from Scott Atlas at The Wall Street Journal, The Health Reform That Hasn’t Been Tried
First, equip consumers to consider prices. Critics always claim this is unrealistic: Are you supposed to shop around from the back of the ambulance? But emergency care represents only 6% of health expenditures. For privately insured adults under 65, almost 60% of spending is on elective outpatient care. Likewise, nearly 60% of Medicaid moneygoes to outpatient care. For the top 1% of spenders—a group responsible for more than a quarter of all health expenditures—a full 45% is outpatient. Giving consumers an incentive to consider price when seeking such care would make a huge difference.
ObamaCare moved in the opposite direction, shielding consumers from having to care about prices. Its broad coverage requirements and misguided subsidies encouraged bloated insurance policies, furthering the misguided idea that the purpose of coverage is to minimize out-of-pocket costs. When the insurer picks up nearly the entire tab, patients have little reason to consider costs, and doctors don’t need to compete on price.
Effective reform would put patients in charge of their own spending, while giving them a way to gain from paying less. The first step is to broaden the availability of high-deductible insurance plans with fewer mandated coverage requirements. ObamaCare went in the wrong direction. Its regulations—including required “essential benefits”—raised prices on these plans and limited their availability.
My analysis of data from the Employer Health Benefits Annual Survey shows that premiums on high-deductible policies rose between two and five times as fast as other types of coverage. It would also help to repeal ObamaCare’s 3-to-1 age rating, the rule that insurers can charge the oldest customers only three times what they charge the youngest ones. This alone raised premiums for young people by 19% to 35% in 2014, according to an estimate for America’s Health Insurance Plans.
A second tool for motivating patients to consider price is large, liberalized health savings accounts. These tax-sheltered accounts are generally used to pay for the noncatastrophic expenses that form the bulk of medical care. Better than tax deductions, HSAs introduce something unique—an incentive to save.