15.6. How Can America's Health-Care System Be Improved?

Most of the proposals for improving America's health care, including President Clinton's recent plan, involve some combination of the following: 1) replacing the private insurance system with nation­al health insurance, 2) enlarging the current system by requiring employers or the government to insure all workers, or 3) requiring everyone to buy health insurance from companies of their choosing.

National Health Insurance. National health insurance would be a compulsory program adminis­tered by the government. Financing for national health insurance would come from employer/ employee contributions, taxes, and fees.

In Canada, where national health insurance was adopted 20 years ago, provincial governments pay the bills, set fees with doctors and hospitals, and decide what new equipment they can purchase. Since doctors and health-care facilities are in the private sector, the public is free to choose whose serv­ices they would like to use.

The German health system is built around 1,200 insurance companies or "sickness funds." Employers and employees pay taxes into the funds, which pay for health care. In addition to paying part of the cost, the German government regulates the system to keep costs down by overseeing negotiations between the funds and the health-care providers.

Supporters of national health insurance feel it is more equitable and cost efficient than the private system currently operating. All Americans would be treated equally, regardless of wealth, and care would be provided without deductibles or co-payments. Its cost effectiveness is suggested in a recent Govern­ment Accounting Office (GAO) study, which deter­mined that the replacement of 1,500 private insurance companies with a single government agency could save $75 billion in administrative costs.

Critics of the proposal cite several reasons for reject­ing a national health insurance program:

• Government regulation and control over the health-care industry would likely stifle innovation.

• While there may be administrative savings at first, given government's involvement, costs would likely rise in the long run.

• Government involvement in matters as personal as health care will be viewed by many as un-American.

• The public is unlikely to accept the kind of income tax increases that would be needed to finance national health insurance.

Mandated Employer-Based Insurance.

Mandated care proposals require that all employers insure or pay for the insurance of their employees.

Under these proposals, businesses above a certain size would be required to provide health insurance for their employees. Smaller firms and the self-employed would have the choice of providing insur­ance or paying into a federal fund that would cover uninsured workers. Medicaid would expand to cover all the needy, and Medicare would be retained to cover the elderly.

A national board of representatives from the health­care industry, government, insurance companies, and the general public would be created to control costs. The board would set overall spending limits and fees for specific services.

Critics of the proposal say that:

• It would make American firms less competitive in

overseas markets.

• It would not contain costs. There would still be

1,500 private insurance companies generating administrative costs that lack the leverage need­ed to force providers to reduce their charges.

• The country cannot afford such a costly program,

given the size of the national debt and deficit.

Individually Owned Insurance. A third approach to the health-care problem seeks to use market forces to cool health-care inflation. It does this by requiring that consumers, rather than employers and government, buy insurance.

Just as car owners are required to carry liability insurance, under these proposals individuals and families would be responsible for purchasing their own health insurance. Employers could give the money directly to their employees that they formerly paid for health insurance. Since consumers would be able to choose the health-care plan that best met their needs, competition among insurance compa­nies would drive health costs down.

The government would continue to finance the Medicare and Medicaid programs, as well as to pro­vide tax credits to the working poor and others. Since companies would no longer be able to deduct health insurance premiums from their tax returns, the gov­ernment would receive enough additional funding to offset the cost of administering the program.

Critics of this proposal say that:

• Free market competition will not work in the

market for health care. Since it involves life and death, people will pay what they must for the services they need.

• Many people will be tempted to save money by

buying policies with high deductibles. Unable to afford out-of-pocket expenses, this will lead them to avoid preventative care and non-emergency treatment.