NCPA - National Center for Policy Analysis

HEALTH PLAN IS MARKET DRIVEN

August 6, 2007

Republicans in the Wisconsin State Assembly have an alternative to the sweeping overhaul of Wisconsin's health care system proposed by Senate Democrats: Let the free market do its job, says the Milwaukee Journal-Sentinel.

The Assembly proposals center on changes in the tax code that aim to make health insurance more affordable:

  • The cornerstone of this approach is encouraging the adoption of health savings accounts (HSAs) by exempting contributions from state taxes.
  • That would lower the cost of health insurance by several hundred dollars a year for the typical family.
  • HSAs, which are paired with high-deductible health plans, allow people to put aside money tax-free to pay for medical expenses.
  • In Wisconsin, unlike most states, contributions are not currently deductible from state taxes.

The underlying idea is that when people are spending their own money -- money they've set aside in a health savings account -- they are more likely to shop for the best quality care at the lowest price.  As Devon Herrick, senior fellow at the National Center for Policy Analysis, points out, the market will only respond when people have more incentive to ask for information on prices.  That in turn will increase competition in health care, driving down prices the same way it does in other markets.

Source: Guy Boulton and Stacy Forster, "Health plan is market driven," Milwaukee Journal-Sentinel, August 4, 2007.

For text:

http://www.jsonline.com/story/index.aspx?id=642538

 

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