NCPA - National Center for Policy Analysis


July 20, 2009

If we let individuals control their health care dollars, and free them to choose from a wide variety of health plans and providers, market competition will make health care better, more affordable and more secure, says Michael Cannon, director of health policy studies at the Cato Institute.

According to experts:

  • One-third of U.S. health care spending, or about 6 percent of GDP, is pure waste.
  • That's more than $3,000 of waste for every $10,000 of health care spending.
  • The waste comes about because Government controls half of our nation's health care dollars, and lets employers control an additional quarter.

Alternatively, by allowing consumers to directly control their health care dollars, the government could effectively provide American citizens the opportunity to pocket the extra $3,000 if they are able to cut costs.  Letting consumers control the money requires two steps, says Cannon:

  • Congress should give Medicare enrollees a voucher, let them choose any health plan on the market, and let them keep the savings if they choose an economical plan. Medicare could even give larger vouchers to the poor and sick to ensure they could afford coverage.
  • Congress needs to give consumers who purchase their own coverage the same tax break as workers with job-based coverage.

Giving workers direct control over the entire $10,000 would be the equivalent of a $532 billion tax cut each year.  Consumers would eliminate wasteful spending quickly, because they would keep the $3,000 in savings, says Cannon.

Source: Michael F. Cannon, "Let Customers Control The Money And Market Will Cure Health Care," Investor's Business Daily, July 15, 2009.

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