4 Reforms to Ensure Health Care for 4th District Hoosiers
Although not perfect, the United States of America has the best health care system in the world. This is the direct result of a market driven economic engine, which rewards innovation. Health care innovation has resulted in the creation of life saving procedures, treatments and medicine beyond anything previously known to mankind. At the same time, access to this incredible health care is still beyond the reach of some citizens and the financing mechanisms have become less efficient, due to government intervention, lack of consumer choice and reduced competition. The Rokita Health Care Plan: 4 Reforms to Ensure Health Care for 4th District Hoosiers recognizes where reform and improvement is needed, while also recognizing the importance of preserving those aspects of the health care system that have created the best health care system in history. I strongly oppose both the Obama Plan which seeks to expand government control over health care and unreasonably restrict free market mechanisms. All proposals should encourage innovation and consumer choice.
Certain areas of the health care system are in need of reform. It is important that any reform be strictly focused on those areas in need of reform and not be used as an excuse to reduce innovation, reduce competition or expand government control. The 4Reforms Plan sees the problems in health care as falling into four broad categories and offers specific solutions to reform each.
1. Increase competition
2. Empower consumers
3. Expand access to insurance
4. Reduce Burdensome Legal and Regulatory Costs
If implemented in full, these practices will not only act to empower consumers, but will drive down costs, by preserving the ability to innovate and driving healthy competition. From these savings, society and the market could afford to insure more Americans, truly bring health coverage, in some for or fashion, even if catastrophic, within the reach of nearly every American. And for those afterward who are still so removed from society, the safety nets will still exist.
- Create Pooling Mechanisms and Group Plan Choices for Everyone - This plan expands options for the purchase of low-cost insurance from new pooling mechanisms. Today, the only health insurance pool available to many Americans is their employer’s pool. Americans not in an employer-sponsored pool purchase insurance in the “individual market.” This plan dramatically expands the insurance pools Americans have access to by allowing churches, alumni associations, trade associations and other civic groups to set up new insurance pools and offer affordable health care packages to their members. Instead of having only one group policy to choose from, under this plan, every American will be able to choose from a number of “group plans.” This will make health care more affordable and portable while not locking individuals into staying at a job simply to keep their health coverage. Families should not be forced to choose between leaving their employer and having health care.
- Increase R&D Tax Deductions – To nurture innovation, companies producing new medical treatments will have increased tax credits and deductions for money spent in the creation of such treatments. This provision recognizes the source of our great health care system and attempts to incentivize even more innovation.
- Fast Track FDA Approval – The FDA will be mandated to move rapidly to review and approve new innovative medical treatments. Under the Obama administration fast track approval of innovative products has been almost halted. Nothing is more harmful to the creation of life saving treatments than penalizing innovation. Any FDA regulation that is moved by FDA that costs the economy more than $50 million will be subject to an up or down vote by Congress.
- Fee Disclosure – Health care providers will be required to publish fees schedules on the internet and as part of a national health care database. No other economic activity requires consumers to make a purchase prior to knowing the cost. Health care should be no different.
- Increased supply of health care providers – Higher education must expand their existing volume of medical training positions and universities not already training medical professionals should be incentivized to enter this arena. Barriers created by professional associations and other special interests must be removed so that existing programs can expand without hindrance. The shortage of nurses and doctors is well known. Vital to an overall reform package is an increase in the number of health care providers.
- Increased Insurance Company Competition – Laws that prevent insurance companies from competing in multiple states must be changed. Under this plan, insurance companies will be allowed to offer policies in all states and the increased competition will create lower costs for Hoosiers by giving them more choices. Free market competition is vital to the success of any health care plan.
- Medicare Reform – Medicare is one of the least competitive parts of the health care system. Rather than let the free market determine reimbursement rates, the government mandates the amount paid to service providers. If the mandate it too low, seniors experience a shortage of health care services and providers may go out of business. If the mandate is too high, too much of service is offered and valuable resources are not properly allocated. Improved competition must include breaking the federal government’s monopoly on health care for senior citizens.
