Moffit offers a thoughtful reflection on programs where competition and choice in health insurance options are helping to hold down health care costs and yet offer quality health care to consumers. He also offers suggestions for additional reforms.
Choice and competition work in health care. Unfortunately, most of us aren't lucky enough to have access to a market driven and shaped by them.
This year employer healthcare costs have risen 7.7 percent, according to a Kaiser family Foundation survey, more than twice the rate of inflation or workers' wage growth. This is lower than in recent years (costs rose almost 14 percent in 2003). But health costs are still highand likely will go even higher next year.
Some of your fellow citizens are luckier. This month, millions of federal workers and retirees, including members of Congress, get to pick and choose their health plans for 2007. According to the Office of Personnel Management, which runs the civil service, their insurance premiums will rise, on average, just 1.8 percent. About 63 percent of them will see no premium increase at all.
These Americans are enrolled in the Federal Employee Health Benefits Program (FEHBP), a consumerdriven system in which many different carriers offer a choice of 284 private plans nationwide. FEHBP plans include a variety of benefit packages, including healthsavings accounts. The bottom line: Feds get highquality care at competitive prices. No wonder they're highly satisfied.
The FEHBP isn't the only example where intense competition works. Another, paradoxically, is Medicare. The overall cost of the new Medicare drug benefit is a serious problem, but at least drugs are delivered to seniors through competitive private health plans. The result: lower drug prices. When the drug benefit was enacted, the projected average monthly premium was $37. Now, intense competition among plans has brought this under $24 per month, a 40 percent reduction, accompanied by growing patient satisfaction. That's what choice and competition can deliver.
...Some members [of Congress] have come up with innovative ideas to introduce competition into the healthcare system.
The first idea is fairness in the tax code. Republican Sens. Mel Martinez of Florida and Tom Coburn of Oklahoma are sponsoring the proposed Tax Equity and Affordability Act, to provide an incometested, individual healthcare tax credit for individuals and families who do not or cannot get health insurance through their jobs. Providing tax relief to families (worth up to $4,000 annually) would enable them to buy the health plans of their choiceplans that would have to compete directly for their dollars. That's what private plans must do in the FEHBP.
The second idea is breaking down barriers to competition across state lines. Sen. Jim DeMint of South Carolina and Rep. John Shadegg of Arizona, both Republicans, have introduced the Health Care Choice Act. Their idea: If you don't like the health plans in your state, you should be free to buy a better and more affordable health insurance policy from another state. That way, Americans could enjoy a national market in health insurance, just as they enjoy a national market for other goods and services. Again, today, only federal workers and retirees have anything like a national market for health insurance.
It's an open secret on Capitol Hill, of course, that big insurance companies and their congressional friends strongly oppose that kind of competition. After the November elections, perhaps Congress will get serious and put the common good of millions of Americans over the special interest of a few who fear a genuine free market in health care.