Stuart M. Butler, Ph.D.: Every so often, we are fortunate
to have someone who comes to Washington, to the Congress, who
really intends to make things happen. Senator Tom Coburn is clearly
one of that rather rare breed of lawmaker who really comes with a
mission, with a sense of urgency, and with a desire to bring about
significant change. We've seen Senator Coburn in action over the
last few months in the area of the budget, in looking at earmarks
and forcing debate over some very tough issues. Not all his
colleagues welcomed that discussion, but he has been determined in
He's also been basically determined throughout his life. When he
first started in the business world in the 1970s, he served as
manufacturing manager at the Ophthalmic Division of Coburn Optical
Industries in Virginia. Under his leadership, that division grew
from 13 employees to over 350 and captured over a third of the U.S.
He came to Washington as a Member of Congress for Oklahoma's
Second District between 1995 and 2001, and whilst in the House, he
created a name for himself in many areas. Most recently, of course,
he's come to the Senate, and he describes himself as a "citizen
legislator" there, talking about a whole range of different issues
and forcing debate on a whole set of questions, including the
budget and, most recently, health care.
Indeed, on this last issue of health care, which has been very
close to his concerns for many years as a doctor, we are privileged
to have him speak to us today on a proposal that tries to lay out a
very different approach to health care in this country. The
Universal Health Care Choice and Access Act (S. 1019) would
radically change the system in a way that makes it a system that
really works for the American people and provides a
free-market-based system that would achieve our objectives in the
health care area.
Stuart M. Butler, Ph.D., is Vice President for
Domestic and Economic Policy Studies at The Heritage
THE HONORABLE TOM COBURN, M.D.: If you go talk to people
about their health care, you hear lots of things. Whether you talk
to their employer or the somebody that is buying it, one of the
basic tenets that you find is that we are having trouble affording
the health care that we have. We spend greater than 16 percent of
our GDP on health care--the highest of anybody in the world by 50
percent--and yet we are not 50 percent better. We are better, but
The second question that comes to mind is: Do we have the
freedom with health care that we need to have in terms of being
able to choose what is right for us, to choose those people who
give us care, to be able to make the decisions about our health
care? The same freedom that accompanies every other aspect of our
society? The private sector, which is only about 55 percent of all
our health care, has created the greatest set of innovations in
health care that the world has ever known. About 75 percent of all
health care innovations comes from this country. One of the reasons
that this happens is the fact that we do have a private segment--
although it is regulated. What we want to do is be sure to protect
that private innovation in any health care reforms that we do.
We have 45 million people that do not have direct access to
health insurance in this country. It is not accurate to say these
45 million people don't have health care; every hospital in America
must accept and stabilize emergency patients, regardless of whether
or not they are insured. What they do not have is a health
insurance policy and preventative health care. We have not
had an emphasis on prevention and wellness. If you look at our
health care market and what is spent every year, 75 percent of the
money we spend is spent on treating five diseases, of which the
vast majority are preventable, and we can lessen the impact of
those tremendously through prevention strategies.
In addition to emphasizing prevention, we must address the
entitlements of Medicare and Medicaid. I would refer you to
Comptroller General David Walker's Web site at the Government
Accountability Office on the impending fiscal crisis that is facing
our nation in the years to come because of these two entitlements.
We have a train wreck coming, and the only way we can solve that is
to fix our health care system so that it doesn't consume 16.2
percent of our GDP. People say, "Well, how can you do that?"
The first step is to allow market forces to improve quality for
patients and hold costs in check. Nearly one of every three dollars
spent on health care does not go toward helping anybody get well,
and we ought to be questioning that.
How do we make health care more efficient? In our country, we
have used competition and markets to allocate scarce resources, and
we have done that very effectively in all but two areas of our
economy. One is education, where there is a side debate going on
about how we get competitive in education and raise the standards
in education. The other is health care.
Health care is far more expensive to us, and the long-term
consequences are great. A lot of people with private care--and even
people in Medicare and Medicaid--do not have the privilege of
choosing who is going to be their doctor. A lot of people do not
have the opportunity to pick the health plan that is right for
them; that decision is taken out of their hands, either by the
government or by their employer.
The other questions are: Why do premiums go up every year at
three times the rate of inflation in this country, and yet the
benefits that are associated with that increase in premiums don't
rise? Why do we have such a confusing system where it is hard to
figure out what you are buying and what you are getting? Why have
we decided that Americans can get the tax benefit from health care
only through their employers? And finally, who makes the best
decisions about your own health care--you, your family, and your
doctor or someone that you do not know?
The Choice Before Us: Government
Control or a Free Market
In terms of the choices that are in front of us politically in
today's environment, we are either going to have a government-run
health care system or we are going to have a private, vigorous,
healthy, consumer-oriented system where we actually allow market
forces to allocate these scarce resources. We cannot afford what we
are doing today.
On the one hand, if we have a government-run system, we might
control the costs, but we will do that at great price. The way
costs are restrained in every other government-controlled system is
through rationing. What that means is that healthy people die
earlier, people with disease do not get treatment on time, and the
long-term consequence to a mobile and healthy society is that you
lose productivity as people age.
All you have to do is look at the statistics, whether it is
Britain or Canada or any other government-run system. For example,
cancer patients in England have to wait too long for
chemotherapy. Think about what happens during that time:
the potential benefit for a cure, the possibility for a cure.
So we have to make a decision in our country: Are we going to
have the government making the choices that are rightly yours to
make? Are we going to have the government running health care? Are
we going to lose the innovation from a health care system that has
produced 75 percent of the advances in health care that we have
seen over the past 30 years, or are we going to go to something
that we have proven in our society will allocate scarce resources,
create great opportunity, advance quality, and give better price
and better transparency?
My belief is that if the American people are given a choice,
they will choose a market-oriented program. It fits with our
culture, and it fits with our society. It's based on freedom; it's
based on choice; it's based on decision-making; and it's based on
accepting the consequences for the decisions you make.
Ensuring Access to Care
How do we go about doing that? The first thing is to make sure
that everybody has access to care. Universal is usually a synonym
for government-run health care, but we are not talking about that.
We are talking about creating market incentives, creating
incentives for states, and creating incentives for individuals so
that everybody can get health care. The only government involvement
is if somebody acts irresponsibly, in which case we allow a state
to design and set up an enrollment mechanism for people who do not
Everyone in America could choose their own health insurance. You
get to decide what is best for you and your family. You get to
choose your own doctor.
Finally, we have an emphasis on prevention. If we don't start
investing properly in prevention, we will never be able to afford
treating the long-term health care consequences of not having that
prevention base. Pfizer CEO Hank McKinnell, in his book,
outlined what is really happening in our society in terms of our
health care. We have a health care system that is based on a
chronic disease treatment model, and we need to have a health care
system that's based on a prevention model.
