Arena Digest: Reform Essentials

A year of political wrangling has produced a pair of 2,000-page bills that promise more than they can deliver. The recently released White House proposal--actually an 11-page outline for a reconciliation bill that would modify the Senate provisions--makes no fundamental changes in the policy direction set by Congress.

There can be only two possible outcomes. Democrats might be successful in pushing through the reconciliation process a reform that is to the left of the Senate bill. Or long-held disagreements between the left and the left-est could frustrate President Barack Obama's political ambitions for major health legislation. Either way, we lose.

The relevant question, then, is: What could we have done better? Here are three elements that should have been the basis for health reform.

The recently released White House proposal makes no fundamental changes in the policy direction set by Congress.

First, set realistic priorities. We live in a world of limited resources and even more limited understanding of what would really reform a complex health sector accounting for a sixth of the economy. Realistic reform would work first on slowing cost growth and redirecting subsidies that are in the current system toward those who need help the most.

Second, give individuals a greater voice in decisions that affect their health and their wallets. Health care and insurance decisions are complicated, and most people rely on expert agents--their family doctor or their employer, if they buy insurance at work--to do much of the heavy lifting. We need better information and stronger incentives for those agents to provide options and advice that are truly in the best interest of the individual.

Third, establish real accountability. Individuals and companies are accountable to government for adhering to regulations and paying their taxes, but government is not directly accountable to those it regulates. That's why bad policies persist: There's no consistent pressure on policymakers to correct their mistakes. In contrast, a market system does not require consumers to continue buying what they do not want. Health reform should have focused more on making markets work and less on making government in charge.

Joseph Antos is the Wilson H. Taylor Scholar in Health Care and Retirement Policy at AEI.

Photo credit: Tom Grill/Corbis

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