Practical Solutions to the Uninsured Dilemma
To understand the roots of the national scandal of forty million people uninsured, it would be helpful to reacquaint ourselves with the early days of hospitals and the practice of medicine. Medical insurance began in the 1920’s as a tool for providers. It was not developed primarily to benefit patients, but was conceived as a mechanism for providing predictable cash flow for health care administering institutions, in order for the health care system to develop and prosper.
This innovation marked a significant shift, however, from self-responsibility for health care to a “third party.” It also began the decline in the individual’s incentive regarding his own health. The beneficiary of any savings was not the patient but the “third party.” The patient, far from being motivated to use restraint and discretion in his use of health services, now had an incentive to utilize it freely (if not frivolously); otherwise his “money” was not well spent. Consider the example of the patient who could very well leave the hospital early (all he needs is a new set of dentures), but who decides to stay longer when he learns that his insurance will pay.
The quagmire deepened as employers created a huge health care benefit they could not pay for. As a result, they sought discounts from providers for their employees. In a perverse irony, the unemployed, the under-employed, and the low wage employee were left out of the health care system altogether, losers in a frenzied grab for a finite number of health dollars. We are all paying for these deficiencies in health care not assessed at the beginning of the journey, but the uninsured carry the largest burden as they have been forced to pay retail prices and subsidize the employed, who have benefited from the lack of market competition and have negotiated large discounts.
The first step that must be taken is to restore the consumer to the heart of health care decision making. Incentives must be created for the consumer to learn and implement health care choices. The area of primary health care services would be the logical area to address first. Shopping by wise consumers, who suddenly have a financial stake in their own health costs, would spawn all kinds of alternative service arrangements, in forms we cannot even now predict. The creation of health care savings accounts would provide the incentive for this radical shift to occur.
Secondly, the historical linkage between health care insurance and employment must be reexamined. This marriage began during World War II when there was a wage freeze. The cap on earnings motivated business leaders to offer “health care benefits” as part of a salary package to attract workers, while staying within the limits of the law. The unintended consequence of this development was the frustration of employees, who felt enslaved to their jobs, reluctant to leave the security of job-tethered health care insurance for the insecurity of an uninsured limbo. An entirely different scenario would ensue if health insurance were portable and owned by the individual or family. Health care would be once more in the sphere of individual responsibility and the purchase of health care made by increasingly wise consumers.
Thirdly, another untapped area of consideration is the little known federal subsidy for health insurance given to high income individuals in the form of tax-free health care benefits from their employment. If this were eliminated, people of means would be able to maintain their lower tax break status and the resulting savings by the Government could be a source of funds necessary to provide lower income citizens with catastrophic health insurance via vouchers or tax credits. Overall, incentives to both higher and lower income people to be wise shoppers would increase competition and create a health care environment more responsive to the consumer.
Certainly these thoughts leave many gaps to be filled and questions to be answered. Nevertheless, the movement toward individual responsibility for primary health care services would be a shift of seismic proportions. It is reasonable to expect that consumers with incentive to shop wisely would readily avail themselves of an expanding array of health information. The stranglehold of the status quo would be broken. Existing bases of power and control would be challenged. Significant pressure would be applied to the spiraling costs we have become accustomed to, and act as a catalyst for additional solutions.