How do we prevent illness, and how do we promote wellness? The
federal government spends billions of dollars each year on
prevention, and grandmother was right: "An ounce of prevention is
worth a pound of cure." If you think about the five diseases I
talked about--heart disease, stroke, chronic obstructive pulmonary
disease, diabetes, and cancer--the vast majority of those diseases
are preventable or early-diagnosable to treat. Most diabetes cases
today--type 2 diabetes--are preventable. We know what causes heart
disease, how to diagnose it, how to prevent it, how to lower the
risk. Hypertension leading to strokes, same thing, atherosclerotic
vascular disease, hypertension associated with that. Chronic
obstructive pulmonary disease, we know what causes it, and it is
So the first thing we do in our bill is prevention. We
concentrate on effective prevention efforts through direct consumer
knowledge. We set up a federal government Web site--there are some
privately available--where everybody in the country can go on and
look at your health risk factors and the things that ought to
normally happen to you or be prescribed to you in terms of
prevention strategies and screening strategies.
Additionally, the bill would redirect existing prevention
dollars being spent on ineffective programs toward a health and
wellness public marketing campaign. The power of advertising works
for businesses, and it can work for prevention.
If Americans were to improve three lifestyle behaviors--regular
exercise, proper nutrition, and smoking cessation--the results
would decrease the morbidity of a multitude of diseases. For
example, diet and exercise play a huge role in reducing the
incidence of heart disease and diabetes. The vast majority of
Americans do not know what they need to do, when they need to do
it, or how they need to do it in terms of wellness and in terms of
prevention. That message of prevention education to the American
people will save us billions and billions of dollars.
For example, colon cancer can be cut in half through early
screening and dietary changes. These are things we know, and yet
this is the second-leading cause of death in men for cancer. Why
would we not want to change that? Why would we not want to cut
colon cancer in half? It is something we could easily do. It is
something that is achievable within four or five years if we put
the tools and the prevention strategies to work.
Changing the Tax Code
The second thing we do is change the tax code. This change is
all on the employee side of the ledger. We do not do anything to
employers; they still get to deduct whatever they buy for anybody
in terms of health insurance. But we equalize the tax benefit for
everybody in America in terms of where they get their health
Right now, if you're very wealthy in this country, the tax code
gives you a benefit of about $2,700. If you're poor, you get a tax
benefit of about $100. So what we do is equalize that, and we
create a refundable tax rebate to everyone in America--$2,000 per
person and $5,000 per family--that grows with the chain-weighted
consumer price index each year. People say, "Well that's not
enough." The average individual market policy in this country
today--with all the mandates that are out there--costs $2,250. So
with $250 of your own, you can have the average policy today.
Anybody that's not covered today and that wants to be covered can
This does not take away your employer-provided insurance. While
your health benefits are now a taxable part of your income--just
like the rest of your wages--if your employer offers them, you will
now have a tax credit that will offset those taxes. Rather than
restricting that tax break to employer-sponsored insurance, you can
use that tax credit to buy health insurance wherever you want
to--the individual market, a Massachusetts-style connector, or your
employer. The vast majority of Americans will benefit from this tax
credit, either through families or through individuals.
With this comes individual choice in the health services market.
What we tend to do is to look at the health insurance market the
way it is today. We do not think about what it might be like if
everybody was in the market, if the market was free to work, and
how innovation could improve the market.
Key to free-market innovation is the ability to buy your
insurance wherever you want to, from an insurance company
incorporated in any state in America. Let us look at mandates and
what they have done. If you compare the price of a health insurance
policy in New Jersey, a heavily regulated state, with the price of
one in a state like Kentucky, a more innovation-friendly state, you
will see a sevenfold increase in cost for the same basic coverage
from one state to the other.
So being able to buy your health insurance from wherever you
want will cause innovation and lower prices in the health insurance
market. There would still be a primary and a secondary state for
licensing purposes, and there would still be oversight and consumer
protections. A health insurance company could be incorporated in
any state whose laws are most friendly to the development of
innovative products, much as credit card companies have the freedom
to do, and would have to meet solvency standards established by the
National Association of Insurance Commissioners. So we are not
going to see fly-by-night health insurance plans. We are going to
see people that are truly insured and a true national market for
individual health insurance.
Why is that important? Think about buying a car. If New Jersey
required benefits on cars as it does for health insurance policies,
you could not buy a car without GPS; you could not buy a car
without a sunroof; you could not buy a car without seat warmers;
you could not buy a car without a DVD that plays in the back seat;
you could not buy a car that did not have remote control locks and
unlocks; and you could not buy a car that didn't have OnStar. You
could not buy a car that did not have all of that, and you probably
would not buy a car there. It would be ridiculous to restrict you
from traveling to another state like Kentucky, where you could buy
whichever car you wanted.
The Universal Health Care Choice and Access Act would allow you
to buy health insurance from wherever you want as well.
The Critical Importance of
Critical to a national market for health insurance and true
health care reform is the value of competition. All you have to do
is take the Federal Employees Health Benefits Program system and
look at how competition works there. We have 284 plans competing
for federal employees' health insurance. While the majority of the
country has experienced premium increases of 7.7 percent, premiums
in the FEHBP increased by only 1.8 percent.
Competition, as found in the FEHBP's design, will drive that. To
truly allow competition and innovation to work, we need to
deregulate health care. The bill allows a transparent health
insurance industry to create programs that are best for
Let us say I have diabetes. I may want to buy a high-deductible
policy that has a low-deductible component for my diabetes with a
health insurance firm that wants to specialize in diabetic care. If
we have great management in diabetes, we markedly decrease
complications, and we markedly decrease hospitalization.
A good example of competition is Duke University, which set up a
system where they managed congestive heart failure. What they did
was markedly decrease the amount of trips to the hospital, markedly
decrease hospitalization, markedly increase the life expectancy of
the patients, and cut the costs by 32 percent because they
specialized in that. It is not in existence today because of the
way the reimbursement system is regulated in America--even though
it was saving 32 percent and getting better patient outcomes.
What we know is that, if we can target prevention of chronic
diseases and can remove barriers to innovation in the insurance
market, competition and innovation work. We will see increased
health, increased quality of life, and decreased cost in health
The next thing we do in this bill is Medicaid reform. If you
look at the quality of care that Medicaid patients get versus the
quality of care that other people get, it is not the same, even
though we say we are giving care. The reason is that access is not
the same, and one of the reasons the access is not the same is
because the reimbursements are generally lower.
What we have done is create a two-tiered situation in Medicaid.
What we have said is, "We are going to commit to give you care, but
we are not going to give you quite the care of what everybody else
in the country gets." We put a stamp on somebody's forehead and
call them a Medicaid patient. All of a sudden their access is not
the same because the reimbursement is not the same, the access to
certain doctors is not the same, and the access to certain
treatment is not the same. That is all because we have decided the
bureaucrats are going to decide what you can have, when you can
have it, and how much they are going to pay for it.
This plan gives states a budget and then allows the states to
take their Medicaid money and take their disproportionate share
hospital (DSH) money to create private insurance access for
everybody that qualifies for Medicaid. If Medicaid patients choose
to take advantage of a $2,000 tax rebate to buy a private insurance
policy, their state can give them additional money to help buy the
right policy for them.
