Patient power vs. service delivery

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(Host) Commentator John McClaughry expects another sharp health policy debate in this legislative session.

(McClaughry) In December a group of Democratic legislators gave notice that they intended to make health care the defining issue of 2004. They proposed allowing small businesses buy into the state’s Medicaid program, buying prescription drugs from Canada, and protecting community rating.

In his January 20 budget message Gov. Jim Douglas set out his counterproposals. After describing the fiscal black hole facing the Medicaid program – the program the Democrats are eager to expand – Douglas proposed state reinsurance of individual and small group portfolios, tax credits for small businesses that contribute to their employees’ Health Savings Accounts, increased Medicaid payments to providers, cheaper imported prescription drugs, and more money for community mental health.

Then Douglas broke out into new territory. He proposed to “empower the patient” by collecting and posting prices for treatments. He proposed to allow insurers to offer a “healthy choices discount”, so that those who avoid health-threatening behavior can benefit from lower insurance rates. This common sense idea is currently prohibited by the same community rating law that Douglas’s opponents have so stoutly defended.

The two sets of proposals offer two diametrically opposed versions of health care policy. Douglas has adopted the “patient power” model. It’s based on consumers making informed choices in their own self interest among competing insurers and providers. Its key mechanism is a tax deductible health savings account, coupled with a low cost high deductible major medical policy. His concept resembles the highly successful Swiss system.

The Democrats favor the “service delivery” paradigm. Its key concept is “universal coverage” managed by a governmental authority through regulations, price controls, budget caps, reimbursements, and rationing, principally or entirely financed by taxation. In such a system, health insurance is abolished. Everyone has a right to as much health care as the government thinks they need, and the idea of empowered consumers is irrelevant. In this model, patients – not consumers – stand in line until their number is called, take what they are given, and do as they are told, at no direct cost to them, consistent with budget realities. These policies are exemplified in the taxpayer-financed Canadian and British systems.

The “universal coverage” advocates oppose Health Savings Accounts that they claim, without evidence, would benefit “the healthy and wealthy”. If the ultimate goal is a single payer system, as theirs is, every incentive for informed consumers to act in their own interest is contrary to the idea of the collective good.

As the political year progresses this debate will be waged in earnest. Vermonters will have to understand the implications of these diametrically opposed policies, and make their choice in November.

This is John McClaughry – thanks for listening.

John McClaughry is president of the Ethan Allen Institute. He spoke from our studio at the Fairbanks Museum in Saint Johnsbury.

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