The President and congressional leaders are wedded to the "Big
Bang" approach to health care legislation, ultimately overhauling
one-sixth of the American economy through one giant,
1,000-plus-page bill. Notwithstanding rhetoric to the contrary, the
President and the congressional leadership are not apparently
interested in even discussing any health policy alternatives
offered by conservatives in Congress.
In fact, the congressional leaders have gone so far as to
dismiss the GOP as "the party of no" on health care policy. But, as
all fair-minded health policy analysts know, this is utterly
untrue. One may disagree with the minority's legislative proposals,
but that does not mean that they are either vacuous or
Three major bills sponsored by congressional Republicans contain
promising conservative approaches to health care reform. They
address the President's key objectives for fixing the health care
system while minimizing Washington's role in the future of health
care. Conservative proposals lower costs, expand accessibility,
create portability, and promote healthy behavior, all while putting
the consumer back in the driver's seat of health care reform.
Reforming Unfair Tax Laws
There is an enormous consensus among economists, including
prominent economists within the Obama Administration, on the need
to reform the current tax treatment of health insurance. Tax breaks
for health insurance disproportionately favor the wealthy and those
who get their health coverage through their employers. This tax
inequity amounts to roughly $300 billion each year and encourages
wealthier Americans to buy unneeded health benefits.
The Patients' Choice Act of 2009 (H.R. 2520 and S. 1099),
sponsored by Congressmen Paul Ryan (R-WI) and David Nunes (R-CA)
and Senators Tom Coburn(R-OK) and Richard Burr (R-NC) would replace
the existing system of $300 billion in tax breaks with a universal
system of tax credits. Regardless of income or employment status,
families would receive $5,700 and individuals would receive $2,300.
Low-income families would receive further assistance through a
supplemental debit card with roll-over funds.
The Improving Health Care for All Americans Act (H.R. 3218),
sponsored by Congressman John Shadegg (R-AZ), would allow Americans
with employer-based coverage to keep it and would also extend tax
breaks to Americans choosing to purchase insurance on their own.
Americans who pay income taxes would receive tax credits of $5,000
for a family and $2,500 for individuals. Those who do not pay
income tax would instead receive a voucher for the same amount.
The Empower Patients First Act (H.R. 3400), sponsored by
Representative Tom Price (R-GA), would reverse current tax
inequality by extending tax credits and deductions to all
Americans, regardless of whether they receive their insurance from
the employer or purchase it individually.
Encourage States to Take Bold
Rather than trying to create a one-size-fits-all solution in
Washington and impose it on the states, the federal government
should instead clarify only the broad goals of a reformed health
insurance system and encourage states to take the lead in devising
the best ways to achieve those goals. Several states have already
begun enacting reform, and though these changes are not always
successful, pursuing reform at the state level allows the rest of
the country to observe what works and what does not.
Take, for example, Tennessee, Massachusetts, and Utah. In
Tennessee, state legislators enacted TennCare, which replaced the
original Medicaid program to offer managed care to all low-income
residents. TennCare offered expensive, highly subsidized health
care paid for by restricting reimbursement rates to doctors and
hospitals. This approach failed dramatically and was abandoned
under the leadership of a Democratic governor. But the Tennessee
experiment served as a lesson for other states that may have
entertained similar proposals.
In the case of Massachusetts, then-Governor Mitt Romney and
state legislators enacted compromise legislation that included an
individual mandate, new insurance market reforms, and a dramatic
reform in health care financing, which redirected existing
government subsidies away from institutions to individuals and
As a policy matter, the Massachusetts reform is a classic "mixed
bag." The state has achieved 97 percent coverage, its uncompensated
care costs have declined by almost 40 percent, it pioneered market
reforms that have created portability and personal ownership of
private coverage, and it also experienced an unprecedented
expansion in private health insurance coverage. Because of
continued excessive regulation, benefit mandates, and
special-interest spending, the state has not been successful in
bending the health care cost curve downward. As former Governor
Romney recently noted, universal coverage, or something close to
it, does not translate into reduced health care costs.
Finally, Utah is currently implementing reform based on a
defined-contribution market using a paperless online health
insurance exchange. It, too, would enable citizens to own and
control their own health insurance and enable them to carry that
coverage from job to job.
The Health Care Partnership through Creative Federalism Act
(H.R. 5864), co-sponsored by Representatives Tom Price (R-GA) and
Tammy Baldwin (D-WI) would encourage bold liberal and conservative
health policy experimentation in the states. Similar bipartisan
legislation has been introduced in the Senate. Furthermore, both
the Improving Health Care for All Americans Act and the Empower
Patients First Act would allow individuals to purchase health
insurance across state lines to create a national marketplace for
Congress and the White House have proposed new federal mandates
that require employers to provide and individuals to buy a
government-specified level of health insurance coverage or pay a
tax. These mandates would, in effect, violate the President's
pledge not to raise taxes on the middle class.
A better way would combine automatic enrollment with financial
incentives to make it easier for individuals to obtain coverage.
The Empower Patients First Act allows employees to be automatically
enrolled in a basic employer-sponsored plan from which they can opt
out. The bill also creates incentives for small businesses to adopt
In addition, employers should be given new flexibility to offer
defined-contribution rather than defined-benefit health plans,
which would allow employees to choose their coverage instead of
taking the plan chosen by the employer. The Patients' Choice Act
also helps states expand coverage through auto-enrollment at state
and medical points of service.
State-Based Health Exchange
Utah has created an electronic health insurance exchange that
requires only two state employees to administer. State exchanges,
paired with defined-contribution benefits provided by employers,
allow employees to keep the benefits of enrolling in an
employer-sponsored plan while still having control over their
coverage decisions. Group insurance perks (such as
non-discrimination for pre-existing conditions) still apply, but
employees would be able to use an employer's contribution on any
plan they choose.
The Empower Patients First Act would create health plan portals
at the state level that are similar to Utah's system. The Improving
Health Care for All Americans Act would create new pooling
mechanisms that allow group insurance to be offered by individual
membership associations as well as by employers. This would allow
Americans to get their health insurance from churches, alumni
associations, trade associations, and other civic groups.
The Patients' Choice Act would require the federal government to
work with states in order to create exchanges. Plans offered under
the exchange would meet the same standards as those enjoyed by
Members of Congress and other federal employees. Participating
insurers would not be allowed to discriminate again pre-existing
conditions, and independent-risk adjustment would keep insurers
from cherry-picking healthy individuals to cover. Lastly, the act
would allow pooling arrangements between exchanges of different
Crushing State Innovation
The key feature of the massive House and Senate health bills,
endorsed by the congressional leadership, is that they centralize
key decision-making in Washington and effect a massive transfer of
regulatory authority from the states to the federal government.
Combined with fines and penalties, taxes and mandates, the major
House and Senate health bills would restrict Americans' individual
freedom. The country deserves better.
Health care policies embodied in leading conservative
legislative proposals--the Patients' Choice Act, the Improving
Health Care for All Americans Act, and the Empower Patients First
Act--are viable alternatives to the top-down approach endorsed by
the congressional leadership. As the President indicated, there is
no partisan monopoly on good ideas in health care policy.
is Policy Analyst in, and Robert E. Moffit, Ph.D., is Director of the Center
for Health Policy Studies at The Heritage Foundation. Kathryn Nix,
a Heritage Foundation intern, contributed to the research for this