Halfacre On Health Care

By Mike Halfacre

With the election of Republican Scott Brown to the Senate from the bluest of blue states- Massachusetts- the healthcare debate will change in Washington DC. Brown specifically campaigned as the 41st vote against the healthcare bill being considered in the Senate and the voters of Massachusetts elected him.
More than that, Brown’s election became a rallying point for people all over the United States who saw his election as a way to tell Washington that they weren’t buying what Congressional Democrats were selling on healthcare legislation. Money and manpower poured into the Brown campaign in the closing weeks of the election from all over the country. The message from voters to Congress is now clear: ignore us at your peril in 2010.

The President and Congressional leaders should take this opportunity to refocus the healthcare debate. There is an old saying: you don’t kill a fly with a sledgehammer. Clearly there are reforms which should be made to the healthcare system; the question is whether to take a market based approach or a one-size-fits-all, centrally planned government approach. I would argue forcefully for the former, and it seems as though the majority of Americans who say they oppose the current healthcare bill agree.

The United States has a health insurance problem, moreso than a healthcare problem. In most cases, the employer owns the insurance policy, and patients are completely disconnected from the actual cost of their healthcare. Would you give your credit card to someone you didn’t know and ask them to go food shopping for you- and not ask to see the receipt? Of course not. They’d have no incentive to shop for a good deal and might even buy things you didn’t want.

Yet this is exactly what happens every day in healthcare: you pay your $20 co-pay with no idea of what you’re paying for. It only costs you 20 bucks, so you don’t object, and your doctor knows that more than likely he’ll be paid for whatever procedures or tests he performs. Neither patient nor medical provider has proper incentives to increase healthcare quality and/or decrease its costs.

Your policy also covers a whole host of things that you may not want or need, yet you are forced to pay for them. If your cable TV company told you that in order to subscribe you had to pay for HBO, Cinemax, and Starz, whether you wanted to or not, you’d think they were crazy.
True health insurance reform requires implementing a “patient-centered” approach which will give the proper incentives, responsibilities and choices to both patient and healthcare provider.

We can do this in the following ways:

1) Encourage individual ownership of insurance policies-The current tax rules that allow employers to own our insurance and receive the tax benefit for it, should instead provide those deductions to individuals. Businesses would then be free to pay a large portion of the money they save on an employee’s healthcare back to the employee in salary or other benefits of equal value.

2) Encourage Health Savings Accounts- These accounts empower individuals to monitor their health care costs and create incentives for individuals to use only those services that are necessary.

3) Allow interstate purchasing of insurance. Some states have more affordable health insurance because they have fewer bells and whistles. Consumers should be able to decide which benefits they need and what prices they are willing to pay.

4) Reduce the number of mandated benefits that insurers are required to cover- Let consumers choose and price their own benefits. This also will increase individual responsibility and “connectedness” to their healthcare.

5) Reallocate the majority of Medicaid spending into simple vouchers for low-income individuals to purchase their own insurance- An income based voucher program would eliminate the massive bureaucracy needed to sustain the current, soon to be bankrupt (within 10 years) Medicaid system.

I believe these 5 policy recommendations would unleash the power of the free market on our healthcare system and dramatically drive down the costs of health insurance. Those reduced costs would then make it more attractive to younger people, many of whom currently find the cost of health insurance prohibitive, to buy insurance. Enlarging of the risk pool with younger (read: healthier) people would spread costs over a larger base, thereby further lowering healthcare costs. For once we could see a spiral downward in healthcare costs instead of upward, and it would be done through free market incentives, rather than the government trampling our rights by forcing us to buy health insurance- or else.

Whether through polls or recent elections, the American people have consistently and clearly shown they want Congress to re-think their approach on healthcare reform. Ignore them at your peril.