Health Marts: A Free Market Health Care Solution
Peter J. Ferrara
A new Republican health care proposal, spearheaded by Rep. Tom Bliley
(R-VA), would greatly expand freedom of choice and control by workers and
consumers over their health coverage and care. This idea would be far more
effective in helping patients than federal regulatory proposals masquerading
under the label of a patient bill of rights, which would actually reduce
the freedom of choice of patients in some ways.
The Health Mart Proposal
Health Marts would be co-ops of workers, employers, insurers, and consumers. Instead of picking the health insurer for all the company's workers, the employer would sign up with a Health Mart. The Health Marts would offer workers a wide range of health coverage choices --- HMOs, traditional insurance companies, Medical Savings Accounts (MSAs) and others. The workers would then each pick the health insurer they preferred.
People who like HMOs could then still choose them. Those who did not
want HMOs could choose traditional insurance, or an MSA. Health Marts would
in fact make the highly attractive MSA alternative far more broadly available.
MSAs include traditional insurance coverage for catastrophic expenses, and
a savings account for lesser expenses that patients can keep if they don't
use it up. These plans maximize patient control and choice over their own
health care, with incentives that have proven even more effective than HMOs
in reducing costs.
The Patients' Bill of Rights Fallacy
Proposals for a so-called patient bill of rights are motivated by restrictions on access to health services and treatments imposed by HMOs and similar managed care insurers. These proposals would grant patients various rights of appeal and to sue in court to force access to the care and specialists or other health care provider the patient wants.
HMOs offer patients a tradeoff. They reduce costs and, in some cases, expand services. But in return, patients give up ultimate control over their health care to the HMO. To the extent the HMO finances the care, it ultimately decides what care and services the patient receives and from whom.
However, a large proportion of Americans do not want to accept this tradeoff. They do not want to cede such decision making authority over their health care to an HMO. This is particularly so given the incentives an HMO faces. Take the case of a cancer patient continuing to pay the HMO a standard monthly fee. The HMO loses a fortune every year it keeps the patient alive. While HMOs do not affirmatively seek to deny essential care to such patients, the perverse HMO incentives have their wearing effect over time, particularly in regard to judgment calls on whether to use more or less advanced, expensive, and heroic treatments.
Nevertheless, people should have the choice of the HMO model if they want it. Millions of people across the country, including very sick people with expensive illnesses, report great satisfaction and high quality services and care from HMOs. For healthy, busy, young people, HMOs may be a good deal, particularly when they offer services like 24 hour walk-in clinics.
But proposals for a so-called patient bill of rights effectively deny people the freedom to choose the HMO tradeoff if they want it. To the extent such proposals are effective in forcing HMOs to pay for any medical services the patient desires from any specialist or health provider the patient wants, HMOs would no longer be HMOs. They could not cut costs by eliminating expensive or unnecessary care, and by using lower cost health care providers. HMOs would be forced to be just like traditional, high cost, insurance companies.
Health costs would then rise sharply again, more people would become
uninsured as a result, and people would lose the choice of a real HMO option.
Choice v. Regulation
Yet, there is a serious problem in the health care system that the supposed patient bill of rights is trying to address. More and more across the country people today are not choosing the HMO option freely. Employers are increasingly sticking workers in HMOs regardless of their preferences. Forcing the HMO tradeoff on people who don't want it is what is creating the growing animosity toward HMOs across the country.
The Republican Health Mart proposal, however, is the perfect solution to this problem, far better than a so-called patient bill of rights. In the Health Mart, people who like HMOs would still have the choice of real HMOs. Indeed, competition between several different HMOs the worker could pick would force all of them to behave better.
But those who did not like HMOs could avoid them and pick something else, including low cost MSAs. And when workers are unhappy with a choice they made, they could leave for another health plan.
In contrast, with a patient bill of rights the patient has to rely on faraway government bureaucrats to enforce their supposed rights. When HMOs evade compliance, patients have to get a lawyer and sue. Indeed, if the bill of rights just grants patients rights of appeal to independent boards and then the right to sue, patients will not necessarily have the right to the health care or providers they want in any event. Such rights of appeal and suit don't change the right of the HMO to say no when it thinks the cost savings are justified.
Just choosing another option in the marketplace through Health Marts is far more practical and effective. Workers and patients could then pick the health plans, like MSAs, that allow them access to the care and providers they want.
The bottom line is that freedom of choice, as through Health Marts, is far more effective than federal regulation, as through a so-called patient bill of rights.
Republicans should vigorously promote their Health Mart proposal to the
public, and drop ineffective regulatory patient bill of rights proposals.
Mr. Ferrara is associated with Americans for Tax Reform in Washington,
DC. Website: http://www.atr-dc.org.
Originally published in the Medical Sentinel 1999;4(6):219-220. Copyright
©1999 Association of American Physicians and Surgeons (AAPS).