Health Reform on a Dime


While Washington once again debates reforming our health care reform system, the states have marched on. Washington-based proposals, like those currently before Congress, are too expensive and ignore the fact that most Americans don’t want and are concerned about a big-government takeover of the U.S. health care system. President Ford had it right when he said, “A government big enough to give you everything you want is a government big enough to take from you everything you have.”

Instead of throwing away our state-based system, we should build on it. Take the problems of access and affordability. Most states guarantee access to health insurance despite a clear lack of federal support, and some states have taken significant steps to increase the affordability of health insurance. As one regulator stated, “Affordability without access is meaningless but accessibility without affordability is equally meaningless.”

There are many reasons why people don’t have coverage (e.g., they have low incomes, are in job transition, don’t think they need it, etc.), and the solutions can and should be equally diverse. Instead of throwing away our current system, which relies heavily on state oversight and regulations, we should improve upon it – guaranteeing access without making health insurance unaffordable. Several limited and targeted reforms would do exactly that.

Guaranteed Access. The healthy can always buy coverage when they need it, but the sick can’t. So President Obama proposes requiring health insurers selling to individuals to accept any applicant (that already happens in employer-sponsored coverage). But that’s like requiring an auto insurer to accept a person after a car wreck.

A better solution for the uninsured with pre-existing conditions is what we call the “Tri-Share Guaranteed Access Plan.” It is similar to the current state-based high risk pool system but with standardized federal guidelines and increased funding.

Tri-share (i.e., three funding sources: federal and state, health insurers and premiums from participants) would provide health coverage for those with a pre-existing medical condition, creating a true safety net for the uninsured. The guaranteed access plans would preserve what is good about the state-based system, protect the vulnerable and keep health insurance premiums more affordable.

Affordable Choices. Any American who has lost a job can tell you employer health insurance is expensive. The stimulus bill provided a temporary subsidy for coverage, but only to continue the employer’s expensive coverage. The unemployed should have access to Affordable Benefit Choices (ABC Plans), which allow them to choose not only from the plans offered by their employer, but a less-expensive “basic” health insurance plan that’s sold in any state.

Equalize Tax Treatment. Most of the uninsured work for employers but don’t have access to employer-provided coverage. It is fundamentally unfair that these employees who decide to purchase health insurance on their own do not get the same tax break as those who have employer-provided coverage. Congress can fix this disparity by providing them with a “refundable” tax credit (in essence, a voucher) to help offset the cost of coverage.

Increasing Competition. If President Obama is really concerned with competition – especially in states like Maine, Massachusetts and New York, which have ruined their market with onerous regulations – he would allow individuals living in one state to buy health insurance that’s approved and being sold in other states.

Safety Net for the Poor. The most important issue for the poor is not access to health insurance but access to needed medical care. Some people will not get health insurance or are too transient to have a medical home. Federally qualified health clinics provide medical care in locations that are easy for the poor to access. In 2007, this safety net program was funded at a $1.99 billion dollars – not nearly enough to provide a true safety net.

Malpractice Reform. One area where the states are leading is malpractice. California, Texas and recently Oklahoma have passed significant tort reform legislation. The downward pressure on malpractice premiums in Texas, for example, and the reduction in needless lawsuits prove the value of reform. States may continue to lead on tort reform, especially if the federal government refuses to take any significant steps.

We need to free ourselves from the idea that we need to achieve universal coverage through a federal mandate. Building on our current system allows us to refocus on solving the targeted problems we can fix while maintaining long-term financial sustainability – and get close to universal coverage in the process.