Momentum for the Obama administration's health care proposal
seems to be dissipating as concern about the plan mounts. But why
is it so difficult to overhaul our health system when there is
bipartisan agreement it needs to be fixed?
First, let's understand the immensity of the task. If the U.S.
health care sector were a separate national economy, it would be
the sixth largest in the world--bigger that Britain's entire
economy. Imagine five bickering congressional committees trying to
redesign the British economy successfully in just a few weeks. No
wonder people are getting nervous.
Second, the congressional majority wants to revamp the huge
health care economy using the doctrine of central planning. So we
have thousands of pages of legislation, with potentially hundreds
of thousands of pages of rules and dozens of boards and "czars."
These will regulate prices, reorganize hospitals and doctors, and
decide what health care each of us should and should not have.
It is inconceivable that this could work successfully.
So it is time to take a deep breath and take a different
direction, one based on the traditional American approach of
gradualism and experimentation, rather than the European vision of
micromanagement and central planning.
How would we do that?
First, we take care of simple things that can be done right now
to expand coverage. For instance, millions of uninsured Americans
are eligible for private insurance or programs such as Medicaid,
yet they don't sign up. Now some low-income workers can't afford
their employer's coverage. So let's provide tax credits or other
subsidies to help them. Others just don't get around to signing up.
So let's encourage auto-enrollment, where workers are automatically
signed up unless they actively decline coverage.
Many eligible people just don't enroll in Medicaid. We should
make the enrollment process easier for them. But the program is
also defective in many ways, and so we need to give states more
leeway to improve it.
Second, let's build a new system one stage at a time and test
each stage to be sure it works before building the next. People in
both parties agree that one of the first stages to create is
effective "shopping malls" for affordable coverage in each state.
That requires information for people to compare plans. And it
requires cooperation between insurers, working with state
governments to design insurance rules, reinsurance systems and
other changes so sicker Americans can get coverage.
Third, rather than micromanage the health system via central
planning, we need to get the system's basic incentives right.
Today, those incentives are totally messed up.
It's remarkable how creative Americans are when they have the
right incentives. But today, with tax-subsidized, third-party
insurance, everyone has the incentive to spend more of someone
else's money. No wonder costs are exploding.
Getting incentives right means things like pushing employers to
show their employees how much of their compensation comes as health
insurance. It also means limiting the tax advantage for health
plans--just as tax breaks are limited for 401(k) plans or IRAs.
That would encourage all of us to look harder to see if our
insurance is good value for money and to opt for fatter paychecks
and less costly fringe benefits.
Fourth, to the extent that government has a role in health
reform--and it does in areas such as insurance rules--we are more
likely to get it right if states are given more power to try
different approaches. If we first allow that kind of
experimentation, we can then compare the results.
No one answer will work the same in Manhattan and rural
Arkansas. So the federal government should set broad goals for
coverage and then give wide leeway for states to try different
approaches and learn from one another. That's American
federalism--and it is exactly the opposite of Congress' current
obsession with dreaming up delivery system "game changers" and
imposing them from coast to coast.
And finally, getting broad public support for change requires
broad political support for change. So remove the poison that is
blocking bipartisanship. The most poisonous element right now is a
government-run public plan constantly demanded by liberals. That
will undermine the private coverage of millions and is unacceptable
to Republicans and even many Democrats. The public plan has to
We must and can get health reform. But it will never be achieved
if Americans are pressured to agree to Big Bang change on a
ridiculously short timetable--and based on central planning, rather
than on better incentives for American creativity and
Stuart M. Butler, Ph.D., is Vice
President for Domestic and Economic Policy Studies at The Heritage
First Appeared in the Washington Times
Momentum for the Obama administration's health care proposal seems to be dissipating as concern about the plan mounts. But why is it so difficult to overhaul our health system when there is bipartisan agreement it needs to be fixed?
Health Care Initiative of the Leadership for America Campaign
Stuart M. Butler, Ph.D.
Distinguished Fellow and Director, Center for Policy Innovation
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