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Free Market Perspectives on American Healthcare Reform Plans

Fri, 20 Nov 2009 04:04:23 +0000

While the primary ideological debate over healthcare reform in America is centered on the Democratic and Republican parties, a number of independent libertarians have also been vocal in expressing their reservations to current legislative options. Although few libertarians have been elected to Congress, a number of leading health and policy scholars have taken a market-based approach which suggests that government healthcare may be counter-productive. The academic debate over the merits of health reform incorporates these varying perspectives, which come from scholars across a variety of disciplines.

Economics of Health Care

Free market economists have been modeling the role of government in health markets since the 1960s, and have aimed to model the influences of government entry, irrational consumer decisions and the role of competition in the market. At the core of the issue is the role of policy in shaping incentives: while liberal economists such as Cass Sunstein argue government should encourage certain types of health behavior , other libertarian scholars have argued that providing more choices and less regulation should be the focus on improving health outcomes.

Research on Health Reform

Two major economic scholars active in health research today are MIT’s Jonathan Gruber and Harvard’s Richard Thaler. Both economists take a free-market approach to the subject but are careful to evaluate potential market failures, externalities and unintended constraints which lead to sub-optimal outcomes. Therefore, while scholars such as Robert Barro of Harvard have argued that private insurance markets can solve healthcare reform issues, centrist research has taken a more nuanced approach to the issue.

In a 2008 report on behavioral economics, Thaler argues that research into why people fail to make rational savings decisions can shed light on sub-par health care practices as well. One overlooked aspect, according to the paper, is the presentation of the options to consumers. While many consumers might agree that quality health care is important, the availability and presentation of choices is even more important. Providing consumers with a clear road map to selecting a plan, especially when they are not given one by their employer is crucially important. For uninsured families, therefore, providing coverage guidance should be a core part of the planning process. Gruber also argues in another paper that lessons from Massachusetts state health care reform can help policy makers better understand effective reform on a national level. In particular, his paper takes a deeper look at consumers budgets and how mandatory plans can encourage more investment in quality health care, including preventative options.

Expert Perspectives on Rising Healthcare Reform Expenses

Fri, 13 Nov 2009 02:07:35 +0000

When the Congressional Budget Office released a report suggesting that healthcare reform legislation may not reduce the overall budget deficit , many policy makers and citizens raised a critical eye. A core part of the healthcare reform debate today relates to its role in lowering overall public spending on health expenses. Since the national US budget deficit is at an all-time adjusted high, structuring legislation to reduce long-run health expenses provides a means for more sustainable health policy. Expert Cost Estimates Today, aggregate healthcare expenses cost nearly 20% of the annual Gross Domestic Product, totaling over $2 trillion in spending, and over $7,000 for each citizen. More importantly, the rising trend in health care costs suggests that health expenditures are growing faster than either currency or wage inflation, making adjusted health expenses even higher in a down economy. The current debate in Congress relates to creating incentives for more affordable treatments, better preventative care and broader coverage for the uninsured (whose lack of coverage leads to adverse effects on the aggregate economy.) Over half of aggregate medical expenses are attributed to direct care in terms of hospital stays and direct medical coverage. Spending on preventative care, education and fitness, on the other hand, represents a much smaller portion of costs. As a result, the overall debate on healthcare reform expenses relates to policy conditions under which consumers and local organizations can make better health allocation decisions. Elements of Savings While there is no single panacea to lowering healthcare expenses, there are several approaches which are being actively incorporated into reform efforts. One of these savings elements relates to better medical technology, including electronic medical records, more efficient medical devices and improved communications between health providers. The theory is that with better information, health care professionals can make most efficient and cost effective decisions. By adjusting their decision making, doctors can lower unnecessary medical costs and help encourage faster recovery. Another aspect of savings includes streamlining and prioritizing existing coverage. By investing more in early education, regulating drug marketing costs and providing more effective public options for senior care, policy makers believe they can take steps to lower overall health expenses. Policy makers argue that creating a public regulator which oversees the pharmaceutical, private insurance and medical device industries can provide an effective way to reduce unnecessary costs and prioritize effective, necessary care options.

Lessons from Canada

Fri, 06 Nov 2009 17:51:17 +0000

While healthcare reform in America remains the center of a contentious debate over economic planning, America’s neighbor to the north has integrated public health options for decades. Many policy analysts have analyzed Canada’s public health care plan as a blueprint to better understand the potential implications for Healthcare reform in America. We wanted to provide you some insight into Canadian healthcare, along with its options, costs and implications for international policy making.

Background to the Health Plans

The Canada Health act established a public healthcare option in the country funded by provincial taxes and a subsidized general premium rate scaled by income. The Ministry of Health issues each citizen a Care Card which provides access to essential professional medical care options, while also allowing patients to invest in supplemental and premium private care. The Government negotiates prescription drug pricing, leading to lower wholesale and direct consumer costs, which lowers out of pocket expenses for many consumers.

Under the plan, the elderly and poor are offered subsidized treatment options which help to ensure complete coverage. The program also has a strong focus on preventative care with mandatory checkups and evaluations, along with a focus on delivering efficient care. Patients are encouraged to use their medical care wisely, and there are stringent limits on over-use or irresponsible personal choices that may lead to higher medical costs. The Canada Health Act went into law in 1984, following on provincial programs which established universal access to health care on a local level.

Costs and Options in Canada

According to the plan, nearly ¾ of essential health care costs are covered under the government’s plan. These expenses include treatment for disease, preventative care, pregnancy and disability costs, as well as support for low income families and the elderly. Citizens still pay a pro-rated monthly premium around $50 per month as well as supplemental costs for specialized care. As part of the plan, citizens pay for aspects of care including dentistry, vision care as well as the cost of certain prescriptions.

While many groups argue that the system under delivers care to those in need, the country’s vital health statistics rank remarkably well in areas ranging from life expectancy, infant mortality and overall healthcare efficiency. As a result, many policy makers in the United States have studied Canada’s health care system carefully with an aim of incorporating some of its most productive elements into our own national plan.