Oklahoma has 600,000 people on Medicaid today. Add $2,000 to
each one of those 600,000 people, and what does that do to
Oklahoma's ability and motivation to buy a private insurance policy
for everybody in the state of Oklahoma that is
Under the bill, we give states the flexibility, tools, and
incentives they need to achieve universal access to health care.
States have the benefit of flexibility and a defined Medicaid
budget that rises annually based on the CPI. Individuals have a
$2,000 tax rebate for the purchase of private health insurance. We
then have a pool of bonuses for states that achieve universal
health coverage; if a state gets to 95 percent coverage, it gets a
monetary bonus. Everything we try to do in this bill is to
incentivize the states to create a vibrant private insurance market
and universal access for their citizens.
We also know that medical liability insurance now accounts for
10 percent of the costs of health care in the private sector.
Administration and processing account for 6 percent; support and
marketing, 5 percent; insurance industry profit, 3 percent;
equipment, 5 percent; hospitals, 35 percent; doctors, 21 percent;
prescription drugs, 15 percent.
If you could take that one-third of health care spending that is
not spent directly on health care and squeeze it through the
efficiency of competition, what would happen? We would not have to
have more dollars in health care. What we would have is more
dollars going toward true care rather than overhead. One out of
every three claims that are filed in the private sector are claims
against a deductible that has not been met. Why would we file a
claim for a deductible that has not been met?
Independent Health Record Banks
The next thing we do is to create a charter for independent
health record banks. What you will have in five or six years is a
card, and on the card you will have your health insurance
information, plus your deductible, plus your health savings
account--or whatever account you may have if you do not have an
HSA--plus your health or medical record. Wherever you go for health
services, you provide your card. There is then an automatic update
to your health record for whatever happens at that visit. Whenever
you go the next time, your doctor or your caregiver does not have
to flip through an old paper chart to find what happened at the
last visit at the last doctor that you went to.
The vast majority of mistakes have come because, number one, we
do not have the right medical history information and, number two,
providers do not take the time to get it because it is so difficult
to get. Payments for services are delayed because a claim for one
service is never filed until it is time for all the claims in a
medical practice to be filed.
Creating a charter for the private market to develop
HIPAA-compliant independent health record banks will increase
efficiency in medical recordkeeping and improve quality of care by
reducing errors. Your information would be automated so that
wherever you go in the country, wherever you walk in, your health
record is available even if you do not have your card available to
you. Health care providers could access your record with your
permission and your PIN so that if you are in an emergency
situation, your whole record can be seen and made available to
anyone you authorize or your family authorizes to give your care.
Some of the major health IT companies are already experimenting
with this technology.
Addressing Dual Eligibility
The next area that we address is dual-eligibles, who are
Medicare and Medicaid beneficiaries. We create a Medicaid
Advantage where we combine funding streams for both programs into a
coordinated and efficient Medicaid Advantage program.
The average cost for a Medicare patient is about $10,600 per
year. The average cost for a Medicaid/ Medicare dual-eligible
patient is about $22,000. When there are two payers and two sets of
paperwork for one patient, we do not have a coordination of how
somebody is actually caring for those dual-eligible, high-risk
patients. We change that by giving states and seniors choice
through Medicaid Advantage. Instead of a tug-of-war, one program is
taking care of those individuals. Instead of two entities fighting
against caring for those individuals, there is one local program
caring for them.
The bill also addresses the legal costs associated with health
care. Today, approximately 5 percent to 9 percent of health care
spending has to do with liability. There is as much as $126 billion
of tests ordered every year that patients don't need--absolutely
don't need--but doctors and providers feel that they need. Now,
$126 billion of $2.2 trillion is nearly 6 percent; if we could cut
that in half, we could lower the cost of health care by 3 percent
Creating Health Courts
We incentivize states to create health courts that you can go to
and get your claim heard. That claim would be heard by three
doctors, three lawyers, and a judge with the court's own neutral
One of the things that happens in liability cases today is what
is called "hired guns." You can get a doctor to testify about
anything if you want them to, but it is not necessarily medically
accurate. Today we get juries influenced not on the basis of the
latest scientific data, not on the basis of the best practices that
should be occurring in this country, but on how somebody can toy
with an emotion--something that is very different from best
The court is not mandatory; it is optional. Individuals can go
there and get a determination. You can have a lawyer represent you
there, or you do not have to have a lawyer represent you, but the
medical facts of your case can be heard. If you do not like the
outcome of the case, you can still go to a regular state court.
We do not step on the rights of state courts, but one of the
ways we can decrease liability costs is to have facts out in the
open. Once a case is heard by the health court, either
party--plaintiff or defendant--can appeal and go straight to state
court. They do not have to accept the findings, but whatever the
health court's findings were, they would have to be admissible as
evidence in a regular court. You should be able to look at a case
and ask, "Was there a basis of negligence, and if there was, should
there be compensation?" Then, if you don't like that decision, you
can go on to court.
Native Americans and Veterans
Finally, if Native Americans, who supposedly have health care at
Indian hospitals and government-run hospitals and clinics, do not
think their service is adequate and do not think it's good, they
can use a card to go wherever they want and buy private service.
That does two things. Number one--this applies to veterans as
well--it gives true access, keeping a commitment that the federal
government has made. Number two, it makes those organizations--VA
hospitals and Indian hospitals-- have to compete, which improves
Everything we have done in this plan, including allowing the
market to determine provider pricing and provider best practices,
is to set up a consumer-driven, market-oriented health care system
that allows individual choice, freedom, and liberty for the
individuals in this country. This bill frees market forces to help
us compete to where we lower the cost of health care.
I am convinced that if we had a true consumer-driven health care
market today, we would in fact see health care costs 10 percent to
15 percent lower than they are today. We would also see disease
incidence go down markedly; and, finally, we would see life
expectancy improve dramatically in this country.
DR. BUTLER: Senator Coburn, as you might have expected,
has taken a very broad, comprehensive approach to the whole area of
health care and health care reform, and these proposals are
enshrined in the Universal Health Care Choice and Access Act before
the Congress. Senator Coburn will probably have to leave for the
Hill reasonably soon, so let's take a few questions specifically
for Senator Coburn before we bring up the commentators.
QUESTION: I was on the Maryland Physician's Board for
four years, in private practice the last year. An exceptionally
wealthy attorney had disc surgery and lost his kidneys
post-operatively, and I'm sure that you and I both know what
happened: Dehydrated before surgery; not operated on until the end
of the day. You then don't get enough fluid because no internist
has to see you, and maybe a nurse practitioner or a PA doesn't
really understand about profusing your kidneys. So he's been on
dialysis three times a week for a year and a half.
This was at Georgetown. He then tells me that he was walking
unsteadily, and he passed out. But he had a meeting in Texas with
very wealthy, important clients, so he hired people to get him to
Texas, take care of him there. He called the doctor when he got
back, and his doctor said, "You probably had a stroke."
I submit to you that people don't want care; doctors have been
so trashed that people feel they can do it all. While universal
health is very, very good, if we got rid of the obesity, which is
60 percent of the population, and alcoholism, you could cut costs.
