Sensible Alternatives for Fixing Health Care

Congressional Democrats claim that their health reform effort will deliver higher quality care at lower cost to more people. But their legislative prescription, which relies almost entirely on greater government involvement in the delivery of health care, would fail to accomplish these objectives.

Fortunately, there is a better way. With a few targeted reforms to our country’s medical-malpractice laws, insurance regulations, and the tax code, we can do a great deal to expand access to coverage and improve the American healthcare system for all — without bankrupting the country.

These basic goals of reform — expanding access and reducing cost — seem to have disappeared from the Democrats’ reform plan. According to the Congressional Budget Office (CBO), the leading Senate healthcare bill would actually cause premiums to rise for most Americans.

A legislative package that makes health care more expensive can hardly be called reform, especially when there are more effective ways of fixing the system.

For starters, consider how the bill would address pre-existing conditions, which often prevent people from securing adequate individual insurance coverage at an affordable price. Many congressional Democrats would like to require insurance companies to extend policies to all comers without regard for their medical history or health status.

States that have implemented such “guaranteed issue” regulations have seen premiums rise by more than 200 percent.

There’s a more prudent approach, one that won’t send premiums into the stratosphere: expand federal funding for high-risk insurance pools at the state level. These privately-run, publicly-funded insurance programs act as a safety net for those who can’t obtain conventional insurance.

High-risk pools already exist in 35 states. Expanding them to the remainder of the country would ensure that those with pre-existing conditions have a way of obtaining quality health care, without causing premiums to increase for all Americans until we have a fully functioning, competitive individual insurance market.

Medical malpractice law is another area that is ripe for reform. One in eight doctors is hit with a malpractice suit each year. These suits aren’t cheap — the average medical tort case costs a whopping $100,000 to defend, even though doctors are found innocent 90 percent of the time. To protect themselves in the event of a legal proceeding, many doctors practice “defensive medicine,” whereby they order more tests and procedures than necessary.

Such overtreatment increased individual health expenditures by $124 billion in 2006 and has added more than 3 million Americans to the ranks of the uninsured.

Patients who are wronged should be able to have their day in court. But with less than 15 cents of tort-lawsuit dollars going to compensate the injured, there’s clearly a significant amount of waste in the system. Implementing several commonsense tort reforms — including a $250,000 cap on non-economic damages — could reduce healthcare health spending by $11 billion, according to the CBO.

Healthcare reform should also make it easier for part-time workers and the unemployed to obtain coverage. Most Americans receive insurance through their employers — and don’t pay tax on the value of the benefit. Those who don’t get insurance through work are forced to buy an individual policy with after-tax dollars or forgo coverage altogether.

That’s unfair. Americans ought to be able to purchase insurance policies for themselves and their families with pre-tax dollars, just as businesses can. Such a reform would render health insurance portable, so workers could take their policies with them if they switched jobs — or keep their policies if they were laid off.

Another way to make health care less costly? Allow insurance companies to do business across state lines. Presently, Americans can only purchase policies approved for sale in the state where they live. This rule limits patients’ choices and curbs their ability to shop around for the best deal.

Removing those barriers would unleash a torrent of competition overnight, as consumers could begin shopping for insurance in states with more affordable coverage options.

A 25 year-old male in New Jersey, for instance, currently pays nearly $5,600 for a basic insurance policy. But if he were free to purchase coverage in Kentucky, he could obtain a similar policy for less than $1,000 a year!

Congressional Democrats may not be willing to admit it, but we can achieve health reform that expands coverage and lowers costs without placing government at the center of the effort. Commonsense reforms like these are a good start.

Michele Bachmann is a Republican Congresswoman representing Minnesota’s 6th Congressional District. Sally Pipes is President & CEO of the Pacific Research Institute.

Nothing contained in this blog is to be construed as necessarily reflecting the views of the Pacific Research Institute or as an attempt to thwart or aid the passage of any legislation.

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