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Market-Based Medicine

After looking at John Kerry’s health care plan, I decided I’d better take a look at President Bush’s plan. I’m going to start with the assumption that everyone believes Americans should have access to high-quality, affordable health care, and I’ll summarize Bush’s plan based on the same criteria I used with Kerry’s plan: Increased coverage, decreased cost, and quality care.

Increased Coverage
President Bush has proposed the creation of Association Health Plans. These AHPs allow businesses, even across state borders, to band together to negotiate prices and services with health care providers. Thus, small businesses can offer better, more affordable plans to their employees.

It's important to note that AHPs already exist at the state level, and have been found to neither increase coverage nor lower premiums. The twist that Bush adds is to make them exempt from state regulations. Opponents of deregulation warn of:

  • Higher Premiums: AHP insurers will raise your rates if you get sick
  • Unpaid Medical Bills: AHP insurers will not be required to have cash on hand to make sure your claims can be paid
  • Rejected Claims: AHP insurers will not allow you to appeal when they deny a claim
  • Limited Benefits: AHP insurers will restrict essential healthcare services for consumers, including OB-GYN choice and mandatory mammogram coverage for women
  • Poor Management: AHP insurers will report, on a limited basis, to the ill equipped U.S. Department of Labor

Regulations in many states mandate coverage for diseases and procedures that insurers would rather not cover in order to cut costs. States also regulate administrative and financial matters that patients are usually unaware of until they run into problems.

Decreased Cost
President Bush is proposing tax exempt Health Savings Accounts. The idea is to promote affordable, portable private health care plans. HSAs have the added benefit of making patients more aware of the cost of their procedures, thus encouraging you to shop around for deals and discouraging unnecessary treatment. You can deposit up to $2,600 per individual or $5,150 per family annually into your HSA. If you buy a high-deductible plan, your premium payments are also tax deductible. A nice bonus is the fact that if you already have a health plan, an HSA makes a great tax shelter.

Bush is proposing refundable tax credits for low-income Americans. Those eligible will receive $1,000 for individuals or $3,000 for families, whether or not they pay more than that in taxes. He is also proposing to streamline health care administration and finance systems, and proposing limits to malpractice suits (even though malpractice payouts account for only one half of one percent of health care costs). These particular cost cutting initiatives are also part of John Kerry's plan.

Much has been made of President Bush's prescription drug plan, but it only applies to those eligable for Medicare, so I won't get into it here except to note that Bush's health care plan doesn't address decreasing the cost of prescription drugs (even after drug company R&D costs have been recouped and a decent profit made), nor does it change the FDAs negative stance on US citizens buying inexpensive generic versions of their drugs from Canada. Kerry's plan covers both of these issues.

Quality Care
As far as I can tell, President Bush's proposal doesn't address quality at all. Unless you count the belief that the market will encourage providers to increase quality, even for individuals who have less expensive plans.

It's estimated that Bush's plan will only add seven million people to the roles of those who have health insurance, leaving more than 36 million to continue draining federal and state coffers when they have to receive emergency treatment. The plan encourages individuals to invest in private health plans while discouraging businesses from offering health care benefits to employees. Unfortunately, it doesn't do much to curb the rising cost of health care. If you believe your family might someday spend more than $5,150 per year for health care, then it's probably not a good deal for you.

Posted by American Pundit at April 25, 2004 9:23 AM