A Better Way to Reform Health Care

Obama's health care could be his domestic Iraq, but worse. It's one thing to declare "Mission Accomplished" but something else to truly accomplish the mission.
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I recently posted an article on the Huffington Post along with my friend, Regina Herzlinger of Harvard, describing how the Obama health care plan will decimate our economy. Many readers asked if I had a plan or if I wished to only criticize the president's proposal. In fact, I have introduced comprehensive health care legislation, the "Patients' Choice Act" along with Senator Richard Burr (R-NC) and Representatives Paul Ryan (R-WI) and Devin Nunes (R-CA).

We believe our plan will meet the president's goals far better than the president's own plan, or the plans being floated by the president's Democratic allies on Capitol Hill. Before I explain how our plan achieves those goals and outline some of the key differences between competing proposals, the American people should realize that there's remarkable agreement about the goals of health care reform.

Republicans and Democrats and conservatives and liberals all want a health care system that is more accessible, affordable and fair. I know this to be true because I've seen it first-hand. I've worked in the health care sector my entire adult life first as the owner of an optical company then, and now, as a practicing physician. The least partisan places in America are health care delivery areas - doctor's offices, emergency rooms, neonatal and intensive care units, and so on. The American people want a system that works, and so do the vast majority of members on both sides of the aisle.

Setting the right tone in the debate is more important because the stakes couldn't be higher for individual families and the future of our country. Getting health care reform wrong won't merely prolong the suffering of families, particularly low-income families, but will jeopardize our long-term economic health. What the American people need, and what policymakers have an intellectual and moral obligation to provide, is a rational debate based on competing ideas and solutions, not the recycled demagoguery of past campaigns. If we believe the other side is wrong we should put forward our best ideas and arguments in specific legislative language.

I'm willing to give the president the benefit of the doubt and believe the best about his motives, even if the political apparatus supporting his plan isn't willing to do the same. I'm also not afraid to say that I want the president to succeed because success will mean a better health care system. I am convinced, however, that if the president isn't persuaded to change course his plan will fail catastrophically, especially if he "wins" the vote in Congress. In fact, health care could be his domestic Iraq, but worse. It's one thing to declare "Mission Accomplished" but something else to truly accomplish the mission.

Let me explain how our bill accomplishes the mission:

Today there are three major barriers to access and coverage. There is broad agreement about two causes: cost and cherry-picking - when insurance companies deny coverage to people with pre-existing conditions. The other major barrier to access and coverage are failing government programs like Medicaid that provide access to a government benefit but not access to health care. Forty percent of doctors and hospitals refuse to accept Medicaid patients because the government's efforts to impose "affordability" have been an abject failure.

On the cost front, our bill gives every American a generous tax credit ($2,290 per individual, $5,710 per family) to purchase health insurance. We do this by ending the current discrimination in the tax code that gives people a tax break if they receive health coverage from their employee but no benefit if they are self-employed or unemployed. The rules governing our current, employer based, health care system were made in the 1940's when Americans stayed in the same job far longer than they do today. Ending the employee exclusion will end job-lock and put the individual and their doctor back in charge of health care.

This is a bold proposal that would dramatically reform our health care system. We address a number of questions related to this provision in our materials but let me address a couple of common questions.

Many people ask: How will a $5,710 tax credit help someone buy coverage when the average plan costs about $13,000? That's a fair and reasonable question.

Our plan works because the employees only pay about one-third of their plan's premium. For example, the average family's annual employer-provided health insurance plan cost about $13,000 last year, with an employer paying about $8,600, while the employee only paid about $4,200 in annual premiums. Under the Patients' Choice Act, that family would have more than enough to cover their share ($4,200) and have a significant sum left over for any additional medical expenses. It's true that the funds the employer provides would now be taxable income just like salary but the point critics ignore is that the typical individual and family will still come out way ahead under our plan.

The tax issue is controversial because the Obama campaign spent millions of dollars distorting John McCain's tax proposal which also called for ending the employee tax exclusion and replacing it with a rebate. Ironically, the Chairman of the Senate Finance Committee, Senator Max Baucus (D-MT) has proposed eliminating or capping the employee exclusion as a way to raise revenue. The fact that Senator Baucus was greeted not with a barrage of attack ads, but with assurances from the White House that his option would be "on the table," shows that the attacks against McCain were illegitimate and purely partisan.

The question the American people should be asking Congress about the way our current tax code treats health care is not whether we should change it but why on earth should we keep it like it is. The current rules are terribly regressive. Today's system discriminates against low‐income Americans: wealthy Americans receive $2,680 in tax breaks for health care while the poorest Americans only receive $102.26.

We address the second major barrier to access - cherry-picking - by making it profitable for insurance companies to not deny coverage. Our bill does this in several ways. First, we set up voluntary state-driven exchanges to facilitate real competition between private plans and give Americans - for the first time - a choice of health care plans. The exchanges would require all participating insurers to offer coverage to any individual - regardless of patient age or health history. Exchanges could also set up auto-enrollment so that a 24-year-old who shows up in an emergency room after a motorcycle accident would already be covered by a basic plan. Today, we all pay for those ER visits.

