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10 Questions: About Health Care

As an issue that will mobilize American voters in the coming election, health care is right up there with the war in Iraq. It's a complicated issue, one that's hard to get a handle on; often, we don't wrestle with it until we're facing illness, doctors, procedures and medical bills piling high.

So we decided to pose our 10 Questions to two experts in the field: Robert Moffit, who's with the Heritage Foundation, a conservative think tank in Washington, D.C., and to Dr. Sidney Wolfe, the director of Public Citizen's Health Research Group, a more liberal-leaning consumer advocacy organization.

(Heritage Foundation)
Next week, we'll hear from Dr. Wolfe. But this week we're posting Moffit's answers. He's the director of Heritage's Center for Health Policy Studies, and his team helped Gov. Mitt Romney with Massachusett's health care reform initiative of 2005.
1) If you could change ONE thing about our health care system, what would that be?

The financing. I would make major changes in the tax code and other laws and regulations so the money and decisions governing health care rest in the hands of individuals and families—not with government officials, employers and managed care networks. Those who control the health care dollars control the health care system.

2) Most people agree that the costs are out of control. What can be done about that?

Let the market work. Currently, it's fettered and bound by countless federal and state regulations. If health insurance plans and providers were forced to compete directly for household dollars, that robust competition would restrain the growth in costs.

Beyond that, we need price transparency. Most people don't have a clue what health care goods and services actually cost, or which doctors and hospitals deliver the best results in treating or curing disease.

Having said all of that, we have to admit that certain factors beyond our control are also driving health care costs upward. Our rapidly aging population demands newer and more effective medicines--baby boomers want and expect access to advanced medical technologies.

3) What works in our system? What doesn't?

We are the world's leaders in medical science and technology. We have superior medical schools, producing highly trained physicians and specialists. In sheer numbers, Americans outclass every other country in the world for capturing the Nobel Prizes in medicine. Since World War II, we have been the beneficiaries of a pharmaceutical revolution that has dramatically improved the arsenal of weapons doctors can use to combat disease; we have made great strides in improving diagnostic technology. So we are getting a good return on our health care dollars invested in biomedical research, science and medical technology, as well as the education of our medical professionals.

What does not work is the financing of our health care system--both the public and private components--and the laws and regulations governing our insurance markets. Tax law and regulations discriminate against Americans who do not or cannot get health insurance through their place of work.

Those without private insurance coverage have higher morbidity rates and tend to die earlier. And those in certain public health programs, like Medicaid, have a harder time getting quality health care.

4) People come to this country from all over the world and get great healthcare. But so many Americans slip through the cracks. What can be done to close this gap?

People come here to get the kind of high quality care they simply cannot get in their home countries, and that includes British and Canadian citizens. For those Americans who slip through the cracks, as you say, the best answer is to tie private health insurance to the person, and not simply the job. You should be able to select and own your health insurance policies, just as you select and own your auto insurance, life insurance or homeowners insurance. Personal ownership makes insurance fully portable; you don't need to worry about losing it or your family doctor when you change jobs, for example.

I should note, by the way, that simply expanding Medicaid or some other government health program does not solve the problem of people falling through the cracks. In Medicaid, you often have "revolving door" eligibility, with people moving in or out of coverage, depending upon their income.

5) We hear a lot about the number of uninsured Americans. Just how many are there?

The Census Bureau says that there are about 45 million. But there are different measures, and different ways of counting them.

The uninsured are disproportionately low-income working people, often Hispanic, working in small businesses that do not offer health insurance coverage.

Some of the uninsured are offered coverage at work, but refuse to take advantage of it, either because they can't afford the co-payments, or because they don't think it's good value for money or because they are young and believe that they don't need it.

The overwhelming majority of the uninsured are in and out of health coverage. Often they lose their coverage when they lose or change their jobs and remain uninsured for only few months until they find new work and qualify for coverage through their new employer.

The number who are chronically uninsured over a long time is actually small. One study of Census Bureau data put that total at 12 percent of the total number of the uninsured over a four-year period.

6) What's the lowdown on managed care? HMOs? Single payer?

With managed care and HMOs, performance varies. Managed care means many things to many people, and it is constantly evolving. Care management is increasingly a focus of health plans, particularly with the steady growth of chronic diseases. The Preferred Provider Organization (PPO) is the most popular with employers, and is increasingly popular among senior citizens in the Medicare program.

