Ealth Care Reform: Rational Alternatives to the Congressional Leadership Bills

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-pluspage
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 inconsequential.
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 Action. 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 families.
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 specialinterest
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 coverage choices.
Defined-Contribution Employer Plans. 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 auto-enrollment.
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