Tuesday, September 9, 2014

ObamaCare and a Free Market Alternative Plan

Market competition is the only form of organization which can afford a large measure of freedom to the individual.

Frank Hyneman Knight (1885-1974), economist at the University of Chicago, in his book Freedom and Reform

What the mind of man can conceive and believe in the mind of man can achieve.

Napoleon Hill (1883-1970), Self-Made entrepreneur and advisor to President Franklin Roosevelt, in his book The Law of Success

I shall begin with a series of assertions.

I believe free market forces, driven by desires of consumers for wide access to the very best in medicine, can and will outperform government control of heath care at every turn.

I believe these market forces should include health consumers, patients, physicians, entrepreneurs, innovators, and businesses, large and small, and American voters and their political representatives, acting in concert .

I believe market reform can only be achieved through informed consumer choice, market competition, and disruptive innovation with creative destruction of poor performers. And it can only be achieved with wide acceptance of health savings accounts, marketing of competitive plans across state lines, elimination of insurance and government middlemen, removal of oppressive government regulations which suppress economic growth, and creative use of the Internet and American genius for unleashing the potential of information technologies.

And finally I believe this can only be achieved if we can conceive and believe in plan that can outperform ObamaCare while at the same time providing a safety net for the poor.

A Memo

Yesterday morning, Jeffrey Anderson, executive director of the non-partisan, politically neutral Center for Health and Economy, whose board includes health policy scholars from across the political spectrum, wrote a memo on a “Winning Alternative to ObamaCare.” Anderson says the Center’s alternative would save $1.13 trillion versus ObamaCare over the next 9 years.

Here is the essence of this memo, which I shall quote.

• Six million more Americans would have private health insurance under the Alternative than under ObamaCare.

• Under the Alternative, premiums would decrease in the individual market “in all plan categories for both single and family coverage,” with reductions ranging from 4 to 25 percent.

• Provider access—“access to desired physicians and facilities”—in the individual market would increase by 19 percent in the first year of the Alternative and by 57 percent as of 2023.

• Provider access in the employer-based market would increase by 4 percent.

• Medical productivity—the “efficient use of resources”—would increase by 10 percent in 2016 and would remain at about that level.

• Twelve million fewer people would be on Medicaid, and 6 million people who would have been put on Medicaid under ObamaCare would buy private insurance under the Alternative.

• ObamaCare would cover 249 million people, while the Alternative—without imposing an individual or employer mandate—would cover 243 million, thereby leaving 38 million uninsured under ObamaCare (13 percent of the population) versus 44 million under the Alternative (15 percent of the population)—with all of ObamaCare’s additional coverage coming from increasing the Medicaid rolls.

• ObamaCare would cover 6 million more people (all on Medicaid) than the Alternative but would cost $1.13 trillion more than the Alternative, which works out to $188,000 per additional covered person.

• The Alternative wouldn’t needlessly disrupt the employer-based market—149 million people would have employer-based insurance in 2015 (the year before the Alternative would take effect), and the same number would have it in 2023 (the last year of the scoring).

• The Alternative would promote the purchase of genuine insurance while increasing the use of health savings accounts, thereby encouraging people to shop for value: “The structure of the Alternative’s premium credits encourage catastrophic coverage enrollment, as many households can purchase catastrophic [plans] for less than the value of the [tax credits],” with their savings going into HSAs.

• In sum, the Alternative would cut federal spending by over a trillion dollars, increase the number of Americans with private insurance, reduce premiums, improve medical productivity, and enhance access to doctors and hospitals in both the individual and employer markets.

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