But I submit to you that until we change the attitude toward health
and toward physicians and get it out of being a business, an
entrepreneurship, we are going to have money siphoned all over the
I appreciate your huge efforts, but the reality in the trenches
is that you cannot get a neurosurgeon at Shady Grove Hospital for
an emergency. Doctors are quitting. My friend was head of the
Washington Cancer Institute for years; he quit. You're not going to
have anybody to give you really good care anymore.
SENATOR COBURN: That is the very reason this bill is
coming about. You just described better than I could the bleakness
that is coming. The reason you cannot get a neurosurgeon is because
of the liability.
QUESTION: No, it's because they get paid so little.
SENATOR COBURN: Your position, then, is that market
forces will not have anything to do with the situation, that there
would not be a price high enough to get a neurosurgeon to come to
that hospital. I believe market forces will work, and I believe
people will respond to market forces.
If you have had seven years of post-medical training as a
neurosurgery resident, maybe your services might be a little more
valuable than an ER doctor in an ER, and maybe, because we have a
market-driven system, you might be compensated appropriately for
your time. I believe in markets. America believes in markets. We
have been successful because of that, and to say that markets will
not work in health care--I do not believe that.
What is the other option? The other option is to have the
government mandate and have quality continue to go down. The
quality will not improve with a government-run health care system.
All you have to do is look around the world and look at what the
access problems are, and the delay in diagnosis and the delay in
Let me give you an example of why I think markets will work.
There is a hospital in Toronto, Canada, that does nothing but
hernia surgeries. Why do people go to Shouldice?
QUESTION: They're cherry picking.
SENATOR COBURN: I disagree that they are cherry picking.
Anybody in the world can go there. The point is, that is one of the
things we need to do. We are going to need specialization. You do
not go to a surgeon to get your allergies treated. You go to
somebody that is good at allergies. You do not go to a surgeon to
get desensitization, endpoint titration for allergy treatment. You
go to an allergist.
What the Shouldice Hospital has done is offer a procedure where
they have a 98 percent satisfaction rate. They have an in-and-out
procedure, and the cost is a third of what everybody around them
charges, and it is because they are efficient at what they do. We
ought to have more of that.
We have now gastroenterology clinics where you get a full
colonoscopy, everything done, for $700. If you go into an
outpatient surgery center or a hospital, it costs two or three
times that. And the fact is that their performance is better. I
believe that if we actually see specialization and competition
based on that, we will see improved quality, not less.
QUESTION: That's how my neighbor ended up on
SENATOR COBURN: No, your neighbor ended up on dialysis
because the doctor who was taking care of him did not take
care of him. He did not specialize, because most neurosurgeons
would not let a patient go low in terms of fluid intravascular
volume to surgery. Most would watch their urine output--yes, they
would. You have less confidence in physicians than I do. I think
most physicians are very well trained, want to do the right thing,
and would have done the right thing.
The fact is that we have a system that is set up to say, "Let's
see, I'm going to put you in the hospital, so I better have this
doctor see you, this doctor see you, this doctor see you before I
do something." The question is: Will a neurosurgeon take care of a
patient, and are they trained to take care of them? Yes, they are.
The question is: Why didn't they? And with the outcome data that
are going to come, will you know who a good neurosurgeon is and who
isn't? Yes, you will in a truly transparent and free market.
QUESTION: I have a question in regard to some of the
things I project are likely to happen on Capitol Hill. How are you
going to address the common concerns that get stated up there: that
the only way something like this is going to work is if we have a
"level playing field," that everybody offers a standard benefit
package, and there are certain standards that apply, and unless you
have a "level playing field" for insurers, you're going to have the
issue that the doctor raised, which is cherry picking?
SENATOR COBURN: Right now, there is cherry picking in
every market we have, and American consumers figure out how to get
around that. The reason you have cherry picking in the health care
system today is because we do not have consumers holding the system
accountable. You do not have a market driving the system. What you
have is a false market. You have the government driving it, and
then you have large insurance farms that are driving it.
You talk about cherry picking. Every hospital in this country,
if you walk in there without an insurance card, cherry-picks your
billfold because they charge you two or three times what they
charge anybody else that comes into that hospital. The system we
have today promotes cherry picking.
A true market-driven system has transparency, both in terms of
price and outcome. The American consumer is smart enough to assess
value, assess quality, and assess price. We do it every day in
everything that we do in this country, and to assume that
individuals in this country cannot do it is insulting the
intelligence of the American people.
So I believe a true market will win. Will it be perfect? No, but
in follow-up to the previous lady's question, what is your
solution? Do you want the government to just mandate suboptimal
care for everybody? Do we want everybody to have socialized
system-quality care in this country? Do we want everybody to have
the same access that Medicaid patients have today? Who doesn't take
the lower-paying patients today? It's the best doctors, the ones
that have the best reputations. Why would they spend time getting
$20 when they can get $100? They are not about to do that.
In some sectors of the health care market, there truly is a
market, and it works. When the government says we are not going to
compete in that system, that destroys innovation and access to the
excellence of America's medical technology. I am saying let the
consumer decide. Let the individual decide. Let us decide what is
best for us--not Washington politicians. I guarantee you, it is
like Field of Dreams: "If you build it, they will come."
No market is perfect, but what we have today is very far from
perfect, and the very vulnerable people in our society, who we say
we are helping, we are not helping. A market-driven system
empowering those people to have choice and freedom in the quality
of care and put them on a level of care that is equal to the
highest CEO in this country is something our country ought to
QUESTION: You've made a convincing case that the
government intrusion in the health care market is part of what's
causing the problem, and I'm curious as to why part of your
solution isn't to further scale back the intrusion that's already
there. If you look back pre-1965, the level of charity care in
health care is considerably greater than what we have now, at a
lower cost than what Medicaid is costing us, with better quality of
care. What are you doing to encourage private charity care and
scale back government intrusion from what it is now?
SENATOR COBURN: In essence, this plan creates charity
care, because it says the very richest in this country will help
contribute to a tax credit-- instead of expanding a government
program like Medicaid--for those that do not have the resources.
What we do is put everybody on an equal footing, because everybody
has access to an equal tax credit to buy private insurance under
this bill. Everybody has access to a plan that gives them what they
want. Everybody will have access to a choice in health in plans,
just as every federal employee has choice in the FEHBP.
It is important to note that the wealthy in this country already
are subsidizing health care for the very poor through the Medicaid
program. This bill would make states more responsible for the
Medicaid dollars they receive and give them a budget. States would
have the incentives, via the tax credit to individuals, to give
Medicaid beneficiaries a private insurance plan instead of a
government program. This market-based approach leaves room for the
generosity of the American people through various charity care
venues as well.
Even though rough at times, markets help allocate resources. If
we spend $2.2 trillion on health care and one out of every three
dollars doesn't go to help somebody get well, we ought to change
that system, wouldn't you think? We ought to change it in a way
that will deliver health care. Why shouldn't we get that one out of
three dollars promoting prevention or giving access to
What happens now is, we give access--delayed and emergent
access--and then we cost-shift. This whole bill is designed to take
all the cost-shifting out of the system. It is designed to take the
Medicare cost-shifting out of it, the Medicaid cost-shifting out of
it, and the charity care cost-shifting out so that everybody has
access and everybody has equal care.
