Private insurers are part of the solution to US healthcare costs

Meaningful health care reform has to be national. But the answer is not to subject the whole country to ideas that don't work at the state level. What the country needs is a shift in priorities, from extending coverage to attacking costs, says Investor's Business Daily (IBD).

Once that decision is made – to make affordability, not scope of coverage, the first objective – then there's a clear choice to make. Policymakers have just two options if they want to reduce the cost of something: They can stimulate competition or impose price controls.

  • Controls can be in the form of regulations or take-it-or-leave it deals based on the government's buying power.
  • The more they work to hold down costs, the more they limit services and choices for the consumer.
  • If they don't work, they let programmes grow into budget-eating monsters, like Medicare.

    Control is the norm in most of the world's health care. Competition is the insurgent model. It's getting a test in the Medicare prescription drug programme, which actually has cost less than expected, says IBD:
  • Its key idea is to give every individual a real choice of insurers and plan types, with incentives for buying frugally and choosing the one that delivers the best coverage and care for the money.
  • The incentives could be provided by tax-favoured savings accounts (HSAs, expanded to cover premium payments as well as out-of-pocket costs) and limits on the tax-deductibility of premiums.
  • The harder part would be to provide the true competition, which is now being held back by a system of state-by-state regulations that load costly mandates on insurers and stands in the way of a national insurance market.

    Congress created the current regulatory regime and could get rid of it (there's no constitutional barrier here), but the political climate would have to change first. Democrats will have to stop scoring cheap points by demonising the insurance business. They'll have to recognise that insurers are part of the solution, not the problem, and that profit in health care is not a dirty word, says IBD.

    Source: Editorial, A Clear Choice, Investor's Business Daily, February 1, 2008.

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    FMF Policy Bulletin/ 12 February 2008
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