The Way I see It: Healthcare reform begins with patients

December 15, 2006

The author makes a case for a shift to a consumer-driven system.

To attract prospective employees after World War II, companies that couldn't compete on wages (war era controls were still in effect) offered medical benefits. Today, more than 60 years later, roughly three-fifths of Americans have employer-subsidized, third-party health insurance. What started out as a business incentive has become the hallmark of our healthcare system.

The problem with having a third party pay for our health insurance, however, is that there's no incentive to be healthy-and even less to shop around for a better price. In fact, just the opposite is true: People want to get everything that's coming to them, which encourages glut. Add to this phenomenon expensive new medical and pharmaceutical technologies, an aggressive tort system, and an aging population, and it's no wonder that the rise in healthcare costs has far outstripped general inflation. Businesses, no longer willing to shoulder these costs have begun to revolt, shifting their burden back onto their employees.

Reform, many agree, is desperately needed, although the nature of that reform remains controversial.

The problem with that expectation is that, when everything is labeled a right, then the concept itself loses any meaning. It's like the student who highlights the entire page of a book, thereby losing all distinction between what's crucial and what's incidental.

There's another problem with calling healthcare a right. It imposes an obligation on the government to fulfill that right-something our government is neither economically nor functionally equipped to do. In contrast, the Bush administration reform plan would shift at least part of the healthcare burden from employers and government back to the consumer. By coupling a high-deductible policy with a tax-free health savings account, policy makers believe that Americans will become more efficient and discerning consumers of healthcare. Part and parcel of this cost-savings approach is price transparency, objective measures of quality, and tort reform.

The devil is in the details, of course. Still, if the current plan accomplishes anything, it will almost certainly raise anew the question of health and individual responsibility. This is crucial for progress in the area of healthcare reform, since, to date, the bad effects on health of certain lifestyle choices-poor diet, overeating, smoking-have done little to alter peoples' behavior. If, on the other hand, consumers were forced to shoulder more of the financial burden of their lifestyle choices, finally, perhaps, they'd be motivated to pursue healthier choices.

And that would be the start of real reform.