Health care is fraught with difficult issues that divide
Americans on matters of conscience. Many of the hottest issues in
social policy intersect with health care spending, such as
abortion, assisted suicide, rationing of care at the end of life,
and embryonic stem cell research. Issues of moral conflict will
only increase as high-tech medicine advances.
Americans should be free to choose health care coverage that
does not subsidize procedures to which they morally object. Health
care reform should be based on the principles of economic freedom
and freedom of conscience to ensure that consumers are able to
receive care, and health care providers are able to offer care,
that does not violate their individual consciences. The most
promising policy vehicle to give individuals this freedom is the
state-based health insurance exchange (HIE), an idea under
consideration in a number of states.
The Constraints of the Current
Freedom of conscience is a cherished American ideal. Excellence
in health care is also prized in our society. These two goods are
not, and must not be allowed to become, mutually exclusive. Health
care reform should ensure that Americans have excellent health care
without having to compromise their deeply-held conscientious
beliefs. One solution to the values impasse in health care is to
maximize citizens' economic freedom of choice in selecting health
coverage. Greater consumer freedom will allow greater freedom of
Consider the case of a hypothetical "John Smith." John Smith
believes abortion is morally wrong, and he would never want to
subsidize it. But John has heard that 46 percent of workers have
employer-based health coverage that finance abortions. John asks about
his own company's plan and learns that his employer-provided health
care plan covers abortions.
John looks into buying his own insurance but finds that the cost
is prohibitive. Not only are the premiums considerably higher, but
because he, as an individual, no longer can get the same tax breaks
that he could if he were enrolled in his employer's plan, he would
be buying his own health insurance with after-tax
dollars-effectively paying an additional 40-50 percent more than
the cost of the employer plan. He cannot afford to do this. If John had
access to a refundable, individual health care tax credit for his
insurance costs, he could purchase a health plan in harmony with
The current employer-based health insurance system makes
purchasing individual coverage prohibitive to many people: to the
unemployed and the underemployed, to people whose employer-chosen
plans do not fit their individual or family health care needs, and
to people like John Smith who have moral objections to paying for
controversial items in their employer's health plan.
Remedies for the Smiths of the
What John Smith and others like him need are more choices that
would yield higher satisfaction and lower costs. It is a long way
from the present system of limited choice, low satisfaction, high
cost, and constricted options to a new system that would empower
individuals economically and ethically. One of the most promising
developments in consumer-based health care reform is the
state-based health insurance exchange, a single market that can
offer a wide variety of health plan options.
Properly designed, an HIE can create a state-wide health
insurance market for all kinds of health plans. Think of a farmers'
market: a single location where anybody can voluntarily purchase a
variety of items. An HIE can do the same with health insurance: A
wide variety of insurance products would be available, and anybody
HIEs have a number of advantages, including:
- Insurance Portability: When individuals are able to
purchase health insurance for themselves in a HIE marketplace, the
insurance belongs to them. Even if they change jobs, move, or quit
working and retire, they own the policy and can keep the same
health insurance if they so choose.
- Increased Diversity of Plans: An open market for health
insurance plans would allow consumers to organize their health care
interests-both economic and ethical-and create demand that would
lead to the creation of new health insurance products. For example,
faith-based organizations might choose to rate or sponsor health
insurance plans that accord with their moral principles.
Further policy changes would make the HIE more effective. These
- State-Level Deregulation: Among the 50 states, insurance
providers are subject to at least 1,824 mandates for medical
services, treatments, procedures, and providers. Twenty-nine states require
coverage for contraceptives, and 15 states mandate expensive
in-vitro fertilization (IVF) coverage.
Reducing the number of mandated services would allow the insurance
industry to respond with more flexibility to consumer demands and
offer a wider variety of coverage. Mandates requiring insurance
plans to cover procedures like hair transplants-a practice that is
unlikely to elicit moral objections, but many might not think they
should have to subsidize-for example, should be eliminated.
Likewise, coverage of procedures like IVF-an expensive procedure to
which moral objections have been raised-should be optional, not
mandated by states. The more consumer control there is, the more
space there will be for the individual conscience.
- Tax Equity: A refundable health care tax credit for
individuals would level the playing field between what an employer
may offer and what an individual can buy for himself. President
Bush recently proposed a measure to accomplish this. In the absence
of this tax reform, employers could designate the health insurance
exchange itself as their "plan" for the purpose of federal and
state taxes. An employer's defined contribution on behalf of an
employee would then be tax free, just as it would be for
conventional employer-based health insurance, and the employee
would have the freedom to select a plan of his choice.
State-level health insurance exchanges present a promising
opportunity to offer greater freedom of choice and freedom of
conscience. They would give individuals and families access to
greater choice, including health plans sponsored or endorsed by
religious groups or others whose moral convictions shape their
views of controversial health care practices. Short of
congressional action to reform the tax treatment of health
insurance, state action to create health insurance exchanges is the
best way for individuals and families to secure personal, portable,
affordable health insurance in keeping with their convictions.
Connie Marshner is a researcher and
writer on family and cultural issues based in Virginia.
Moffitt, "The Rationale for a Statewide Health Insurance Exchange,"
Heritage Foundation WebMemo No. 1230, October 5, 2006.
information about the merits of state HSEs, see Nina Owcharenko,
Edmund Haislmaier and Robert E. Moffit, Ph.D., "Competition and
Federalism: The Right Remedy for Excessive Health Insurance
Regulation," Heritage Foundation WebMemo No. 1060, May 5,
2006; Edmund Haislmaier, "The Significance of Massachusetts Health
Reform," Heritage Foundation WebMemo No. 1035, April 11,
2006; and Edmund Haislmaier, "Issues 2006: State-Based Health Care
Solutions," The Heritage Foundation, 2006, at www.heritage.org/research/features/issues/issuearea/Healthcare.cfm
Matthews, Director, Council for Affordable Health Insurance,
testimony before the Subcommittee on Health, Committee on Energy
and Commerce, U.S. House of Representatives, June 28, 2005, p. 4,
at www.cahi.org/cahi_contents/issues/MMChoiceTestimony.pdf (April