Empower Consumers: Returning Insurance to Its Origins
Health insurance should be true insurance. In other words, it should protect individuals and families from unexpected or financially ruinous costs. It should not pay for normal and anticipated health care costs. One of the main reasons that health care costs are out of control is that there is little connection anymore between the user and payer of health care services. Thus, there is little or no incentive for the users of health care to find the best price for services. There is no reason to ask whether a proposed treatment is necessary or if a less expensive alternative exists.
The advent of Individual Retirement Accounts in 1974 and 401k plans in 1978 ushered in a new era of consumer driven retirement savings. Despite the ridiculous claims that they would only be savings accounts for the rich, IRAs, 401k, 403b plans provide millions of Americans with their primary source of retirement funds. The wisdom of the consumer has shown that a privately driven retirement system can be much more beneficial than a government mandated and operated system. The same can be true of health care when the consumer is empowered.
- Replace First Dollar with Catastrophic Coverage Policies – Tax incentives will be created to incentivize the use of Health Care Savings Accounts (HSAs) in conjunction with catastrophic coverage. Auto insurance does not cover tire rotations and wiper blades. Homeowners insurance does not cover grass cutting and snow removal. Health insurance should not cover routine items which drive up the cost of health care and remove the incentive of consumers to select cost effective choices. When combined with HSAs, consumers will have better coverage at a reduced cost. In addition, by having “skin-in-the game” consumers will make better decisions that will ultimately lead to lower costs. As with basic household expenditures, the wisdom of consumers will prevail and better cost-benefit decisions will be made.
- Expand Health Savings Accounts (HSA) - HSAs offer a way to protect people from catastrophic costs while giving them tax protected savings from which to finance routine and expected health care expenses. Such accounts should be expanded dramatically as a way to encourage patients to be wise consumers of health care without putting them at risk of financial ruin in the event that serious and expensive health care conditions do arise. HSAs give consumers control of their health care purchases. The HSA reduces reliance on insurance company claims and increases the power of the consumer when dealing with health care providers. When you hold the check book, you are in control. Tax incentives will be introduced that encourage employers to grow the use of HSAs and employees to use HSAs.
- Tax Free Health Care Purchases – All health care transactions should be conducted tax free. Whether an individual receives health insurance coverage from an employer, purchases individual coverage from a variety of sources or uses the benefits of an HSA, each transaction should be tax free. When the federal government taxes health care benefits it directly increases the cost of health care. Whereas the Obama health care plan is designed to increase the cost of health care by increases the taxes on health care, the Rokita Plan will reduce taxes. In addition, the threshold for deducting health care expenses on income tax returns should be eliminated and all health care expenditures should be deductible from the first dollar spent.
- Electronic Medical Records – Transitioning to an electronic medical record system would aide doctors in the practice defensive medicine, reduce errors and fraud, and drive down costs by avoiding duplicate tests and procedures.
- Transparency: Consumer-driven healthcare must rely on transparency so we, as consumers, can do our job of picking the best value provider and procedures for our HSA and insurance dollar. This requires data. More specifically, it requires data that focuses on providers' outcomes, not merely their input and processes. Information such as procedure mortality rates, readmission rates, average treatment costs, fee schedules, and even pre-procedure cost estimates are all items that could be provided to consumers. While purchasing health care is more sophisticated than buying other consumer products, we must empower consumers to make the correct decisions. All stakeholders should come together and decide what data is needed and how to provide this data to consumers, so they may make informed decisions.
- Federal Disclosure Mandates - The federal government should create transparency laws that mandate the disclosure of a wide range of medical information, ranging from the performance of all medical professionals and institutions to the detailed costs of every procedure. This information must be easily accessible via the internet to any consumer who wishes to use it. Such a law will let the sun shine in so consumers can make their own, informed decisions using reliable, useful data. The data should not come from the government. It can come from provider disclosures, which would soon be analyzed by independent third parties. This same technique was used by the Indiana Secretary of State’s office to address campaign finance disclosures. Campaigns immediately publish campaign reports online and independent third parties (newspapers and community watch dog groups) review the data and report to the public. The public also has direct access to all the data, presented in a user friendly format.