Our exchanges are NOT based on the Massachusetts model, which is not working. Rather, we acknowledge the economic reality that single-payer advocates ignore: health care economics are regional, and that a one-size-fits-all mandate from Washington will fail.

We overcome the third barrier to access - failing government programs - by giving low-income Americans the means to buy insurance outside of the failing Medicaid program.

The Patients' Choice Act gives low-income families at 100 percent of poverty level an additional $5,000 to purchase coverage on top of their tax credit. In other words, a family of four at 100 percent of the poverty level would now have $10,710 to buy coverage under our plan.

Many on the left don't like to address the reality of failing government programs because it is undermines their case for the "public option." How can a system that turns away the poor 40 percent of the time by called a success and worthy of expansion? The American people should not have faith in the public option until members of Congress voluntarily enroll in Medicaid.

Instead of acknowledging the failure of government interventions many on the left like to demagogue greedy insurance companies. One problem with this argument is that the government already drives about 60 percent of the health care economy. We already have a system of price fixing and cost containment in place called Medicare that sets the prices that insurance companies and providers follow.

Of course, insurance companies are hardly perfect actors. As a doctor, I've berated many insurance company bureaucrats who thought they knew how to care my patients better than I did. Yet, it is misleading to claim half of the problem is the whole problem. Our bill deals with reality and the whole problem - the perverse incentives in government and the private market that are hurting families. Putting the individual in charge of health care is the only way to address these underlying factors that drive up costs and reduce quality and access. The third-party model lacks transparency and accountability and allows both government and insurance company bureaucrats to get between a patient and their doctor.

Our bill includes a number of other provisions that make our plan truly comprehensive. We emphasize prevention and disease management and change reimbursement rates so doctors can be paid for doing prevention. We eliminate widespread fraud and waste in Medicare and Medicaid, which is estimated to be $80 billion per year, and so on.

The point is that health care needs a new operating system, not a service patch to a broken system. Building a new "public option" on top of a failing system with an elaborate system of fines continues the 1960's idea that a little more government spending and intervention will fix health care. It's time for true innovation and change, not a Windows 1975 approach to reform.

Finally, a critical factor that sets our bill apart from the president's plan is sustainability. Our bill accomplishes these goals without spending any new federal money, or raising taxes. The problem in health care is not that we don't spend enough, but that Americans aren't getting enough value for their dollars. On a per capita basis, America spends nearly twice what other industrialized nations spend. Our responsibility is to make better use of existing resources.

The president's argument that we have to make an enormous new investment in a "public option" in order to save money down the road is speculative at best, and a recipe for fiscal disaster at worse. Every major health care program created by the government since 1960 has cost far more than originally envisioned.

In 1965, Medicare was supposed to cost $3.1 billion a year. Today, Medicare costs $455 billion a year and is headed for bankruptcy. SCHIP was established a decade ago as a safety net for poor children. Today, a family living at 300 percent of the poverty level is eligible for SCHIP.

Some estimates say the "public option" will cost $1.2 trillion but no one knows for sure. It's impossible to predict the havoc that would ensue if, for instance, the Lewin Group's study is correct and 120 million Americans lose their private insurance because private companies are driving out of business by the government plan. When faced with out-of-control costs, European countries with single-payer plans responded the only way they could - they rationed and denied life-saving care.

The president is using conservative economic arguments to sell his plan - it's about choice and competition, etc. - but he is putting forward a proposal that would have the opposite effect. Also, the American people should be concerned about the need for a government plan to keep the private plans "honest." In a free society, individuals keep the government honest, not the other way around.

The president has given Congress a firm deadline to pass a health care bill. In the next seven weeks all sides should put their ideas on the table and have it out. What is not acceptable, though, is delay and posturing. Organizing for America, the organization set up by the President's former campaign manager, David Plouffe, has asked Americans for donations to combat those who are allegedly spreading "fear and confusion" about the changes the administration seeks. I would contend that if the American people are fearful and confused the administration should look in the mirror. We are on the cusp of a major debate and neither the administration nor its allies on the Hill have put their ideas in clear legislative language.

Many on the left are obviously worried about a repeat of 1993 when their detailed plan was released early, roundly criticized then defeated. While hiding the ball might be a good short-term political strategy, a plan that can't survive public scrutiny does not deserve to become law.

I believe the Patients' Choice Act can prevail in a public debate. Even if our plan doesn't have the votes to pass in Congress, it does show the American people that it is possible transform health care without putting the government in charge.

I know that many on the other side have a different vision and philosophy. Yet, their stalling raises a difficult question. If they are confident in their plan why haven't we seen it? We're still waiting. More importantly, so are the American people.

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