Opinion: America Desperately Needs Health Care Reform

(March 18) -- America desperately needs health reform.

Today, nearly 50 million people are uninsured. For those of us lucky enough to get health insurance at work, a pink slip can end our coverage. Without insurance, much necessary health care becomes unaffordable, and serious injury or illness can deplete a lifetime of savings and cause bankruptcy.

Every other economically advanced country provides its people with the peace of mind that comes from knowing that, no matter what, families are guaranteed affordable, essential health care. To provide American workers with that same peace of mind, the health care reform legislation now being considered does three things:

Medicaid covers the poorest uninsured.
Low-wage workers and their families whose incomes are too high for them to qualify for Medicaid but too low to pay for coverage on their own receive subsidies to help them buy private insurance.
Insurance companies are forbidden from discriminating against consumers with pre-existing conditions.

Shared responsibility among consumers, business, insurers and the public sector is the hallmark of this reform. Government helps people who need it, but everyone who can afford coverage must buy it. Free riders can't choose to be uninsured, knowing they can skate into the emergency room whenever they need services and shift the cost of care to the rest of us.

Employers will likewise be barred from offloading their costs. If a large or medium-sized firm decides not to offer insurance and its employees enroll in publicly funded coverage, the company must reimburse the taxpayers.

Insurers will also be held accountable. They can't discriminate against people with health problems, impose annual or lifetime limits on covered benefits, or charge co-payments for cost-effective preventive care.

Many leading economists applaud this bill's approach to controlling health care costs:

Each state establishes a marketplace offering multiple private insurance plans to small firms and to workers who lack employer-based coverage. If they want this significant line of business, insurance companies must offer small companies and the self-employed good deals like those now reserved for the very largest firms.
In this new marketplace, consumers who pick a more expensive plan will have to pay more. That will make them cost-conscious and give insurers an incentive to hold down costs to attract customers.
Medicare will lead the way in testing new approaches to paying for care that reward value rather than volume. Federal authorities can rapidly implement innovations that slow cost growth while maintaining or improving quality. History shows that private insurers quickly adopt new and successful payment methods that start with Medicare.
Insurance companies that sell policies with unusually high premiums will pay an excise tax, encouraging them to keep costs below taxable levels.

In 1994, President Bill Clinton's health care reform plan suffered a fatal blow when the nonpartisan Congressional Budget Office issued its cost estimates. This time around, CBO finds that, because the proposed expansion in coverage is more than fully paid for, the legislation will cut the federal budget deficit by $138 billion over the next 10 years. CBO estimates the bill will cover more than 30 million uninsured and that health insurance costs will fall modestly for most people with private coverage.

Unfortunately, heated political rhetoric has misinformed the public about the pending legislation. If Congress fails to pass it, health costs will continue to rise, and millions of middle-class Americans will join the ranks of the uninsured. Only if our leaders understand the facts about the reform proposal now on the table can they decide whether it would be an improvement over the rapidly degenerating status quo.

Stan Dorn is a senior fellow at the Urban Institute.