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A Consumer Choice Health System
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20344 |
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CURRENT ISSUES
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6 / 1992 |
2,686 Words |
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Edmund F. Haislmaier
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What do Americans really want from their health system?
It is the most basic question in the debate over health care reform. Yet, it rarely seems to be the starting point for proposals to fix the problems.
I think the answer is that Americans want two things: First, an efficient health system that provides quality care at reasonable cost (good value for money); and second, a compassionate health system that provides the same level of care to those with low incomes or substantial medical problems as it provides to those who are reasonably healthy and affluent.
The present system does not meet these objectives; it instead produces spiraling costs, declining access, and more often than might be imagined, inferior quality. The culprit is not doctors, hospitals, insurers, new technology, or even consumers. The real problem is that the basic incentive structure of the system, or the "rules of the game," are all wrong.
Imagine what would happen if the rules of football were all wrong. Suppose there were no penalties for personal foul, or worse, that teams were awarded extra points for injuring opponents. Such a perverse incentive structure would result in mayhem on the playing field. Blaming players, coaches, or fans would do little good, absent changing the rules.
So, too, in the health care system. Beneficial results can come only from the right rules, or incentive structure. In most areas of the economy a sound incentive structure produces, through free and competitive markets, beneficial results. But, while the present U.S. health system is largely private, with a somewhat competitive market, because of its perverse incentive structure the result it produces are often harmful, not beneficial.
Thus, in order to achieve genuine health care reform we first need to understand how the present problems are the product of past government policies, which established the wrong rules for the health care market. The issue to begin with is the long-standing rules of health care tax policy.
Money spent by an employer on a worker's health insurance is really part of the worker's wages. But under federal tax law, it is not counted as taxable income to the worker, who thus does not pay federal income or payroll (FICA) taxes or state income taxes on
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