Time for Patient Power

Commentary by Pete du Pont

We can be sure of one thing, no matter who wins the presidency, no matter which party or parties control the House and the Senate: health care will be rationed. For that matter, it's being rationed now.

Do you know how much your own health care cost last year? The answer almost certainly is no. The reason, is that somebody else - usually an employer, an insurance company or the government - pays most of the bill. Thus there isn't a lot of incentive for the patient to pay much attention to the cost.

But there are infinite ways to spend money legitimately on health care. For example, we could spend half the gross national product just on clinical tests. Somebody has to decide when to provide care, when to delay it and when to withhold it altogether. That's how we got managed care and other approaches that tend to infuriate almost everybody -patients and providers alike - as they attempt to control the supply of health care services by fiat. They try to dictate the amount and kinds of services patients can receive, and the prices doctors, hospitals and other providers can charge.

It isn't working. Managed care is under political siege and questions are increasingly being raised about whether employer-provided health insurance is a good idea for either businesses or workers. The number of people without health insurance has increased from 39 million in 1997 to more than 44 million today. In that climate, the free market reforms are finding a wider, more receptive hearing.

Indeed, Dr. Paul Ellwood Jr., the "father of the HMO," recently described managed care as a failing system characterized by "rising medical inflation, consumer distrust, provider hostility and political opportunism." Said Dr. Ellwood; "The stage is set to shift from a health system dominated by employers and government purchasers to a system responsive to patient power at the individual provider level."

Patient Power. That is the key.

What that means is making it in the self-interest of individuals to become prudent buyers of health care. As John Goodman, president of the National Center for Policy Analysis, and NCPA Senior Fellow Gerald Musgrave wrote in their 1992 book Patient Power, "In general, there is no right amount of money to spend on health care. The right amount is whatever people choose to spend, providing they are spending their own money and are facing prices that reflect the real social costs of medical services."

As a step toward putting more control in the patient's hands, House Majority Leader Dick Armey has proposed a patient protection bill that will include expanded Medical Savings Accounts, permitting rollovers of flexible spending accounts from one year to the next, group-pooling options like health marts and association health plans, and tax equity. These proposals are intended in part to level the playing field between those with and without employer-provided insurance.

At the same time, using the "patient power" term from the Goodman-Musgrave book, Armey described it as affording four rights for all Americans: the right to choose doctors and hospitals, the right to choose insurance, the right to choose health benefits, and the right to direct the course of health care treatments.

Currently, most health plans are employer-provided, and are not personal or portable. Employers allow the health plans to dictate which doctors, hospitals and clinics they will cover. Individuals have little or no control over these choices made on their behalf. Doctors are given their orders by the insurer, and not the insured. Consequently, the doctor-patient relationship is diminished. Administrative costs soar as this third-party approach to access, quality and cost savings results in an increased bureaucracy, limited care, and growing out-of-pocket co-payments for the patient. The patient becomes powerless and captive to employer-provided insurance.

The health care system envisioned by Armey would allow individuals to choose the plan that best suits their needs, whether a fee-for-service plan with an MSA, a group health plan, HMO, or PPO that includes a favorite physician and neighborhood medical center. In either case, the patient makes the decision about the plan and the services it provides. It becomes personal and portable and secure.

By changing the tax code and creating tax credits for the purchase of health insurance for all individuals, the proposal would give people the ability to select the insurance plan that best suits their needs. Instead of health insurance benefits mandated by states or the federal government, "patient power" health reform would let patients design their own plans, containing whatever coverage they need and are willing to pay for.

Since health care has to be rationed by somebody, wouldn't you rather ration your own in consultation with your physician? That's what patient power is all about.

 

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The National Center for Policy Analysis is a public policy research institute founded in 1983 and internationally known for its studies on public policy issues. The NCPA is headquartered in Dallas, Texas, with an office in Washington, D.C.