In the final days of the Pennsylvania primary, Barack Obama flooded the airwaves with an ad attacking Hillary Clinton for proposing a health care plan that would garnish workers’ wages if they failed to buy health insurance. Clinton responded by accusing Obama of pushing a plan that would leave 15 million Americans “out in the cold.”
Regardless of who wins the Democratic nomination for president, though, the party’s candidate will offer a plan that would mean more regulations, an explosion in federal spending and drastically less control by consumers over their own health care. Under an alternative conservative vision, a consumer-centered approach would harness patient choice to secure improved results at lower prices.
The problem with the plans from Clinton and Obama is that they both would retain our fundamentally flawed health care system while adding new programs and mandates to plug gaps in coverage. That current system encourages all participants (payers, insurers, providers and patients) to engage in a giant game of cost-shifting in which each party tries to stick one or more of the others with a bigger share of the bill.
What America’s health care system desperately needs are structural changes that create real competition. The key test is whether or not health care reform puts in place such changes to maximize the ability of many individuals to make basic choices about their own coverage and medical care. Principles to judge health care plans include:
1) Make consumers the key decision makers. In a consumer-centered health care system, individuals make the crucial decisions medical treatment and insurance. The government’s role should be limited to providing means-tested financial assistance and ensuring transparent pricing to increase consumer choice.
2) Allow individuals to buy and own their coverage. When a parent purchases breakfast cereal for a child, the customer is the parent, not the child. Although it’s probably not a good idea for parents to allow younger children to choose a cereal, it’s clearly a good idea to allow consumer — not their employers or the government — to choose their own health insurance.
3) Empower consumers to choose the right plan for them. The most basic decision consumers must be allowed to make is which health insurance plan to buy. Even the most sophisticated consumer may not have all the relevant information, or sufficient time to gather and analyze it, when deciding among providers and treatments. A consumer-oriented system makes the facts and expertise available to assist consumers.
4) Remove barriers that prevent a range of choices. Market competition works when consumers are free to choose among many options and when suppliers are free to innovate in meeting consumer demands and preferences. A precondition to any well-functioning, consumer-centered market is the removal of regulations that unduly restrict either consumer options or supplier innovation.
5) Make prices transparent to consumers. Government can play a legitimate role in ensuring a market functions fairly and smoothly by establishing basic rules for clear and up-front prices so consumers may “comparison shop.” Government already requires grocers to include the unit price for products sold by weight or volume, for instance, and also requires lenders to disclose the effective annual percentage rate (APR) of a loan to prospective borrowers. For the health care system, lawmakers and stakeholders will need to agree on appropriate standards for calculating and communicating prices to consumers.
6) Consumers must have regular opportunities to choose. For a market to be truly consumer-centered, individuals must be able — at least periodically — to reconsider past purchasing decisions and make different choices. A market that restricts consumer choice by unreasonably locking consumers into decisions has the effect of shifting the balance of power in the market back to suppliers.
Liberal pundits love to claim the U.S. health care system features “the most market competition.” This is a far cry, though, from saying America has a free market in health care. We don’t. The system is built on World War II-era wage and price controls. It needs to be refocused on the consumer.
True health care reform would fundamentally change the system instead of merely expanding it or micromanaging the design of insurance plans. By changing the basic structure and incentives of health care markets, consumer-centered reform will maximize value for the price in insurance and medical care.
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