- Pre-Existing and Chronic Conditions Covered at Affordable Rates- Our fragmented health care system makes it difficult for Americans with pre-existing conditions and chronic illnesses to find affordable coverage. No American should go bankrupt because they get sick. This plan strengthens, expands and creates new avenues for affordable health care for the sickest Americans through high-risk pools and reinsurance mechanisms. The sick and those with chronic conditions will be able to buy coverage at competitive rates.
- If You Like It You Can Keep It - Approximately 83% of Americans are satisfied with the health care they currently receive through their employer. Under this plan, Americans with employer-provided care can keep it without any change. Unlike other proposals, this proposal will NOT tax your employer-sponsored plan to pay for a government takeover of health care. And, unlike the Democrats plan, it will not force you to give up the health care coverage you currently have if you choose to keep it!
- All Americans and Hoosiers Get Choice and Coverage – This plan allows Americans who do not have employer-sponsored care or those not satisfied with their employer-sponsored plan to buy their own insurance with the same tax deductible feature currently only offered to employer sponsored plans. Americans who pay income taxes get a dollar for dollar reduction in their tax bill up to $2500 for individuals and $5000 for families. Americans who do not pay income taxes get the same amount from the government to buy a policy of their choice; $2500 for individuals and $5000 for families.
- Medicare Protection – Employees have paid into the Medicare trust fund and are entitled to the benefits for which they have already paid. Under the 4Reforms Plan, seniors will be given the option to accept their current Medicare coverage or take those dollars and purchase non-Medicare based coverage. The risk of losing high volumes of patients will incentivize the Medicare program to create efficiencies, new products and compete directly with private plans. It is important the current system be responsive to patient needs and not the other way around.
- Other provisions – Many provisions contained in other areas of the plan will dramatically empower consumers to make better health care choices.
Expand Access to Insurance
- Group Rating and Small Business Protection –While existing law reduces insurance company competition, it also allows the sharing of actuarial data. The 4 Reforms Plan aims to retain this important feature of current law and leverage this information, by requiring the insurance carriers to use one uniform rating process. This will allow small businesses to receive the same insurance coverage rates offered to large employers. The sharing of risk is central to the theory of insurance and group rating moves health insurance in the direction to which insurance was originally intended.
- Preexisting condition benefits – By implementing a group rating system, the exclusion of pre-existing conditions from newly issued policies can be eliminated. Since all employers will receive the benefits of group ratings, the need for such exclusions will be removed. To further strengthen this issue and to prevent loop holes, the banning of pre-existing condition exclusions will be written into law.
- Portability – Another benefit of group rating will be the option of creating portable insurance coverage. Group rating reduces the cost employers incur by extending benefits to employees no longer with the employer. Additionally, group rating will allow new companies to form, which specialize in providing “bridge coverage” to former employees, who wish to retain their prior coverage.
- Vouchers for the Poor – Medicaid currently offers health care for low income families. The quality of this care varies by state. By restructuring the current payment mechanism, electronic health care benefit cards (with their payments on them) can be given to low income families and empower them to purchase coverage that fits their unique situation, rather than be forced into a government run health system.
Reduce Burdensome Legal and Regulatory Costs
- Medical Liability Reform - The nation should adopt Indiana’s highly regarded medical malpractice rules, which fairly balance the rights of those injured and those of health care providers who are falsely accused. Such false claims drive up the cost of medical malpractice insurance. A significant amount of the nation’s health care costs are driven by doctors and other providers practicing “defensive medicine” – ordering extra tests, treatments, and services to make sure that patients have no grounds for claiming later that their treatment was inadequate and then filing a frivolous lawsuit. Both patients and doctors must be protected and this plan accomplishes both.
- Punitive Damage Caps - Caps on punitive damages should be implemented and cases should be required to go through a medical review panel before being filed in court. People that are legitimately injured should be allowed compensation for their loss. Awards, however, should be limited to compensatory damages, so as to reduce incentives for fraud and abuse.
- 1099 Reform – A requirement of ObamaCaree, which requires employers to report all $600+ purchases to the IRS via a 1099 will destroy jobs by creating costly red tape for employers. This provision must be immediately repealed.