QUESTION: In rural areas, Medicare is a prime driver in
access, and it's also the driver of cost increases in health care
in America. How do the provisions in your bill affect Medicare, and
how would it help contain cost growth and also ensure access to
health care in Johnson County, Oklahoma?
SENATOR COBURN: The question is: Why doesn't Johnson
County have access today? A doctor graduates from residency,
fulfills the two-year obligation, goes to Johnson County, and, as
soon as that two years is up, is gone. Why? Because the
availability of earning power is limited by what Medicare says,
because the vast majority of patients are going to be Medicare and
Medicaid. What if we had a market that said we are going to pay
somebody an appropriate amount to live in a rural area and care for
QUESTION: So what does your bill do to fix that?
SENATOR COBURN: It creates a market. We allow Medicare to
continue, but we allow somebody like yourself--on a completely
voluntary basis--to start putting your 2.9 percent FICA taxes into
a medical retirement account so that 45 years from now, you can
take whatever that credit will be worth, based on the CPI updates,
and add it to your medical retirement account. You can then buy a
lifetime health insurance policy instead of switching to a
government program the day you turn 65.
Why shouldn't you be able to keep the same health insurance and
doctor that you've always had? Why should you have to be in a
Medicare system that pays a third of what it actually costs to do
Medicare's payment rules are always two or three years behind
the latest treatment, so seniors do not get it because somebody in
the bureaucracy has not approved the latest treatment that saves
lives and money. It is that bureaucracy of medicine, which has been
copied by large insurance companies, that has restricted some
access to care and some improved quality care in the name of saving
money. I believe markets will do a far better job than CMS ever
could do in figuring out what to pay for things and what their
relative worth is.
DR. BUTLER: I'd ask Joe and Grace-Marie to join us to
make some comments on the proposal and the legislation. Both Joe
and Grace-Marie have worked on the same issues that the Senator has
focused on for many, many years, and I'm sure we'll have very
insightful comments about the approach that Senator Coburn has
Joseph Antos is the Wilson H. Taylor Scholar in Health Care and
Retirement Policy at the American Enterprise Institute. He also
serves as a commissioner on the Maryland Health Services Cost
Review Commission and is an adjunct professor at the School of
Public Health at the University of North Carolina. He's worked with
us at Heritage and all of us in the field for many, many years on
Medicare reform, on insurance regulation and the uninsured. He's
also had a long career in the government at the Congressional
Budget Office, the Council of Economic Advisers, and the Office of
Management and Budget and has been a consultant for the World Bank
in such exotic places as Bulgaria, Croatia, and the Czech
Grace-Marie Turner is the founder, President, and Trustee of the
Galen Institute. The Galen Institute and Grace-Marie also for many
years have been working on the same broad issues of health care and
the tax treatment particularly and tax policy generally. She was
Executive Director of the National Commission on Economic Growth
and Tax Reform in 1995 and 1996 and has been very instrumental in
the promotion of consumer-based health care and health savings
accounts and a whole range of issues that the Senator touched
Before I ask Joe to make a few quick comments, let me just note
that a central part of the Senator's proposal touches on what one
might call the elephant in the room: the tax treatment of health
care, which is so much a factor in the system we have today and
also a barrier to the kinds of changes we need to move toward in
terms of a consumer health care system. So it's a very gratifying
and, I think, critical part of the proposal to have a fundamental
reform of the tax treatment of health care.
I think that's an idea whose time has come. The President has
put forward a proposal to limit the tax exclusion for
company-provided coverage and look at opening up other tax relief
for people who don't have that coverage. There have been proposals
on Capitol Hill, proposed by organizations like Heritage and
others, to institute forms of refundable tax credit, or rebates as
the Senator called them, to begin to change that tax treatment.
The tax relief for health care for individuals in this country
is now over $200 billion a year. That's an enormous incentive and
subsidy, but it's very skewed toward one form of coverage, as the
Senator laid out, and really forces you to enter a Faustian
bargain: to hand over the entire control of your health care
insurance to your employer as a condition for getting that
Addressing that fundamental inequity and unfairness and
disempowerment of the current tax system is absolutely critical to
bringing about the kind of consumer system that the Senator laid
out and to beginning to address the perverse incentives that we
currently have, both to overuse services in some areas and not to
have any help to get them in others. So it's very, very important,
and I applaud the Senator for making this a central part of the
JOSEPH ANTOS, Ph.D.: Senator Coburn, you're not fooling
around with little ideas. They're all big ideas, but they're
The Commonwealth Fund spends a lot of money studying health
policy, and they have a new report analyzing the leading
congressional health care bills. I didn't see yours in here, but if
you read the table of contents, you see the kind of ideas that are
the leading ideas today. Some of them are pretty good. The first
one on their list does in fact deal with the tax treatment of
health insurance--they couldn't avoid that; the President mentioned
it. But then there are some other ideas that might be a little more
Federal-state partnerships to expand health insurance sounds
good until you realize the bill they're talking about is one where
Congress sets up a committee to decide what the good ideas are.
Expand coverage through Medicaid; Medicare buy-in for older adults;
universal coverage of children, which means through a federal
program; expanding Medicaid and SCHIP coverage to families;
employer mandates for large employers; and improving the
affordability of coverage for small businesses, although it isn't
entirely clear what that means--the Commonwealth Fund's list didn't
include many free-market ideas, and your proposal is a refreshing
counterpoint to that.
Let me mention a couple of issues specific to the Coburn
proposal. First, on the tax treatment, something Stuart didn't
mention is that your bill would allow employers to contribute to
employees' health insurance premiums regardless of where they
bought the coverage. That makes it possible to come up with a more
sensible tax treatment for health insurance without destroying the
current insurance arrangement that nearly everybody has. This is
the kind of innovative approach that should be addressed in open
debate on the Hill.
On private insurance, you support the idea of allowing people to
buy insurance no matter where the insurance company happens to be
located; you include some regulatory provisions that are meant to
protect consumers from fraud and that would be run by the state
where you live. So you're protected in two ways: by the state where
the insurance company is located and the state where you live.
Interestingly, one of the things that you left out, which I know
Stuart is concerned about, is a Massachusetts-like connector. Your
view, apparently, is that the private sector will figure out how to
market insurance to individuals, and, in fact, there is
ehealthinsurance.com that does just that. It is actually possible
to buy insurance without creating a government organization. I'm in
favor of making it as easy as possible for people to buy insurance,
but I share your skepticism about that particular model. I think
it's worth looking at, however.
I wanted to dwell mostly on Medicare. I think the Senator's
proposal is very daring, almost dangerous. It opens up the Medicare
program potentially to almost any insurance that's sold in America.
In other words, it offers insurance choices that Medicare
beneficiaries don't have right now.
