05/02/2009 – Healthcare: The Answer is Unleashing Markets – Not Government

The following policy op-ed by Mitt Romney appeared in Newsweek on 05/02/2009. It is entitled The Answer is Unleashing Markets – Not Government.

I hear loud and clear from people in my state, and from across the country, what they want to see in health care. They want it to cost less, have the highest quality and see that it extends to all Americans—even when they lose their job or when they’re sick. Republicans agree. So do Democrats. Where we disagree is how to get the job done.

Our divide is fundamental: Republicans believe health care can be best guided by consumers, physicians and markets; Democrats believe government would do better. Some Democrats would have government buy health care for us; set the rates for doctors, hospitals and medicines; and decide what medical treatment we would be entitled to receive for each illness. If you liked the HMOs of the ’80s, you’d love government-run health care.

Democrats have been winning. When President Lyndon Johnson signed the Medicaid bill, he estimated it would cost $500 million. Today, it costs $500 billion. Politicians have expanded government coverage to more and more people. They propose that we adopt European-style, government-financed health care. But, in some respects, they’ve already gotten us there: the government now spends more per citizen on health care than do the governments of France, Germany, the United Kingdom or Sweden.

But government can’t match consumers and markets when it comes to lowering cost, improving quality and boosting productivity. Compare the U.S. Postal Service with UPS and Federal Express. Stack North Korea against South Korea.

The right answer for health care is to apply more market force, not less. Here’s how:

1. Get everyone insured. Help low-income households retain or purchase private insurance with a tax credit, voucher or coinsurance. Use the tens of billions we now give hospitals for free care to instead help people buy and keep their own private insurance. For the uninsured who can afford insurance but expect to be given free care at the hospital, require them to either pay for their own care or buy insurance; if they do neither, they would forgo the tax credit or lose a deduction. No more “free riders.” This is the basic plan I proposed in Massachusetts. It has worked: 360,000 previously uninsured citizens now have private health insurance. The total number of uninsured has been reduced by almost 75 percent. The Massachusetts plan costs the state more than expected, largely because the legislature has been unwilling to further reduce state payments to hospitals for free care. The costs should be brought in line by eliminating these payments, by requiring sustainable copremiums and by removing coverage mandates (for example, every policy is now required to include unlimited in vitro fertilization procedures).

2. Make health insurance affordable and portable. Eliminate the tax discrimination against consumers who purchase insurance on their own. This, plus getting everyone insured, will sharply lower insurance costs (in Massachusetts, the premium for a single male has declined by almost 50 percent). The result: Americans wouldn’t have to worry that their insurance would be unaffordable or canceled if they changed or lost a job.

3. Give people an incentive to care how expensive and how good their health-care treatment will be. Learn from the French and Swiss experience with coinsurance, where the insured pays a given percent of the entire bill, up to some upper limit. Unlike a deductible, where there is no cost to the insured once a threshold has been reached, coinsurance means that the insured continues to care about cost.

4. Provide citizens with information about the cost and quality of providers and the effectiveness of alternative treatments. This transparency, when it’s combined with a meaningful personal financial incentive, will help health care work more like a consumer market.

5.Reform Medicare and Medicaid, likewise applying market principles to lower cost and improve patient care.

6. Center reforms at the state level. Open the door to state plans designed to meet the various needs of their citizens. Before imposing a one-size-fits-all federal program, let the states serve as “the laboratories of democracy.”

Republicans have introduced bills in Washington that promote these and other consumer-driven policies. In every one, the patient and doctor guide care, not the government—and that makes all the difference.

Romney is a former governor of Massachusetts.

1 views

Comments are closed.