The wrong way to reform health care is fairly easy to describe. It involves large bureaucracies trying to keep 300 million patients and 900000 doctors from doing whatever they want to do. It erects a system in which people at the top have worthy social goals while everyone at the bottom faces perverse incentives to undermine the achievement of those goals. Wrong-way reforms fail for the same reason socialistic systems always fail almost everyone has a self interest in their failure.
The right way to reform health care is also fairly easy to describe. It gives 300 million patients and 900000 doctors good incentives to achieve worthy social goals. Right-way reform involves eliminating all of the perverse incentives faced by people at the bottom. Once that is done it really doesnt matter what people at the top think they become irrelevant. Right-way reforms succeed because everyone has a self interest in their success.
So far wrong-way reform has been Obamas way and the Congressional Democrats way while hardly anyone has stepped forward to endorse right-way reform.
Theres no sorrow toil or danger in that bright land to which I go"
Right-way reform begins with the recognition that we are all trapped in a dysfunctional system in which normal market forces have been systematically suppressed. Consequently we all have perverse incentives to make costs higher quality lower and access to care more difficult than would otherwise be the case.
To correct this state of affairs perverse incentives must be eliminated. And that means liberating people from the dysfunctional trap in which they find themselves.
Every doctor every patient every nurse and every hospital administrator knows where there is waste and could if motivated act to eliminate much of it. Everyone on the provider side knows ways of improving quality if only the incentives to do so were at hand.
One way of liberating doctors and patients is to get rid of third-party payment altogether. In markets where this has been done low-cost high-quality accessible care is the rule. Direct service doctors for example communicate with patients by telephone and e-mail they keep electronic medical records and prescribe electronically. They provide coordinated care and help patients get lower prices for diagnostic tests and specialists care. Overall they are very accessible and they lower the time cost as well as the money cost of care.
Walk-in clinics in shopping malls telephone and e-mail consultation services urgent care clinics surgicenters the international medical tourism market these are only a few of the many additional innovations that are possible when third-party payers are not dominating provider behavior.
Of course third-party payment cannot be completely eliminated nor should it be. Still sensible reforms throughout the health care system follow the same general principles. Unlike the command-and-control approach being spearheaded by the Obama Administration our ten point plan to solve problems focuses on liberating every part of the system. Here is what you can expect as a result:
1. Free the Doctor: Your doctor will be able to act as your agent rather than the agent of your insurance company your employer or the government and help you make the best purchases of drugs tests and specialist services. Your doctor will be able to communicate with you by telephone and email and provide other services that todays insurance wont pay for.
2. Free the Patient: You will be able to manage more of your own care and more of the money that pays for that care instead of having all your health care dollars controlled by your insurance company your employer or the government. You will also be able to purchase services you do not now get (e.g. telephone and email consultations and house calls) and avoid paying for services you dont want or need.
3. Free the Employee: Your employer will be able to help you obtain health insurance that is portable traveling with you when you change jobs or move in and out of the labor market. Today this is illegal is almost every state.
4. Free the Employer: Employers will be able to make a monthly fixed contribution to the premium for your personal health insurance much as they make matching contributions to 401(k) plans. In both cases the benefit belongs to the employee.
5. Free the Workplace: Employers will be able to give their employees choices between taxable wages and non-taxed benefits. If you are covered by a spouses plan you will be able to obtain higher wages instead of duplicate coverage. If you are a part-time worker you will be able to trade less pay for benefits you currently dont get. These choices are illegal under the current tax law.
6. Free the Uninsured: If you must purchase your own health insurance you will get the same tax relief that is currently given to employees with employer-provided coverage the opportunity to purchase insurance with pretax dollars.
7. Free the Kids: Children who have lost their private health insurance because of the lure of a free State Childrens Health Insurance Plan (S-CHIP) will be able to return to the private sector where access to care is much better. If you qualify the money S-CHIP now spends will be available to you to help pay for private insurance instead. The same opportunities will be available for enrollees in Medicaid.
8. Free the Parents: Instead of having one parent on Medicaid another in an employer plan and a child on S-CHIP public dollars will be used to help enroll all three in one private-sector family-friendly plan.
9. Free the Chronically Ill: Health plans will be able to specialize in treating such conditions as asthma diabetes cancer and heart disease. If you are chronically ill these plans will compete to meet your special needs and they will be rewarded based on their success.
10. Free the Early Retiree: Employers will be able to help retirees who are not yet old enough for Medicare to obtain low-cost high-quality health insurance with untaxed dollars just as they make pretax contributions to health insurance for their active employees. You will be able to pay your share of the premium with pre-tax dollars as well; and the insurance will be owned by you.
These ideas are explained in somewhat greater detail in this NCPA Brief Analysis and in much more detail in my Congressional testimony.