With the HMO Act of 1973, Congress mandated that firms of a certain size offer HMOs along with other options as a way to spur cost control in the system. The original idea was for HMOs to serve as a combined financing and delivery mechanism that would "maintain" and promote health, stress preventive care and secure the good outcomes. In some parts of the country, the reputation is quite good. Elsewhere, doctors and patients alike have criticized HMOs as bureaucratic agents of employers, bent on cutting health care costs by restricting patient access to specialists. In the late 1990s, this sparked a backlash and Congress pondered a "patients' bill of rights," while state legislatures enacted about 1,000 laws to regulate HMOs.

Most patients have little or no choice over what kind of health care plan they get. It's whatever their employer offers them, and roughly eight out of 10 employers offer only one plan.

As for single payer, as in Britain and Canada, the principle is simple: health insurance is reduced to a public utility and everyone is legally entitled to it by virtue of citizenship. You pay the government taxes--very high taxes--and the government finances your health care. This normally means that you get what the government gives you or says it can afford to give you. Typically, these budget decisions mean that people must wait for medical services—especially the more complex or sophisticated treatment.

7) What role should the government play in providing Americans with health care? What role should the marketplace play?

The government already pays for more than 50 percent of all health care costs in the United States, largely through the giant Medicare and Medicaid programs. With no change in policy, the government will take an increasingly dominant position in health care spending. Medicare, for example, is already governed by literally tens of thousands of pages of excruciatingly detailed rules and regulations. Doctors complain that this excessive red tape robs them of their professional independence.

As for the marketplace, there is no normal market for health care in the United States. To get a functioning health marketplace, lawmakers and bureaucrats will have to make fundamental policy reforms. First, they must fix the tax laws governing health insurance, so that every American, regardless of class or condition or status of employment gets either a tax credit or a voucher to help purchase coverage of their own choosing. Second, government should level the playing field for health plans, allowing them to compete for the dollars of American households, even across state lines. Third, government should set common rules for health insurance that focus exclusively on consumer protection, such as guaranteeing that plans have the reserves to pay claims and punishing fraud. Then, government should get out of the way.

8) The babyboomers are now starting to retire, and people question whether Medicare will be able to handle them. Will it? What are the estimates on costs?

The Sixties Kids are the last group you would expect to follow the rules; they are not big on authority or being told by some Congressman or GS-15 at HHS what they can and cannot have. They will want the kind of personalized medicine that modern medical research and technology will increasingly be able to deliver. That will mean they will have to pay more for more generous benefits, rather than just sticking the Twenty Somethings with their giant medical bills.

If we keep the system as it is today, the Medicare Trustees report that the Medicare's unfunded liabilities—the gap between expected tax revenues and the cost of benefits promised to seniors—will soar to $32.4 trillion over the next 75 years. Absent reform, there are only three ways to plug this gigantic gap: perform radical surgery on Medicare benefits; force seniors on fixed incomes to fork over sky-high premiums; or impose unprecedented tax increases on working Americans.

9) You worked on Massachusetts' health care reform, with Mitt Romney as governor. How does that work, and could it work on a national level?

The Massachusetts Health Plan is a big and complicated health reform. But this is designed as a state reform, and every state is different. This is no simple, one-size-fits-all solution.

My colleagues at Heritage worked closely with Governor Romney on the most important feature of the Massachusetts plan: the creation of a statewide health insurance exchange. It's a kind of big shopping mall for health plans. With this exchange or "connector", small-business employees would be able to pick and choose the health plans that suit them best, own those policies, and take them with them from job to job. It's a mechanism that creates a statewide system of personally owned and fully portable health coverage. That portability alone will reduce un-insurance.

In Massachusetts today, there are more choices, lower premiums and bigger reductions in the number of uninsured than anywhere in the country. We hope that other states will import it without dragging along all the costly and cumbersome regulatory junk that is peculiar to Massachusetts.

10) What role will the health care issue play in the election? And is there a political candidate in this broad field who you think has the right idea?

It certainly deserves to be at front and center of the Presidential debate on domestic policy.

As far as the candidates are concerned, I do policy, not politics. Certainly the candidates are worlds apart. Liberal candidates generally embrace expanding government programs. Expanding government control over the financing and delivery of medical services will guarantee even bigger bureaucracy, higher taxes, and increasingly detailed regulations governing the delivery of care. Conservative candidates generally emphasize the need to re-energize the market and make individuals and families the key decision-makers in the system. Obviously that's the policy direction I favor.

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