Car insurance doesn’t pay to fill up your gas tank, why does health insurance pay for your flu shot? ABC’s John Stossel explores how third-party payments are driving up are nation’s health care costs:
Obamacare would only make the status quo worse. Heritage scholars Bob Moffit and Nina Owcharenko explained how when Obama first unveiled his plan last year:
The current structure of third-party payments—which Senator Obama wants to preserve—creates serious problems in the delivery of care. In this system, insurers and medical professionals have little direct accountability to individuals, either as consumers of insurance or as patients. The existing financial and insurance arrangements compromise both the interests of consumers who demand health insurance that meets their individual needs and the interests of patients who demand the best and highest value of medical services. Insurance may encourage either too much or too little of certain types of care. As many prominent economists have suggested, the best policy response to that problem is to restructure the market to align the incentives of insurers, doctors, hospitals, and patients to ensure the delivery of value to patients.
The better policy approach is consumer driven health care. Heritage scholar Ed Haislmaier detailed six key principles of reform that will bring sanity to our nation’s health care system:
- Individuals are the key decision makers in the health care system. This would be a major departure from conventional third-party payment arrangements that dominate today’s health care financing in both the public and the private sectors. In a normal market based on personal choice and free-market competition, consumers drive the system.
- Individuals buy and own their own health insurance coverage. In a normal market, when individuals exchange money for a good or service, they acquire a property right in that good or service, but in today’s system, individuals and families rarely have property rights in their health insurance coverage. The policy is owned and controlled by a third party, either their employers or government officials. In a reformed system, individuals would own their health insurance, just as they own virtually every other type of insurance in virtually every other sector of the economy.
- Individuals choose their own health insurance coverage. Individuals, not employers or government officials, would choose the health care coverage and level of coverage that they think best. In a normal market, the primacy of consumer choice is the rule, not the exception.
- Individuals have a wide range of coverage choices. Suppliers of medical goods and services, including health plans, could freely enter and exit the health care market.
- Prices are transparent. As in a normal market, individuals as consumers would actually know the prices of the health insurance plan or the medical goods and services that they are buying. This would help them to compare the value that they receive for their money.
- Individuals have the periodic opportunity to change health coverage. In a consumer-driven health insurance market, individuals would have the ability to pick a new health plan on predictable terms. They would not be locked into past decisions and deprived of the opportunity to make future choices.