It’s been over a year since President Obama signed into the “Patient Protection and Affordable Care Act” , commonly known as “ObamaCare”. An enormous bill (at one point, over 2000 pages before being pared down to a mere 906), it is chock-full of mandates, prohibitions, taxes, and bureaucracy deemed “reform” by its advocates and ostensibly designed to provide “universal coverage”. The law has become the signature accomplishment of the Obama Administration but remains unpopular: a majority of citizens still favor its repeal, every announced Republican presidential candidate has vowed its reversal, and the Department of Health and Human Services has had to issue over 500 waivers to companies and unions to prevent them from dropping coverage for their employees and members.
Advocates of the government-centric approach (many of whom thought the law didn’t go far enough, preferring a total government takeover with a European-style “single-payer” system) continue to accuse critics of being against health care reform altogether and having no alternative. There are a number of free market reforms that would improve access to health care and reduce costs without imposing costly taxes or intrusive mandates on individuals and families, and without increasing the size and scope of the federal government. Three easy, market-based reforms in particular should form the basis for any reform plan.
First, give individuals the same tax benefits for purchasing health insurance that employers currently get for offering it. Employees could still have the option of getting health insurance through their employer, but would no longer have to worry about losing their health coverage if laid off or if they wanted to change jobs or start their own business. Coverage would be portable, and millions of new consumers would be unleashed into the marketplace, creating new competition. Rather than looking only at the options provided at work, individuals and families could shop around for coverage that more fits their own needs. Insurance companies would be forced to cater to a wider variety of interests and would be forced to sell directly to the consumer, not a benefits department at a large corporation.
Second, further expand competition and choice by ending the federal prohibition against buying health insurance across state lines. If a resident of Texas wants to buy a laptop computer, a car, or even food, he doesn’t have to buy from a company chartered in the state; unfortunately, such is not the case when purchasing health insurance. The explosion of internet-based commerce has made it even easier to shop for nearly any item around the country, or even around the world. Imagine what increased market access could do for health insurance consumers if insurance companies were no longer sheltered from out-of-state competition. Companies like Amazon that have revolutionized shopping for books, movies, and electronics could become retail outlets for insurance, further expanding the market and making companies more accountable to their customers. More personalized options would be offered as companies compete for the consumers’ dollars, and the insurance companies themselves could cut expensive overhead by not having to meet state-by-state regulatory requirements. States themselves could then compete to streamline their own requirements to induce companies to move there, removing even more red tape from the insurance process, with savings passed along to consumers.
Third, increase consumers’ ability to leverage by removing barriers to group plans. Groups as varied as the NAACP or the National Small Business Association could pool members together from all 50 states and leverage those groups to negotiate with the insurance companies. For example, many architects are self-employed and lack insurance; think the American Institute of Architects would be interested in providing insurance options to its members? Many with diabetes are worried about getting coverage for their “pre-existing condition”: enter the American Diabetes Association, with its ability to leverage a potential customer base of up to 25 million people. In an open market, most insurance providers would probably be interested in competing for those customer pools. And, as the market expanded, further groups could be formed with the sole purpose of consolidating groups to bargain for better rates and more options.
Cellular phones were once large, clunky devices, owned exclusively by the rich; market competition and innovation have brought down the costs of cellular service dramatically while simultaneously improving the service and options. The result: over 80% of Americans now own a cell phone, and “smart phone” innovation is breathtaking. Why not apply the same principles of free market competition to the health insurance market? The three steps outlined above would expand access, decrease costs, improve options, and empower individuals and families.
That would be true health care reform.