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It is an honor to be invited here today. Thank you Mr. Secretary, fellow panelists, and distinguished guests?
?Gail has shown us that we are entering a new world of health care.
We finally can see that the light at the end of the health care tunnel isn?t the train of socialized medicine coming at us but, instead, the light of a new health care system that empowers free markets and free choices for consumers.
Ownership society: President Bush has offered new ideas based upon a new vision, one built around an ownership society where consumers will have more options in how they obtain health insurance and health care ? ownership that, in his words, brings ?security, dignity, and independence.? This ownership society creates new incentives to put the genius of the American consumer to work in transforming our health sector.
I don?t think it is overstating the case to say that we now have an historic opportunity to transform American health care from the bureaucratic, paternalistic system that it has been to one that is more streamlined, efficient, and accountable to the needs of every American.
Fear not: But some people are afraid of this new era, often called consumer-directed health care, because it brings change. Yet we know that change is essential to address the high costs of care, the lack of choice, lack of competition, uneven quality of care, and the need to help the many people who don?t have health insurance.
The changes shouldn?t be frightening because they are based upon allowing the health sector to be guided by the same principles that govern the rest of our economy: competition and free choice. (This doesn?t mean asking a patient who is nearly unconscious when he is wheeled into an emergency room after an accident whether he wants an MRI or an X-Ray. It does mean people sitting around their kitchen table and deciding how they want to protect themselves financially if illness strikes or an accident happens.)
Options: This new era of consumer-directed care can take many forms. It may be in providing more choices of doctors and health plans, in better information, or in new financial arrangements that give consumers more options and more control over their health spending. The common goal is to engage consumers in making better use of health care resources.
Health Savings Accounts are the bright new star in the consumer-directed health care universe. They work much like 401(k)s or IRAs. HSAs allow individuals and/or employers to put money aside tax free to pay for routine health costs. Consumers pay directly for the health services they prefer while still having protection against high-cost medical care. Whatever people don?t spend in their accounts can be rolled over year to year and saved for future needs. HSAs are portable and can stay with a worker even when changing jobs.
To enhance HSAs, President Bush wants to allow anyone to deduct the cost of the health insurance policy they must buy to open an HSA.
So what is some of the early experience with HSAs, and their sister Health Reimbursement Arrangements?
? Companies that have instituted consumer-directed plans have seen their health costs moderate, level, and even fall when they engage employees as partners rather than adversaries in managing health costs.
? HSAs and other consumer-driven plans have built-in incentives for prevention, and early experience shows use of preventive care up 25% or more.
? Plans have new incentives to offer consumer-friendly options, like better chronic care management or a nurse hotline that a mother with a sick child can call to get advice that might save her an emergency room visit in the middle of the night.
Consumer-directed care is starting to reshape the health sector around the needs of people, not bureaucracies.
The Information Revolution: The Internet allows people easy access to a wealth of medical information that was available only to professionals a few years ago. As people become more empowered with information, they want access to the care and services that they believe will improve their health ? and even save their lives.
It?s impossible for a paternalistic, bureaucratically driven system to stem this tide or to cater to the very different needs of millions of patients and consumers.
So the era of consumer-driven care is here to stay.
New proposals: But more changes are needed to allow this fledgling movement to take wing.
Fortunately, the president has offered answers. Several examples:
1. Small business: Because small businesses struggle hardest to provide health insurance for their employees, President Bush would help them establish HSAs for their workers by giving them a rebate for making deposits to their workers? accounts.
2. The uninsured: Many of the uninsured earn too much to qualify for public programs, but make too little to have the good, high-paying jobs that provide health insurance or to afford to buy coverage on their own.
President Bush has proposed providing a new kind of subsidy to help the uninsured purchase coverage, and his idea is gaining acceptance across the political spectrum.
These new financing mechanisms, called refundable tax credits, will enable an army of consumers to shop for the health policies that best suit their needs. And they will force the insurance industry to cater to them, not to a distant bureaucracy.
Individual ownership of health insurance would be a fundamental and positive change in our health system, and refundable tax credits, along with HSAs, can help to make that happen.
Cross-state purchasing: But people need more options in buying health insurance. In one of his most innovative initiatives, President Bush would allow people to purchase policies across state lines.
Right now if you live in New Jersey, for example, health insurance policies can cost $3,000 or more a month, largely because the state says people can wait until after they get sick to buy insurance ? and still pay the same premiums as others who have been paying all along. That?s like saying that you can wait to buy homeowner?s insurance after your house is on fire ? at the same price as your neighbor who has been paying premiums for years.
This drives up the costs, as do an excessive number of mandates on what the insurance must cover. Citizens have two choices: either pay the price or do without. The president?s proposal gives them a third option ? to look across state lines for a better deal.
We are well on the way to saving and strengthening the private health care system in America because of the policies that President Bush has signed into law and the new proposals he is offering for his second term.
Empowering consumers with new resources and new incentives will be the next revolution in health reform. It will force the system to provide better, more affordable care, and it will provide a climate for continued innovation to keep America?s health care system strong to produce tomorrow?s medical miracles.
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