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President Obama's Plan for Reform
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Where health care policy experts have their say
Sources of Medical Research Funding
July 23, 2009:
Recently the Congressional Budget Office dealt a blow to arguments anticipating significant cost savings in the primary health care bills under consideration in Congress. Notes the Washington Post:
Under questioning by members of the Senate Budget Committee, CBO director Douglas Elmendorf said bills crafted by House leaders and the Senate health committee do not propose "the sort of fundamental changes that would be necessary to reduce the trajectory of federal health spending by a significant amount."
From a cost perspective, what are the most problematic elements in the legislation under discussion? What reforms aren't on the table, but should be?
This edition of our expert panel includes:
By Joseph Antos
The silver bullet cost-saversincluding comparative effectiveness analysis, health information technology, medical homes, and accountable care organizationsare not ready for prime time now or even a decade from now. The public plan, which is supposed to force competition on private insurers, will follow in the footsteps of Medicare into fiscal crisis. The best reforms would promote real competition, not cost-shifting from the government plan to private payers. Capping the income tax exclusion for health insurance would encourage employers and insurers to develop plan options that offer better value. With better choices and better information, consumers can be counted on to make sensible purchasing decisions.
Joseph Antos, is also a commissioner of the Maryland Health Services Cost Review Commission, a health adviser to the Congressional Budget Office, and an adjunct professor at the Gillings School of Global Public Health at the University of North Carolina at Chapel Hill. Before joining AEI, Mr. Antos was Assistant Director for Health and Human Resources at the Congressional Budget Office. At AEI, Mr. Antos's research focuses on the economics of health policy, including Medicare reform, health insurance regulation, and the uninsured. He has written and spoken extensively on the Medicare drug benefit and has led a team of experienced independent actuaries and cost estimators in a study to evaluate various proposals to extend health coverage to the uninsured. Mr. Antos also writes for AEI's Health Policy Outlook series.
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By Diana Furchtgott-Roth
Insurers would be required to accept all applicants, no matter how sick, and would be always required to renew coverage. With the exception of age, everyone, no matter how sick or healthy, would be charged the same premiums. When pricing by age, the highest premiums could not be more than twice as high as the lowest. If companies were to make more than a certain level profit in a particular year, they need to return funds as rebates to enrollees. This prevents insurance companies from building up a reserve in some years to guard against losses in other years.
This pricing mechanism would quickly force private plans in the Health Exchange out of businessand leave consumers with the public plan, whose costs would soon rise as quickly as Medicare costs are rising today.
In order to prevent insurance companies from offering plans outside the Health Exchange, Americans who receive financial help in paying for insurance would be required to buy plans in the Exchange. They could not select "bare bones" or catastrophic insurance plans sold on the open market.
"Affordability credits" would be given to Americans who earn too much to be eligible for Medicaidover 133% of the poverty line, now $29,000 for a family of fourbut less than 400% of the poverty line, now $88,000. Hence, health insurance assistance would be extended well above the median income for American households, now $55,000. Americans could only spend "affordability credits" on one of the programs in the Health Exchange. In addition, employers’ plans would have to been the standards in the health exchange. So catastrophic health insurance plans, which cover emergencies and allow people to shop around for routine care, would be unavailable to most Americans.
Suffocating competition raises health care prices rather than lowering them, as we have seen from Medicare. Rather than a new public plan and regulations on private plans, Republicans Senator Tom Coburn and Representative Paul Ryan have proposed giving everyone tax credits to shop around for health insurance, just they shop for home and auto insurance. Coupled with tax-free savings accounts for routine care, this would bring health care prices down, rather than up.
Diana Furchtgott-Roth is an adjunct fellow at the Manhattan Institute and a columnist for RealClearMarkets.com. She is also a senior fellow at the Hudson Institute, where she directs the Center for Employment Policy. From 2003 to 2005, Ms. Furchtgott-Roth was Chief Economist of the U.S. Department of Labor. From 2001 to 2002 she served as chief of staff at the President's Council of Economic Advisers.
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By Douglas Holtz-Eakin
is president of DHE Consulting, LLC. He served most recently as director of domestic and economic policy for the John McCain presidential campaign. He has also recently been a senior fellow at the Peter G. Peterson Institute for International Economics, the director of the Maurice R. Greenberg Center for Geoeconomic Studies, and the Paul A. Volcker Chair in International Economics at the Council on Foreign Relations. Previously, Dr. Holtz-Eakin was the sixth director of the Congressional Budget Office, where he was appointed for a four-year term beginning February 4, 2003.
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By Benjamin Zycher
Benjamin Zycher is a senior fellow at the Pacific Research Institute, the President of Benjamin Zycher Economics Associates, and an adjunct Professor of Economics and Business at the Martin V. Smith School of Business and Economics, California State University, Channel Islands. In addition, he is a member of the advisory board of the quarterly journal Regulation, of the advisory council of USA for Innovation, and the advisory council of Consumer Alert.
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