NCPA - National Center for Policy Analysis


February 24, 2010

To lower health care costs, we should look at proposals that will actually increase choice, competition, and consumerism, says James Gelfand, Senior Manager of Health Policy with the U.S. Chamber of Commerce. 

One way would be to break down state barriers and allow consumers to choose from thousands of insurance plans, instead of forcing them to stay in consolidated markets with burdensome coverage mandates? 

  • The Congressional Budget Office (CBO) said that this option alone would cut health care costs by 5 percent and save the federal government at least $12 billion.
  • Allowing small businesses to pool together and purchase plans outside of state bureaucrats' control would save billions more by getting people off of Medicaid and into new, more affordable employer plans. 

If we want real competition in health care, we should let people and plans see the costs and quality of providers and procedures:  

  • That's a big project and it will take time, but it could be jump-started by releasing patient-protected CMS claims data to quality reporting organizations.
  • Overnight, we could have massive amounts of data on thousands of hospitals and doctors, and could let people truly see the costs of care.  

Once people see the real costs of health care, those costs need to matter -- which means a purely third-party-payer system needs some change, says Gelfand: 

  • For starters, we need many more high-deductible health plan (HDHP) options to give people skin in the game.
  • People often expect their health insurance to cover everything, because it costs so much; HDHPs have lower premiums but do not immediately kick in to cover all costs.  

Enact these changes, and we have already cut health care costs, insured more Americans, and created real competition between health plans and providers -- while helping people be better health care consumers and giving them the tools to be smart shoppers.  And we saved money for the government, without taxes and without infringing on individual or employer autonomy.  These few items would not be a comprehensive reform plan, but they would certainly be a good way to start -- and they could all garner bipartisan support, says Gelfand. 

Source: James Gelfand, "Control Costs with Real Choice, Real Competition, Real Consumerism," U.S. Chamber of Commerce, February 20, 2010. 

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