Members of Congress once again are
embroiled in a debate over managed care reform legislation that
attempts to address some of the symptoms plaguing America's health
care system. Instead of changing federal policies that restrict
competition and patient choice, the Patients' Bill of Rights Act of
1999 would burden the health care system with more federal
regulation. A growing body of evidence indicates that adding new
layers of regulation would increase the cost of health insurance
for many Americans and add to the number of people who are
uninsured. Specifically:
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The managed care reform proposals
would increase health insurance costs for America's workers and
their families.
According to recent Congressional Budget Office (CBO) estimates,
if the Patients' Bill of Rights Act of 1999 provisions were fully
phased in, insurance premiums would rise by an average of 4.8
percent. The private-sector mandates in Title I of the bill would
cost about $3 billion in 2000 and $13 billion in 2004.
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In driving up the cost of coverage, the
proposed legislative reforms would throw more people off the
insurance rolls.
The CBO, as well as several private economists, estimates that
each 1.0 percentage point increase in the cost of health insurance
drives between 200,000 and 300,000 additional Americans off the
insurance rolls.
Each
new mandate and regulation passed by federal and state regulators
may increase costs by a percentage point or two; some by much more.
And even though they can be justified individually, the cumulative
effect of the added regulations is that more and more people will
be forced to forego health coverage.
In a
properly functioning health care market, in which consumers could
choose and own their health insurance policies, companies would be
forced to shape insurance products to meet
customers' needs for services, quality, and price. Companies that
did not do so quickly would lose customers and revenue. Sellers of
health insurance policies would be bound by the contract agreement
they had made, which would be enforceable through the existing
legal system.
The
direct link between imposing regulations and mandates on the health
insurance market and the number of uninsured is well-established in
the research. For example:
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Duke University researchers found that the
higher the number of coverage requirements placed on plans, the
higher the probability that an individual will become uninsured and
the lower the probability that a person will have any private
health insurance coverage, including group coverage.
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Professors at Wayne State University and
the University of Alabama-Birmingham determined that as many as one
in four Americans lacks health insurance because of benefit
mandates. Each additional mandate significantly lowers the
probability that a firm or an individual will have health
insurance.
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A researcher at Georgia State University
found that state guaranteed issue requirements, coupled with either
community rating or rate bands in the small-group insurance market,
increase the probability that a person will become uninsured by
nearly 29 percent.
As
costs and the number of uninsured continue to rise, a different
approach clearly is needed. By injecting patient choice and
competition into the health care sector, many of the problems the
political community is attempting to solve through legislation and
regulation would be addressed by consumers within a competitive
marketplace.
Specifically, Congress should
consider:
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Targeted tax credits for the uninsured.
Legislators on both sides of the political aisle are introducing a
number of innovative tax credit bills.
Other bills would allow individual tax deductions for the purchase
of health insurance. Tax deductions can ease the burdens of
self-employed individuals, but they do not roll back the regressive
nature of the current system, which provides more tax relief for
those with higher incomes and a higher tax break for the purchase
of more expensive health insurance policies. Tax credits would be
more equitable, and they could be made refundable and targeted to
those who are most likely to be uninsured. Tax credits would
empower consumers to shape the health insurance market through
competition instead of regulation.
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Alternative purchasing
mechanisms.
Providing alternative grouping mechanisms for individuals in
purchasing health insurance would give them the benefits of group
purchasing. A number of mechanisms are being debated, like
voluntary choice cooperatives, HealthMarts, and association health
plans.
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A moratorium on regulation and
mandates.
Congress and state legislators should place a moratorium on
passing more insurance regulations and health benefits mandates
until their costs and impact can be explored in full. People
are denied health coverage suited to their needs when government
forces plans to provide an array of benefits designed by
politicians, not consumers. Regulations and mandates drive up
health care costs, making insurance more costly for individuals and
families who have no choice but to purchase the policies prescribed
by politicians.
If
increasing access and lowering costs are genuine goals of Congress,
a better approach would be to empower individuals and families to
make their own health care choices, restore the doctor-patient
relationship and the independence and integrity of the medical
profession, and force the health care industry and insurance
companies to compete for consumer dollars. The health care delivery
system, at all levels, should be directly accountable to those it
serves.
Grace-Marie Arnett is
President of the Galen Institute, Inc., a not-for-profit
organization located in Alexandria, Virginia, that specializes in
health and tax policy research.