In essence, to suggest a phrase, you're proposing something that
I would call "health insurance for life." When you're 20 years old
or 22 years old, you can buy insurance that suits you; as you go
through your life and through your career, you can change what you
buy; and then, when you enroll in Medicare, you don't necessarily
have to change just because you turn 65. That's an important
principle, the idea of allowing people to have continuity in the
coverage that they have. There are a lot of difficulties in making
that happen, but the principle is very sound.
Another point that I would emphasize is that Medicare
beneficiaries under the Senator's bill would have the choice of
staying in traditional Medicare or opting out completely. The
material that I read from his office doesn't mention the "V"
word--voucher-- but essentially, the Senator has come up with a way
to give people the value of Medicare while allowing them to buy on
the private market the kind of coverage that they think they
There are real issues here. Since this would be voluntary,
selection bias could be a problem. Leaving that aside, a system
that allows Medicare to transform itself, not abruptly but over a
period of time, is a sensible objective, but the details need to be
There are carrots associated with this. One of the carrots is
that you get various kinds of tax breaks to buy private insurance,
which will stay with you if you opt out of the traditional Medicare
program and buy private insurance. That's a gigantic carrot.
There is also a stick. The Senator would take the President up
on his proposal to eliminate the indexing of those income
thresholds for Part B premiums. As you know, starting this year,
higher-income beneficiaries have to pay a somewhat higher premium
to participate in the Part B program. The Senator basically would
allow that schedule of higher premiums to remain constant in
nominal dollars so that over time more people would be required to
pay higher premiums. If the traditional Medicare program looks
worse and worse, seniors will be more likely to consider another
I think there isn't enough focus in the proposal on slowing the
growth of health spending. If Senator Coburn's bill could be
passed, changes that would gradually accrete to the system would be
very positive. But the problem is that the crisis is now,
and we've been in that crisis for decades. So part of the package
ought to focus on cost-reduction policies that could take effect
Another element of the problem that needs to be dealt with is
health information technology.
SENATOR COBURN: The federal government has already spent
$200 million trying to establish health IT, and we should have let
the private sector markets do that.
DR. ANTOS: Absolutely, but the government ought to get
out of the way of progress as well. One of your proposals is to
take a look at the Stark restrictions that prevent private
subsidies to encourage the adoption of health IT systems. All I'm
saying is that there are some issues that can be dealt with, and
health IT is the easiest one to describe.
We also ought to work on comparative effectiveness research.
Information is a public good, and the government is in the best
position of all to collect information. In fact, Medicare collects
information on millions of medical treatments and then doesn't use
it to better understand what works and what does not. That should
One could argue that there isn't enough detail in the bill, but
Congress would take care of that. The first rule of Congress is,
"If in doubt, micromanage." So the real issue is not a lack of
detail, but the need to worry about allowing too much detail
in the law as you go along. On the other hand, not enough detail is
a CBO scoring problem, and as everyone knows, CBO scoring is a
short-term analysis, not a long-term analysis. I think you've got
real challenges there--we all do--in terms of reforming the
I don't think you allow enough competition in the Medicare
program. Not on the Medicare Advantage side--you allow plenty of
competition there-- but the traditional program is going to be with
us for a long time. I think we need to foster competition there as
Let me finish with one last point: This proposal has too many
big ideas. There was a great article in The Wall Street
Journal recently that got it exactly right. Quoting Mike Franc
of The Heritage Foundation: "Republicans are still too preoccupied
with health care small-ball." In other words, which procedures
should be covered by Medicare, how much should generics cost--the
details of running the health system as opposed to getting the
broader picture. As Mike says, "This is still outside their
intellectual comfort zone, and Republicans never do well in that
situation. But to win this debate--the defining issue of the next
40 or 50 years--they are going to have to address it forcefully,
head-on, and with every bit of their intellectual firepower."
Senator, I think you've started the ball rolling.
DR. BUTLER: As Joe said at the very beginning, you've got
organizations like the Commonwealth Fund that try to determine what
the debate is going to be on health care by drawing attention to
some proposals and ignoring others. I think one of the things we've
learned from Senator Coburn is that Senator Coburn is to the
discussion of issues as Fox News is to the earlier networks,
forcing his way into the discussion. I have no doubt that the
Commonwealth Fund and others will be including these proposals in
the future as the debate continues.
GRACE-MARIE TURNER: Senator, I am grateful to you for
developing such a comprehensive vision of health care reform based
upon your free-market perspective. I think it is very important for
conservatives to understand that reform is possible that is built
around consistent principles of individual responsibility, belief
in markets, belief in competition, belief in freedom, belief in
individual choice, and belief that we can move to a better health
care system through the market forces that we know work in the rest
of the economy. So I congratulate you on coming up with this
comprehensive vision of free-market health reform.
I would like to focus on the Medicaid provisions of your bill,
not only because I served on the Medicaid Commission, appointed by
Secretary Leavitt, but because Medicaid is now the biggest
health care program in the country. It spends more money and covers
more people than any other health care system, so addressing it is
terribly important. Senator Coburn calls it "keeping Medicaid on
mission," and keeping Medicaid on mission means taking care of poor
people first and taking care of those who are most vulnerable.
The Senator would establish a budget for Medicaid, and he would
tell the states that Medicaid no longer would be an individual
entitlement to benefits. The states would be responsible for
figuring out how to spend this money wisely and well. We heard many
examples during our Medicaid Commission's work that the states
could do this if they are given more flexibility and the proper
Under his plan, the states would have budgets for Medicaid, but
they would have much more flexibility in how they would spend that
money. For example, Senator Coburn describes elsewhere in his
legislation a system of individual and family tax credits for
health insurance. The bill would allow states to turn the Medicaid
allocation into a defined contribution to supplement those tax
credits. This would allow those with the lower incomes who are
eligible for Medicaid to have the opportunity to purchase private
That is a consistent theme running through the Senator's bill:
that everybody should have the option of purchasing private health
insurance. We shouldn't relegate people to a Medicaid ghetto
because of their income category. Let them have the opportunity to
purchase private health insurance, which means, in part, allowing
them to use a Medicaid stipend to help buy into employer-based
coverage if they have the option or to purchase coverage on their
Senator Coburn also is building on several successful models in
his Medicaid reform proposal. For example, Cash and Counseling is a
very successful program within Medicaid that allows people who are
eligible for personal care services to essentially decide who they
want to take care of them and their personal needs. Cash and
Counseling allows people to have much more choice and control over
the services that they receive, and the program's 98 percent
satisfaction rate is testament to its success. These beneficiaries
not only have a say over who provides their personal care, such as
bathing by a daughter or niece rather than a stranger from a home
health agency, but they also have counselors available who help
them make decisions about how they are going to allocate those
That's basically, as I understand it, the model of the Medicaid
allocation in the Senator's legislation: Give people assistance;
give them access to counselors to help them make those decisions;
and give them information about the markets and the choices that
are available to them.
A critical need for reform in the Medicaid program is to do a
better job of helping those who are dually eligible for Medicare
and Medicaid, whose care costs taxpayers $22,000 a year on average.
