Affordable health insurance for all Americans

Americans need access to health insurance, but there are divergent philosophies on the best way to provide it.

Some believe the federal government should insure everyone and use tax dollars to do it. The result would be long waits for treatment, lower quality and higher taxes.

There is a better way. Government should continue to provide insurance for the poor, elderly and disabled through Medicare, Medicaid and SCHIP. The private insurance market in each state must be organized so everyone else is offered a choice of basic plans at affordable prices.

If the world has learned anything from the 20th century, it is that an efficient marketplace beats government at delivering value and controlling costs. The power of consumers to drive quality up and prices down needs to be used in government-sponsored programs as well.

Medicare Part D, the prescription drug benefit, illustrates well the value generated when consumers choose. When the program began last year, actuaries estimated premiums would average $38 per month. Insurers competed, offering lower prices and better benefits. This year, premiums have continued to fall to about $22 per month. 

No surprise, more than 75 percent of seniors say they are happy with their plans.

At the same time Part D was added, other changes were made giving consumers choice. Participants have the option of staying with the government version of Medicare or changing to a private insurance version called Medicare Advantage.
Predictably, private insurance companies are increasing benefits and lowering the cost. Even more important, they are taking steps to keep seniors healthier.

Since 2004, more than 20 percent of all Medicare enrollees have opted for private plans over government plans, and more are doing it every day. That’s 8.3 million people switching because they are getting extra benefits like vision care, extra covered days in the hospital or free prescription drug coverage. They get higher quality and lower cost.

The program has proven especially attractive to low-income and minority enrollees. In rural areas, enrollments grew fourfold.

Yes, an organized market increases quality and decreases cost. These successes need to be top-of-mind as we pursue the goal of every American having health insurance.

There is a torrent of activity right now as states aggressively move to make health insurance available to all their citizens. Some have been well publicized, like California, Pennsylvania, Texas, Illinois, Missouri, Michigan, Indiana, Ohio and Massachusetts.

However, there are governors and state legislatures in many other states developing plans tailored to their individual state’s needs and philosophies. Each has an aspiration for every person to have access to health insurance.

In his State of the Union Address, the president outlined proposals to help the states accomplish their goal.

The first proposal levels the playing field for health insurance purchasers. Today, if your employer provides your health insurance, you aren’t taxed on the value of your policy, but if you buy your own insurance, you pay for it with after-tax dollars.

The president also proposed to help states close the affordability gap for those who can’t even afford a basic plan and don’t qualify for Medicare, Medicaid or SCHIP.

Finally, SCHIP needs to be reauthorized.

Every person having insurance is a critical goal, but it’s not enough. We have to deal with the rapidly escalating cost of care.
Once again, the answer is competition in an organized market. When patients have reliable information about the cost and quality of care, they make decisions that increase quality and decrease cost.

The federal government must show leadership as the largest payer of health care in our nation. We have joined with other large payers from the public and private sectors and are working collaboratively with doctors and hospitals to organize a system of competition based on value. The goal is to organize information so consumers can easily compare the cost and quality of care offered by various providers.

A system of competition based on value requires four cornerstones: electronic medical records, quality measurement standards, a widely accepted means of comparing price and, finally, incentives that motivate everyone to increase quality and decrease cost.

All together, organizations that pay for the healthcare of more than 100 million people in the United States have formally committed to make these four cornerstones significant criteria in their procurement decisions. Our goal is to have 60 percent of the market covered by those who implement those principles for the 2008 policy year. When 60 percent of any market moves, things change.

Change is coming. I see a day in the not-too-distant future when every American will have access to a basic, affordable insurance policy in a system of competition, based on value.

Leavitt is secretary of the Department of Health and Human Services.

 


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