NCPA - National Center for Policy Analysis

Injecting Competition into Health Care

June 10, 2014

Lowering health care costs and achieving better quality is possible by promoting real competition among providers and insurers, says Paul Howard, senior fellow at the Manhattan institute.

Obamacare exchange networks are largely based, not on quality, but on hospitals and doctors' willingness to accept lower reimbursements. As growing numbers of patients become dissatisfied with their health care, state and federal regulators may expand network requirements. If this happens, costs will rise even more. 

To bring down prices and, at the same time, improve quality, state and federal lawmakers should implement consumer-driven health care reforms.

  • If state employers and public health programs shopped domestically for health care in the way that large companies -- such as Boeing and Lowe's -- do, a market for health services would emerge. Medicare should offer incentives to enrollees to use low-cost, high-value providers.
  • Federal Medicare and Medicaid funds should be tied to state-level reforms that promote competition. Nurse practitioners (NPs), for example, offer high-quality care and should be able to offer services without physician supervision, yet only 20 states allow them to do so. NPs can compete with doctors and should be eligible to receive payment through federal programs.
  • Making it easier for consumers to use Health Savings Accounts (HSAs) would improve people's ability to pay for unexpected expenses. HSA qualifications should be streamlined, and more plans should qualify for HSA status.

Without more competition, the newly insured under Obamacare will see nothing but fewer choices, more risk and higher costs, says Howard.

Source: Paul Howard, "Obamacare is the New Premium Support. Without a Strong Dose of Deregulation and Competition, It Won't Succeed," Morning Consult, June 4, 2014.


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