The wrong way to reform health care is fairly easy to describe. It involves large bureaucracies trying to keep 300 million patients and 900000 doctors from doing whatever they want to do. It erects a system in which people at the top have worthy social goals while everyone at the bottom faces perverse incentives to undermine the achievement of those goals. Wrong-way reforms fail for the same reason socialistic systems always fail almost everyone has a self interest in their failure.
The right way to reform health care is also fairly easy to describe. It gives 300 million patients and 900000 doctors good incentives to achieve worthy social goals. Right-way reform involves eliminating all of the perverse incentives faced by people at the bottom. Once that is done it really doesnt matter what people at the top think they become irrelevant. Right-way reforms succeed because everyone has a self interest in their success.
So far wrong-way reform has been Obamas way and the Congressional Democrats way while hardly anyone has stepped forward to endorse right-way reform.
Theres no sorrow toil or danger in that bright land to which I go"
Right-way reform begins with the recognition that we are all trapped in a dysfunctional system in which normal market forces have been systematically suppressed. Consequently we all have perverse incentives to make costs higher quality lower and access to care more difficult than would otherwise be the case.
To correct this state of affairs perverse incentives must be eliminated. And that means liberating people from the dysfunctional trap in which they find themselves.
Every doctor every patient every nurse and every hospital administrator knows where there is waste and could if motivated act to eliminate much of it. Everyone on the provider side knows ways of improving quality if only the incentives to do so were at hand.
One way of liberating doctors and patients is to get rid of third-party payment altogether. In markets where this has been done low-cost high-quality accessible care is the rule. Direct service doctors for example communicate with patients by telephone and e-mail they keep electronic medical records and prescribe electronically. They provide coordinated care and help patients get lower prices for diagnostic tests and specialists care. Overall they are very accessible and they lower the time cost as well as the money cost of care.
Walk-in clinics in shopping malls telephone and e-mail consultation services urgent care clinics surgicenters the international medical tourism market these are only a few of the many additional innovations that are possible when third-party payers are not dominating provider behavior.
Of course third-party payment cannot be completely eliminated nor should it be. Still sensible reforms throughout the health care system follow the same general principles. Unlike the command-and-control approach being spearheaded by the Obama Administration our ten point plan to solve problems focuses on liberating every part of the system. Here is what you can expect as a result:
1. Free the Doctor: Your doctor will be able to act as your agent rather than the agent of your insurance company your employer or the government and help you make the best purchases of drugs tests and specialist services. Your doctor will be able to communicate with you by telephone and email and provide other services that todays insurance wont pay for.
2. Free the Patient: You will be able to manage more of your own care and more of the money that pays for that care instead of having all your health care dollars controlled by your insurance company your employer or the government. You will also be able to purchase services you do not now get (e.g. telephone and email consultations and house calls) and avoid paying for services you dont want or need.
3. Free the Employee: Your employer will be able to help you obtain health insurance that is portable traveling with you when you change jobs or move in and out of the labor market. Today this is illegal is almost every state.
4. Free the Employer: Employers will be able to make a monthly fixed contribution to the premium for your personal health insurance much as they make matching contributions to 401(k) plans. In both cases the benefit belongs to the employee.
5. Free the Workplace: Employers will be able to give their employees choices between taxable wages and non-taxed benefits. If you are covered by a spouses plan you will be able to obtain higher wages instead of duplicate coverage. If you are a part-time worker you will be able to trade less pay for benefits you currently dont get. These choices are illegal under the current tax law.
6. Free the Uninsured: If you must purchase your own health insurance you will get the same tax relief that is currently given to employees with employer-provided coverage the opportunity to purchase insurance with pretax dollars.
7. Free the Kids: Children who have lost their private health insurance because of the lure of a free State Childrens Health Insurance Plan (S-CHIP) will be able to return to the private sector where access to care is much better. If you qualify the money S-CHIP now spends will be available to you to help pay for private insurance instead. The same opportunities will be available for enrollees in Medicaid.
8. Free the Parents: Instead of having one parent on Medicaid another in an employer plan and a child on S-CHIP public dollars will be used to help enroll all three in one private-sector family-friendly plan.
9. Free the Chronically Ill: Health plans will be able to specialize in treating such conditions as asthma diabetes cancer and heart disease. If you are chronically ill these plans will compete to meet your special needs and they will be rewarded based on their success.
10. Free the Early Retiree: Employers will be able to help retirees who are not yet old enough for Medicare to obtain low-cost high-quality health insurance with untaxed dollars just as they make pretax contributions to health insurance for their active employees. You will be able to pay your share of the premium with pre-tax dollars as well; and the insurance will be owned by you.
These ideas are explained in somewhat greater detail in this NCPA Brief Analysis and in much more detail in my Congressional testimony.
