NCPA - National Center for Policy Analysis

THE HEALTH OF THE UNION

January 31, 2006

The argument for Hillarycare and other national health schemes has been that "one payer" -- meaning the national government -- would simplify the system and make it more efficient. To believe that, you would have to believe that America's Amtrak train system, for example, or anything else managed by the 535 members of Congress is "efficient," says George Melloan, of the Wall Street Journal.

In his State of the Union address, President Bush will outline a program that goes in the opposite direction, or at least attempts to do so. It reportedly will stress health savings accounts (HSAs). These were the one bright spot in what was otherwise a badly conceived and expensive Medicare drug-benefit bill passed two years ago, says Melloan.

  • The idea of HSAs is to bring market choices back into the medical-care industry.
  • Health insurance, particularly if it is provided by an employer, creates the illusion among consumers that health care is free.
  • When consumers are spending out of their own HSAs they will exercise the same kind of judgments they use for other major purchases, shopping for the most economical source of the procedure needed and being less inclined to run to a doctor for every small ailment.

This may not be a cure for everything that pumps unnecessary costs into health care, but employers seem to find it interesting as an alternative to shelling out rising insurance premiums. If consumers in significant numbers actually start shopping for health care, they may well push the health care industry into finding more efficient ways of delivering services. There already is movement in that direction under pressure from health insurance providers, who are themselves under pressure from large corporations, says Melloan.

Source: George Melloan, "The Health of the Union," Wall Street Journal, January 31, 2006.

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