In March 2009, President Barack Obama said, “If there is a way of getting this done where we’re driving down costs and people are getting health insurance at an affordable rate, and have choice of doctor, have flexibility in terms of their plans, and we could do that entirely through the market, I’d be happy to do it that way.” This paper explains how letting workers control their health care dollars and tearing down regulatory barriers to competition would control costs, expand choice, improve health care quality, and make health coverage more secure.
First, Congress should give Medicare enrollees a voucher and the freedom to choose any health plan on the market. Vouchers would be means-tested, would contain Medicare spending, and are the only way to protect seniors from government rationing.
Second, to give workers control over their health care dollars, Congress should reform the tax treatment of health care with “large” health savings accounts. Large HSAs would reduce the number of uninsured Americans, would free workers to purchase secure health coverage from any source, and would effectively give workers a $9.7 trillion tax cut without increasing the federal budget deficit.
Michael F. Cannon is director of health policy studies at the Cato Institute and coauthor of Healthy Competition: What’s Holding Back Health Care and How to Free It.
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Third, Congress should break up state monopolies on insurance and clinician licensing. Allowing consumers to purchase health insurance licensed by other states could cover one-third of the uninsured without any new taxes or government subsidies.
Finally, Congress should reform Medicaid and the State Children’s Health Insurance Program the way it reformed welfare in 1996. Block-granting those programs would reduce the deficit and encourage states to target resources to the truly needy.
The great advantage of a free market is that innovation and more prudent decisionmaking means that fewer patients will fall through the cracks.
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The health care group purchasing industry remains an unknown success story in lowering the cost of medical care. Group purchasing organizations, or GPOs, can save the country tens of billions of dollars annually through the power of aggregated purchasing volume and negotiated discounts with manufacturers, distributors and vendors. They work with hospitals and heath care facilities across the country to assure that patients and providers benefit from important medical technologies and innovations. Recent studies show that GPOs annually save the nation between $36 and $64 billion. I would encourage you to visit http://www.GPOsSaveMoney.org to learn more.