Centralized health care opposed

Nina Owcharenko, deputy director of the Center for Health Policy Studies at The Heritage Foundation, recently issued her ideas on a “much better alternative” than a centralized approach to U.S. health care reform.

She opposes the federalized plan touted by President Obama because she believes it would remove health care decisions further away from the patient and care provider.

“Proposals for a new public health plan and a federal health insurance exchange, as well as an individual mandate to purchase a government-approved package of benefits, clarify their intent: Washington control over health care financing and delivery,” Owcharenko noted of the Obama approach.

Owcharenko lists the primary problems with health care today.
• Health care costs continue to rise while people have fewer choices and are less secure that the coverage they have today will be there tomorrow. The U.S. spends more than $2.4 trillion on health care (almost 17% of GDP), and the government accounts for almost one-half of all health care spending.

• Premiums continue to rise in the private sector. Employer-based family coverage has increased from an average of $6,438 in 2000 to $12,680 in 2008.

• According to recent CMS Actuary calculations, Medicare and Medicaid spent $818 billion in 2008 and are projected to reach $1.7 trillion by 2018.

• Today, 85% of all employers offer only one health plan for their employees. Similar restrictions on personal choice face enrollees in government programs. In Medicaid, 23% are not accepting new Medicaid patients, and 18% are accepting only some.

• Most important, while the percentage of those without coverage remains constant, the individuals are not the same. As a matter of fact, 45% of uninsured are uninsured for less than four months; only 16% are uninsured for more than 18 months. This churning in the health insurance markets, and the lack of portability, is almost entirely the result of outdated government policies.

Owcharenko believes a centralized system of federal decision-making would:
• Diminish individuals’ control over their personal health care decisions;
• Directly undermine state autonomy and authority in health policy, undercutting both innovation and experimentation to expand coverage and deliver quality care, especially for the poorest and most vulnerable of our citizens;
• Generate and perpetuate unsustainable federal spending; and
• Ultimately, in the face of serious budget crises, lead to government rationing of care and services.

Owcharenko also proposes what she calls “workable solutions.”
• Tax Equity
Today, individuals who purchase coverage through their place of work receive an unlimited tax break on the value of their health care benefits. However, those who purchase coverage on their own receive no comparable tax break. Ideally, Congress should replace the current tax exclusion with a system of universal tax credits. Moreover, as a general principle, Congress should provide tax relief for those who purchase coverage on their own and redirect other health care spending to help low-income individuals and families purchase private health insurance coverage.

• State-Based Reform
The health care challenges vary greatly across the country. Some states face high health care costs, while others face high rates of uninsurance. And, rural states face different challenges than urban states. Instead of depending on a federal one-size-fits-all solution, Congress should embrace a federal-state partnership that would preserve diversity in the states. The states’ role would be to devise the best ways to achieve common national goals — for example, to establish a mechanism for portability. This is in sharp contrast to other state-based approaches where the federal government sets explicit requirements and imposes on the states the onerous task of administering its federal reform. These types of partnerships are little more than a backdoor way to a one-size-fits-all federal plan.

• Sound Financing
The U.S. spends more than $2.4 trillion on health care. Instead of spending an additional $1.6 trillion on a plan financed by tax increases and unproven savings from Medicare and Medicaid that may never materialize, Congress should restructure and redirect existing health care spending to make it more effective. To address long-term health care costs, Congress must focus on fundamental reform of the tax treatment of health insurance and entitlements. At the very least, Congress should require that savings be realized before appropriating them to any expansions.