Current efforts by Congress to "reform" the health care system
are centered on several flawed policy initiatives that will
transfer more power and decisions to Washington and away from
patients and families.
Rather than create a massive government-based health care system
and dislocate people from their existing private coverage,
policymakers should focus on putting the health care system on a
path where individuals and families are in control of their health
care dollars and decisions.
Shortfalls of the Health Care
The following five provisions are the cornerstone of the House
and Senate bills and unavoidably result in legislation taking
health care reform in the wrong direction.
1. New Public Plan and Federal Exchange. Both the House
and Senate bills would create a new government-run health care plan
through the establishment of a federally run national health
insurance exchange. The result: widespread erosion of private
insurance and substantial consolidation of federal control over
health care through the exchange. As is evident in the details
of the House bill (H.R. 3200), there is no level playing field for
competition between the government plans and private health plans.
Plus, the incentives in the legislation guarantee that millions of
Americans will lose their existing employer-based coverage.
2. Federal Regulation of Health Insurance. Both the House
and Senate bills would result in sweeping and complex federal
regulation of health insurance. Moreover, it would take oversight
away from states and concentrate it in Washington.
3. Massive New Taxpayer-Funded Subsidies. Both the House
and Senate would expand eligibility for Medicaid, but they would
also extend new taxpayer-funded subsidies to the middle class. Such
commitments would result in scores of Americans dependent on the
government to finance their health care. This is unfortunate because
Congress could have reformed the tax treatment of health insurance
to enable people to keep their existing private coverage and buy
better private coverage if they wished to do so.
4. Employer Mandate. Both the House and Senate bills
would impose an employer mandate for employers who do not offer
coverage and for those whose benefits do not meet a new federal
standard. An employer mandate would hurt low-income workers the
most and would also stifle much-needed economic growth.
Employer mandates are passed on to workers in the form of reduced
wages and compensation. This is exactly the wrong prescription for
businesses, especially during a recession.
5. Individual Mandate. Both the House and Senate bills
would require all people to buy health insurance. There is no doubt
that such a mandate would result in a tax increase on individuals
and families whose health insurance does not meet the new federally
determined standards. This means that Congress will, for the first
time, force Americans to buy federally designed packages of health
benefits, even if they do not want or need those benefits.
It also means that health benefits will tend to become
increasingly costly as powerful special interest groups and
representatives of the health industry lobby intensively to expand
the legally mandated health benefits, medical treatments and
procedures, and drugs that all Americans must buy under penalty of
A Better Direction for Health Care
Congress should stop and take a step back from these divisive
House and Senate measures. Instead of trying to overhaul one-sixth
of the American economy and seize an unprecedented amount of
political control over health care decisions and dollars,
policymakers should consider proceeding with smaller, incremental
improvements. Policymakers need to proceed slowly and deliberately,
making sure that the initial steps they take are not disruptive of
what Americans have and want to keep, actually work, and do not
result in costly and damaging and unintended consequences. There
are three broad areas where Members can and should find
1. Promote State Innovation. Congress should preserve the
states' autonomy over their health care systems and give them
greater legal freedom to devise solutions that meet the unique
characteristics of their citizens. In addition, individuals should
also have the freedom to purchase coverage from trusted sources and
not be restricted by where they happen to live. This means that
Americans should be able to buy better coverage across state lines.
Congress should respect and encourage personal freedom and
2. Establish Fairness in the Tax Treatment of Health
Insurance. There is little disagreement that today's health
care tax policy--which favors coverage obtained through the
workplace--distorts the market and is inequitable. Instead of
expanding government-run programs like Medicaid, policymakers
should offer tax relief to those individuals who purchase private
health insurance on their own, regardless of where they work.
At the same time, Congress should make sure that tax relief goes
only to taxpayers. Congress should also devise a voucher program,
giving low-income citizens the opportunity to get private coverage
if they wish to do so. There is a broad bipartisan consensus that
Congress should help low-income working families with direct
assistance to enable them to get health insurance.
3. Get Serious About Entitlement Reform. Medicare and
Medicaid, the giant health care entitlement programs, are not only
increasingly costly, but they are also not delivering value to the
taxpayers. The best way to secure value to patients (not government
officials) is to compel health providers to compete directly for
consumer dollars by allowing seniors and the poor to choose the
coverage that is right for them using the money that is already
available to them in these programs. This will "bend the cost
curve" while at the same time allowing private-sector innovation to
Americans want to fix the problems in the health care
system--but not at the expense of their own coverage. It is time
policymakers recognize the lack of support for a major overhaul.
But instead of continuing to protect the status quo, Congress
should advance improvements that put the health care system on a
path to reform.
Such improvements should be focused on increasing choice and
competition not by turning control over to Washington but by
empowering individuals and families to control their health care
dollars and decisions.
Owcharenko is Deputy Director of the Center for Health Policy
Studies at The Heritage Foundation.
Edmund F. Haislmaier, "Micromanaging Americans'
Health Insurance: The Impact of House and Senate Bills," Heritage
Foundation WebMemo No. 2558, July 23, 2009, at http://www.heritage.org/Research/HealthCare/wm2558.cfm;
Dennis G. Smith, "Undercutting State Authority: The Impact of the
House and Senate Health Bills," Heritage Foundation WebMemo
No. 2559, July 23, 2009, at http://www.heritage.org/Research/HealthCare/wm2559.cfm.