Increase Consumer Choice

The House bill will accelerate health spending, not slow it down. It relies on higher taxes (featuring the "millionaire’s tax" that has no impact on health spending) and Medicare cuts that do little to change fee-for-service incentives--but that are unlikely to be taken when future Congresses come eye to eye with elderly constituents and their health care providers.

The Senate can do better. The key is promoting smarter purchasing and smarter medical practice, not easy-to-score budget cuts that keep intact payment and delivery methods that have produced unaffordable health care.

Here are some suggestions:

  • Reform the tax break for health insurance. Best option: cap the exclusion and extend it to everyone, not just those who buy coverage through their employers. The Finance Committee's tax on so-called Cadillac coverage is a second-best policy that penalizes rich and poor equally.
  • Give consumers better insurance choices. Open up state insurance markets to competition. Support value-based insurance design. Provide risk-adjusted subsidies for insurance.
  • Create price and value transparency. Patients need to know the cost and likely effectiveness of their treatment options--and so do their physicians. Collect real-time information about treatments and outcomes to inform clinical decisions.
  • Let competition work in Medicare. Require real competitive bidding among private Medicare Advantage plans and traditional Medicare. Move to bundled and performance-based payments to promote efficiency.

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

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Closing the gaps in health outcomes: Alternative paths forward

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