These are often the most vulnerable citizens. They're both poor
and, often, elderly. They are eligible for Medicare either because
they are elderly or disabled or both, and for Medicaid because
they're poor, but their care is incredibly fragmented through the
What we need is to build incentives and a structure for a new
kind of system to take care of these most vulnerable people. The
Senator has developed an idea called Medicaid Advantage, which Bob
Helms and I initially developed for the Medicaid
Commission. It was adopted by the Medicaid Commission as a
recommendation, and I'm happy to see it incorporated in this
legislation because in all of our hearings across the country for a
year and a half, we kept coming back to the need to solve this
For example, we heard about a patient who was dual-eligible. She
was in a nursing home that was being paid for by Medicaid. She had
to be transferred to a hospital where her care would be paid for by
Medicare. It took a week for her medical records to catch up with
her in the hospital because she was operating between these two
systems, falling through the cracks, diminishing the quality of
care for this patient and costing the taxpayer more in duplicative
and potentially even inappropriate care. No one is in charge of
coordinating care for the people who most need it.
The Senator's idea for a Medicaid Advantage program once again
builds on something we know works--Medicare Advantage, one of the
most popular parts of the Medicare program. Medicare Advantage
gives seniors the option to participate in the same kind of private
coverage that people have through the workplace: private health
plans that can coordinate their care, including those with special
needs, and that provide a single setting so that their records are
integrated in one place. They can get their drug benefits, their
preventive care, their hospitalization, their doctors' visits, and
their lab tests, all coordinated through this one health plan.
That's what our vulnerable dually eligible citizens need as
But in order to do that, we need to rationalize the funding. We
don't want Medicaid to be paying for the nursing home and Medicare
to be paying for the doctors' visits and hospital care in a
fragmented system. What this proposal would do is put all those
funds into one pool that follows the person so that the Medicare
funds, the Medicare Part D prescription drug benefit funds, and the
federal and state share of the Medicaid dollars follow the person.
States can be in charge of figuring out how they can best allocate
those resources to provide the best care for seniors and for others
who are eligible for both programs.
We saw examples of how this works in states that are
experimenting with a coordinated care model. Vermont, for example,
has a hugely successful program that is able to get down to almost
the individual level of patient needs for dually eligible citizens.
We heard over and over that people want to stay in their homes;
they don't want to go to nursing homes. Sometimes they need very
specialized support to do that, but sometimes it can be relatively
simple and inexpensive care but it isn't allowed because of the
constellation of rules that govern both programs.
Senator Coburn's program would let states decide what services
people need in order to be able to stay in their homes. Sometimes
relatively simple technologies can provide the assistance that
somebody needs to stay out of a nursing home. This plan could save
money, make care more efficient, allow the competitive market to
work within the states, and give the states a lot more authority
and responsibility to make it work.
So I commend you, Senator Coburn, for your "consumer-directed
market" approach and for envisioning a health care system that
provides for individual freedom, competition, and choice and that
looks to building a 21st century health care system.
SENATOR COBURN: As you look at what is going to happen to
our country with Medicare and Medicaid, any responsible adult in
this country would ask, "Do we have a responsibility to those who
follow us, to the next generation?" We are on an absolutely
unsustainable course to be able to keep the commitments that we
have made in terms of Medicare and Medicaid. There is no question
about that. Whether it is the Government Accountability Office or
the Office of Management and Budget or the Congressional Budget
Office, they all agree that we have promised things we cannot
deliver under the present system. And when one out of three dollars
we have promised is not doing what it is supposed to be doing, we
need to change things.
I think it is really a moral question for us. As Joe suggested,
we could say we are going to change this so we get more control of
it. The fact is, it is really a question of selfishness. If you are
a Medicare patient today and you say, "Medicare is a promise to
me"-- and what we know about the vast majority is that most people
will get more out of it than they put into it--what you are really
saying is, "I want my grandkids to pay for my health care." Is
there any responsibility on us to try to change the system so that
the burden that is going to be placed on the next two generations
is less and at the same time create improved quality and access? I
believe we can.
The other thing, I think, is that you cannot fix health care by
looking with a microscope at the small areas; you have to address
every aspect of health care at the same time. You have to address
prevention. You have to address liability because it's such a large
component. You have to address service delivery. You have to
When we talk about the cost of keeping somebody in their home
versus in a nursing home, it's about 60 percent of what it costs to
keep them in a nursing home, even having to pay workers to come in
to take care of your family. What we know from that is that they
live longer and have better quality. Why would we not want to do
that? Well, we have a Medicaid system that does not encourage that.
Why wouldn't we want states to be able to do that? Why wouldn't we
want the ideas of everybody in this country that's helping to pay
for this system to be able to contribute on a state level to
improve quality and improve access?
There is going to be a selection bias in everything we do.
Oklahoma already has a high-risk pool. We've further incentivized
high-risk pools in this bill. In terms of the insurance industry,
if this is truly implemented, there will be little advantage to
cherry picking in underwriting insurance based health status,
because the insurance company will pay for it one way or another.
Insurance companies will get dinged at the end of the year based on
an industry-regulated pool, much like the country of Switzerland
has in place, to help pay for those people that they have denied
care. To address that problem, we want to create more of a true
We know we have a long way to go in the health care debate. What
we tried to do with this bill was not think of politics. We tried
to think of what needs to happen for us to have a vibrant,
progressive, improving, and more efficient health care system that
will give quality and access to everybody in this country.
When you start thinking about the politics, you start to think
about what you cannot do. We realize there are going to be a lot of
criticisms of this bill, but we do know principles that work in
this country, and we know things that we have been very successful
with. If we refuse to do that in health care, we will pay the price
for that. We will pay the price in terms of global competition. We
will pay the price in terms of innovation. We will pay the price in
terms of lack of quality of care and prolonged lifespan. There is a
cost of what we do not do.
We have tried not to think about the politics of this, thinking
that if the American people really like liberty, really like
choice, really like freedom, and really like this idea of
fairness--then why shouldn't we have a tax code that is fair to
everybody and allows people to have the same shot? Why shouldn't
Americans get to decide where they buy their health insurance? And
along with that comes some personal responsibility.
There is no such thing as total dependency by active adults in
this country, and no longer can our country afford for individuals
to say, "You owe it to me." Nothing is owed to anybody, because
what we are owed today is coming off the backs of our
grandchildren. So the way I address seniors when they talk to me
about how they do not want anything changing is to say, "Then you
don't want your grandchild to have a college education, because
that's what you're going to steal." There is a $70 trillion
unfunded liability in Medicare alone that we're adding to the next
couple of generations. We have to be about addressing that today.
Instead of saying "You owe it to me," we should be asking, "What do
we owe to our grandchildren?"
We cannot wait to do that. We cannot worry about the politics of
it. Let's think about the principles. Let's think about the
policies. Let's think about intergenerational fairness. Let's think
about the heritage of this country. It is: one generation will
sacrifice for the next to create greater opportunities and more
freedom. That's what we need to be thinking about, not the
So I am happy to have all the political criticism that is going
to come with this bill, and I am anxious to debate anybody on the
idea of freedom and choice and true competition in any market. I
believe it works. I believe that in my group, my peers, the
physicians in this country are fed up, and if you asked them
tomorrow, they would probably all take a government-run system.
