Free-Market Alternative

By Grace-Marie Turner

The debate will be different this time around. When Hillary Clinton first attempted an overhaul of our health sector, she was no learned hand at politics. But the health plan that her presidential campaign released last month is much more politically attuned and lacks the hubris of those 1,342 pages of legislation the White House dropped on Congress 14 years ago. Today’s talking points (at variance with the actual details of her plan) stress choice, affordable private insurance, and no new government bureaucracy.

Her proposal foreshadows the much larger debate to come over universal coverage and the role of government in our health sector. The debate is being ignited now by the fight to reauthorize legislation that provides health insurance for children, but it’s by no means the only change from years past.

Americans are unhappier today with private insurance and more worried about losing their own coverage than they were 14 years ago. The managed-care revolution of the 1990s, which many people equate with HMOs denying them care, has left a sour aftertaste with wary consumers.

Many American employers are eager to shed the responsibility of providing health insurance to their workers. With the cost of a job-based health-insurance plan for a family now topping $12,000 a year, many employers are nervous about whether they can continue offering coverage. As a result, even workers who have insurance today are worried about losing it in the future.

And we are being pilloried at home and abroad for having 47 million people without health insurance. Europeans truly believe that we have a permanent underclass of 47 million poor citizens who have absolutely no access to health care, and Michael Moore and others with a liberal agenda throw fuel on the fire by condemning the U.S. health-care system as one of the worst in the world.

So in this new climate, the debate has shifted. More people are worried and open to the argument that universal coverage is the solution.

The immediate debate has shifted to universal coverage for children. The children’s health-insurance legislation that President Bush has vetoed would, he believes, quickly have become a new middle-class entitlement.

There is ample evidence to support that: Under the legislation, states could extend government-provided health insurance to middle-income families, including families of four earning up to $83,000 a year in New York and $72,000 in New Jersey. Virtually any other state could put children in families earning $61,000 a year on this taxpayer-supported health-insurance program — crowding out the private coverage that many of them already have.

Expansion of government programs is a key element of the Left’s strategy. Senator Clinton’s plan would expand Medicare and SCHIP (the State Children’s Health Insurance Program) and create a new “Medicare-like” program for working Americans. But she, like most other Democratic presidential candidates, would try to achieve universal health-insurance coverage by requiring everyone to have coverage, either through a government plan, employer group, or a federal arrangement.

This “individual mandate” would mean that Washington would dictate the terms of the coverage and decide how much individuals and employers would be required to pay for the policy. The insurance market would quickly morph into a government-regulated utility. This would be a giant leap toward government control of our health sector and spell a loss of individual freedom over health-care and health-insurance choices.

So what is the alternative?

A conservative alternative will show people that the same forces that guide the rest of our economy can also be brought to bear in the health sector. That means freeing health insurers from bureaucratic controls — control by state and federal governments and by corporate bureaucracies — that keep people from being able to buy the kind of health insurance that suits their families and resources.

We can create a health-care system that fits our 21st-century economy by putting in place new policies that respond to consumer demands for more affordable health insurance and more control over health-care decisions. Here’s how.

●  Health insurance should be portable from job to job, and people should be able to get the same tax break when they buy insurance on their own as they do when they get coverage at work.

●  In addition, Congress could offer new subsidies for those left out of the system to help them purchase private insurance. Eighty percent of the uninsured are workers or their dependents who can’t afford to buy coverage on their own or make the co-payments on policies offered at work. Providing refundable tax credits or health certificates would allow them to buy coverage and would be an important investment in protecting our free-market system.

●  Further, Congress could allow those eligible for public programs to apply the value of the subsidies for which they are eligible toward the purchase of private health insurance. This would mean, for example, that citizens could take the value of their Medicare, Medicaid, or SCHIP subsidy and apply it toward private coverage.

●  Legislators could create new opportunities for people to purchase group health insurance, with reasonable consumer protections, through organizations such as churches, labor unions, and professional associations.

●  And people should be able to buy health insurance in a national market rather than being restricted to purchasing only those policies regulated by the state where they live. Interstate banking has transformed the financial-services sector; allowing interstate health insurance could do the same.

This combination of a general tax deduction or credit, with additional financial assistance for lower-income people, and the flexibility to turn government benefits into defined contributions would retarget existing funds to increase access to private health insurance. And more flexible options for purchasing insurance would inject much-needed competition into the health-insurance system.

Building on a base of private coverage would both be more economical for taxpayers and also would give workers eligible for public subsidies the dignity of private insurance coverage, with its broader access to private physicians and medical facilities.

These ideas would sharpen the debate between those who believe that the answer to the problems in the health sector lies in much more government involvement through expansion of public programs, and those who believe that the free market can and does have much more potential to get health insurance costs down and provide people with greater access to coverage and more choices.

At the end of the day the levers of power over health-care decisions will be controlled either by individuals and their families or by centralized bureaucracies, public and private. Whether the free market prevails will largely depend upon our success in communicating that the free market is the best way to get to a more affordable, more flexible system in which doctors and patients — not remote bureaucracies — make health-care decisions in the future.

— Grace-Marie Turner is president of the Galen Institute, a nonprofit research organization focusing on free-market solutions to health reform.

