NCPA - National Center for Policy Analysis


December 19, 2005

In a recent debate between American Enterprise Institute (AEI) scholar Joseph Antos, National Center for Policy Analysis (NCPA) president John C. Goodman and Robert Reischauer, president of the Urban Institute and vice chair of the Medicare Payment Advisory Commission, the consumer-driven health care (CDHC) system was discussed.

According to Antos:

  • CDHC is a way to break the health inflationary spiral by making consumers more aware of costs, but it puts a premium on information about cost, quality and effectiveness of care.
  • We are years away from the kind of information infrastructure needed for an efficient health care system of any kind.
  • Directly or indirectly, workers pay for their own health insurance and as a matter of sound policy and social justice, we should redirect government subsidies so that they are better focused on those who need the help.

According to Goodman:

  • CDHC is not about shifting costs to employees, it is about shifting money so that employees can manage their own health-care dollars.
  • It is also about patient power -- having patients make the often-difficult choices between health care and other uses of money instead of having those choices made by large, impersonal bureaucracies.
  • To improve the system, rationing by waiting -- paying with time -- should be replaced with rationing by pricing, which would let providers compete to solve problems.

According to Reischauer:

  • One of the major problems facing the nation's health-care system is rapidly rising health-care costs and it's unlikely that CDHC will prove to be a significant solution to this problem.
  • A more sensible approach would be reference pricing; under this system, basic insurance would cover (with some modest co-insurance) the cost of an efficiently provided service that met acceptable quality standards.

Source: Joseph Antos, John C. Goodman and Robert Reischauer, "Consumer Choice: Can It Cure The Nation's Health-Care Ills?" Wall Street Journal, December 13, 2005.

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