But that is not the best thing for our country. That is not the
best thing by far. It is certainly not going to be the best thing
for quality, and it ultimately will not be the best thing for
access and improvement. So what we need to do is be bold about what
we are talking about and be able to defend it. We know this bill is
not perfect; we are willing to take other market-based ideas to
make it better; but you cannot fix health care by just assuming we
can take it all under the government's wing and it is all going to
be solved. It is not. It is going to be worse; it is not going to
be better. As P. J. O'Rourke said, "If you think health care is
expensive now, wait until it's free."
QUESTION: Senator, just a detail question. Do you
anticipate that your legislation will be acted on as a whole, or do
you think you will be ending up with a strategy that will have it
broken down into amendments on different bills? What committees has
it been referred to, and do you anticipate any action in those
SENATOR COBURN: I think this bill ought to be the
standard to which any piece of health care legislation ought to be
compared. You can create medical retirement accounts for people of
Medicare age, but if you don't fix the rest of the problems with
the health care market, they will not be able to afford it. We have
to address the problems that are limiting access, raising costs,
and decreasing quality.
I am sure it will go to the Health, Education, Labor, and
Pensions (HELP) Committee and the Finance Committee. We are working
to get co-sponsors in the House, and very soon, I think we will
have eight Senate sponsors, which is not a bad number of sponsors
for a bill this big.
QUESTION: My wife and I recently had to go to the
private-sector individual market to purchase coverage because we're
both independent consultants. Each of the topics you
mentioned--slightly elevated blood pressure, cholesterol, getting a
colon scan, getting a lump checked out--turned out to be fine, but
each of these factors was used by private-sector companies either
to deny us coverage completely or to grotesquely raise the price at
which they'd be offering it. How do you suggest addressing that
SENATOR COBURN: One is what I talked about in terms of
high-risk pools, which will discourage insurance companies from
saying, "Well, they're going to be highly expensive, so maybe we
don't want to cover them."
If we have a high-risk or reinsurance pool that they all have to
contribute to, based on revenue versus loss, there is little reason
for them to deny you anymore because they are going to pay for you
anyway. So we make insurance again truly insurance. Right now, when
you buy insurance, you are asking them to take 20 percent off the
top and then pay your medical bills. We are not spreading risk.
What the insurance companies typically try to do is get rid of any
high-risk stuff so they can exaggerate their profits.
What we need is competition. Big insurance is probably going to
fight this bill because they are making a killing. When a big
insurance company in The Wall Street Journal is telling them
that they are fining doctors because they cannot send them to a lab
they think is better than some lousy quality somewhere else, you
take the professionalism out. When you have real competition, that
will not happen. One of the things the American Medical Association
has always tried to get is to allow doctors to come together to set
their prices. If you have to publish your prices in a transparent
market, you will know what everybody is charging.
If we are going to have a truly transparent market, doctors can
charge what they want. Maybe they will not get used, but maybe they
will. Maybe Dr. Joe, who has the best bedside manner, has the best
art of medicine, has the best training, the best diagnosis, and the
best result, ought to get paid more than Dr. Tom, who has the
poorest bedside manner, is very curt, doesn't spend any time with
you, and doesn't do a good job of diagnosing. Maybe the bad doctors
will get retrained or forced out.
Remember: The other thing that is coming is that we are going to
have a shortage of some 200,000 doctors over the next 50 years in
this country. Nobody is even talking about that. The good doctors
are retiring. They are retiring from medicine. They are leaving
because they are frustrated with it, and there has been this
massive change that has occurred. Let's fix it all. Let's address
every issue that is impacting health care today, whether it is
liability, markets, access, or competition.
The other question, I again would ask is this: When we say we
are going to cover a veteran or we are going to cover a Medicaid
patient or we are going to cover a Native American and then we give
them inferior quality, have we met the expectation that we promised
them? No, we have not. And that is what we have done.
Many times, what we have promised is inferior. The best example
on that is that now dental assistants can do root canals in Alaska.
You really want a dental assistant doing your root canal? But that
is what we are giving Native Americans. That is what we have told
them: "We're going to allow some extender, some physician extender,
to give you care."
Maybe that will be good care, but sometimes it is not, and if we
do not need four years of medical school and four years of
residency on average in this country now, why don't we get rid of
them? Why don't we just make everybody a PA or a nurse
practitioner? That is the option. So the assumption behind this
lower level of care, even though we are saying we are meeting our
commitment, is a moral question as well.
GRACE-MARIE TURNER: When you are shopping for health
insurance, the insurance company may very well look at you as
though you have a fire smoldering in the basement: Why are you in
the individual market buying health insurance now? They think you
may know more than they do about your health problems, and the
companies may be pricing insurance to protect themselves against
the fact that you may be buying health insurance before a major
health event. But if you had the kind of insurance that Senator
Coburn is talking about, where you have continuity of insurance
over your lifetime, then you can buy a longer-term care policy, and
you would have less risk of facing prices with a defensive
It is important that people be able to purchase health insurance
that has continuity of coverage so that you are investing in that
policy that you may own for years. You would have a relationship
with the company, but you also would have the ability to move
companies as long as you maintain continuous insurance
But our current system doesn't provide for continuity of health
insurance; health insurance is repriced year after year. Worse,
people with insurance at work get thrown out of the market
altogether if they leave their job, start a new business, or get
fired. Continuity, portability of health insurance, and long-term
contracts would solve many of the problems in our health sector
SENATOR COBURN: I completely agree. One of the
misunderstandings about the non-group insurance market is that
people often say it is a dysfunctional market that does not work.
Actually, the problem is that it works all too well in the sense
that people in that market are required to pay what the insurance
is worth to them. They are not subsidized, and the microscope is on
them the first time they apply.
The other thing that many people may not understand is that once
you get coverage in the individual, non-group market, if you
maintain that coverage, insurance companies do not up your rates
just because something happened to you a couple years down the
road. They tend to raise rates only on the basis of age. This is
the general practice throughout the country.
So the real problem a lot of people have, beyond what
Grace-Marie is saying--that they did not buy insurance when they
were young and were able to maintain it--is this unfair tax subsidy
system we have and this complicated and confusing system where
employers are "giving" us a benefit when, in reality, those of us
who have employer-sponsored coverage are giving it to ourselves by
taking lower wages. It's a confusing system, but sticker shock
still matters. Individual Americans, not employers, should be able
to take direct advantage of tax breaks for health
insurance--wherever they choose to.
Hank McKinnell, A Call to Action: Taking Back Healthcare for
Future Generations (New York: McGraw-Hill, 2005).
Centers for Medicare and Medicaid Services, an agency within the
U.S. Department of Health and Human Services that is responsible
for administering Medicare, Medicaid, and the State Children's
health Insurance Program (SCHIP)
Michael Leavitt, U.S. Secretary of Health and
Robert B. Helms, Director of Health Policy
Studies at the American Enterprise Institute.