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By Grace-Marie Turner

The debate will be different this time around. When Hillary Clinton first attempted an overhaul of our health sector, she was no learned hand at politics. But the health plan that her presidential campaign released last month is much more politically attuned and lacks the hubris of those 1,342 pages of legislation the White House dropped on Congress 14 years ago. Today’s talking points (at variance with the actual details of her plan) stress choice, affordable private insurance, and no new government bureaucracy.

Her proposal foreshadows the much larger debate to come over universal coverage and the role of government in our health sector. The debate is being ignited now by the fight to reauthorize legislation that provides health insurance for children, but it’s by no means the only change from years past.

Americans are unhappier today with private insurance and more worried about losing their own coverage than they were 14 years ago. The managed-care revolution of the 1990s, which many people equate with HMOs denying them care, has left a sour aftertaste with wary consumers.

Many American employers are eager to shed the responsibility of providing health insurance to their workers. With the cost of a job-based health-insurance plan for a family now topping $12,000 a year, many employers are nervous about whether they can continue offering coverage. As a result, even workers who have insurance today are worried about losing it in the future.

And we are being pilloried at home and abroad for having 47 million people without health insurance. Europeans truly believe that we have a permanent underclass of 47 million poor citizens who have absolutely no access to health care, and Michael Moore and others with a liberal agenda throw fuel on the fire by condemning the U.S. health-care system as one of the worst in the world.

So in this new climate, the debate has shifted. More people are worried and open to the argument that universal coverage is the solution.

The immediate debate has shifted to universal coverage for children. The children’s health-insurance legislation that President Bush has vetoed would, he believes, quickly have become a new middle-class entitlement.

There is ample evidence to support that: Under the legislation, states could extend government-provided health insurance to middle-income families, including families of four earning up to $83,000 a year in New York and $72,000 in New Jersey. Virtually any other state could put children in families earning $61,000 a year on this taxpayer-supported health-insurance program — crowding out the private coverage that many of them already have.

Expansion of government programs is a key element of the Left’s strategy. Senator Clinton’s plan would expand Medicare and SCHIP (the State Children’s Health Insurance Program) and create a new “Medicare-like” program for working Americans. But she, like most other Democratic presidential candidates, would try to achieve universal health-insurance coverage by requiring everyone to have coverage, either through a government plan, employer group, or a federal arrangement.

This “individual mandate” would mean that Washington would dictate the terms of the coverage and decide how much individuals and employers would be required to pay for the policy. The insurance market would quickly morph into a government-regulated utility. This would be a giant leap toward government control of our health sector and spell a loss of individual freedom over health-care and health-insurance choices.

So what is the alternative?

A conservative alternative will show people that the same forces that guide the rest of our economy can also be brought to bear in the health sector. That means freeing health insurers from bureaucratic controls — control by state and federal governments and by corporate bureaucracies — that keep people from being able to buy the kind of health insurance that suits their families and resources.

We can create a health-care system that fits our 21st-century economy by putting in place new policies that respond to consumer demands for more affordable health insurance and more control over health-care decisions. Here’s how.

●  Health insurance should be portable from job to job, and people should be able to get the same tax break when they buy insurance on their own as they do when they get coverage at work.

●  In addition, Congress could offer new subsidies for those left out of the system to help them purchase private insurance. Eighty percent of the uninsured are workers or their dependents who can’t afford to buy coverage on their own or make the co-payments on policies offered at work. Providing refundable tax credits or health certificates would allow them to buy coverage and would be an important investment in protecting our free-market system.

●  Further, Congress could allow those eligible for public programs to apply the value of the subsidies for which they are eligible toward the purchase of private health insurance. This would mean, for example, that citizens could take the value of their Medicare, Medicaid, or SCHIP subsidy and apply it toward private coverage.

●  Legislators could create new opportunities for people to purchase group health insurance, with reasonable consumer protections, through organizations such as churches, labor unions, and professional associations.

●  And people should be able to buy health insurance in a national market rather than being restricted to purchasing only those policies regulated by the state where they live. Interstate banking has transformed the financial-services sector; allowing interstate health insurance could do the same.

This combination of a general tax deduction or credit, with additional financial assistance for lower-income people, and the flexibility to turn government benefits into defined contributions would retarget existing funds to increase access to private health insurance. And more flexible options for purchasing insurance would inject much-needed competition into the health-insurance system.

Building on a base of private coverage would both be more economical for taxpayers and also would give workers eligible for public subsidies the dignity of private insurance coverage, with its broader access to private physicians and medical facilities.

These ideas would sharpen the debate between those who believe that the answer to the problems in the health sector lies in much more government involvement through expansion of public programs, and those who believe that the free market can and does have much more potential to get health insurance costs down and provide people with greater access to coverage and more choices.

At the end of the day the levers of power over health-care decisions will be controlled either by individuals and their families or by centralized bureaucracies, public and private. Whether the free market prevails will largely depend upon our success in communicating that the free market is the best way to get to a more affordable, more flexible system in which doctors and patients — not remote bureaucracies — make health-care decisions in the future.

— Grace-Marie Turner is president of the Galen Institute, a nonprofit research organization focusing on free-market solutions to health reform.

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