[The Universal Health Care Choice and Access Act (S. 1019) proposed by Senator Tom Coburn (R-Okla.) would give every American the opportunity to purchase their own health care coverage, either through their employers or through the private market. An income tax credit would be made available to all who buy insurance, and individuals would be permitted to purchase coverage from any qualified company in the country. States would be given the flexibility to reform their Medicaid programs, and while federal payments for Medicaid would be capped, states could earn bonuses by achieving nearly-universal coverage for their citizens. The bill also promotes health information technology, disease prevention and health promotion, medical liability reform, and other changes intended to improve health system efficiency.]

Senator Coburn, you're not fooling around with little ideas. They're all big ideas, but they're politically difficult.

The Commonwealth Fund spends a lot of money studying health policy, and they have a new report analyzing the leading congressional health care bills. I didn't see yours in here, but if you read the table of contents, you see the kind of ideas that are the leading ideas today. Some of them are pretty good. The first one on their list does in fact deal with the tax treatment of health insurance--they couldn't avoid that; the President mentioned it. But then there are some other ideas that might be a little more questionable.

Federal-state partnerships to expand health insurance sounds good until you realize the bill they're talking about is one where Congress sets up a committee to decide what the good ideas are. Expand coverage through Medicaid; Medicare buy-in for older adults; universal coverage of children, which means through a federal program; expanding Medicaid and SCHIP coverage to families; employer mandates for large employers; and improving the affordability of coverage for small businesses, although it isn't entirely clear what that means--the Commonwealth Fund's list didn't include many free-market ideas, and your proposal is a refreshing counterpoint to that.

Let me mention a couple of issues specific to the Coburn proposal. First, on the tax treatment, something Stuart didn't mention is that your bill would allow employers to contribute to employees' health insurance premiums regardless of where they bought the coverage. That makes it possible to come up with a more sensible tax treatment for health insurance without destroying the current insurance arrangement that nearly everybody has. This is the kind of innovative approach that should be addressed in open debate on the Hill.

On private insurance, you support the idea of allowing people to buy insurance no matter where the insurance company happens to be located; you include some regulatory provisions that are meant to protect consumers from fraud and that would be run by the state where you live. So you're protected in two ways: by the state where the insurance company is located and the state where you live.

Interestingly, one of the things that you left out, which I know Stuart is concerned about, is a Massachusetts-like connector. Your view, apparently, is that the private sector will figure out how to market insurance to individuals, and, in fact, there is ehealthinsurance.com that does just that. It is actually possible to buy insurance without creating a government organization. I'm in favor of making it as easy as possible for people to buy insurance, but I share your skepticism about that particular model. I think it's worth looking at, however.

I wanted to dwell mostly on Medicare. I think the Senator's proposal is very daring, almost dangerous. It opens up the Medicare program potentially to almost any insurance that's sold in America. In other words, it offers insurance choices that Medicare beneficiaries don't have right now.

In essence, to suggest a phrase, you're proposing something that I would call "health insurance for life." When you're 20 years old or 22 years old, you can buy insurance that suits you; as you go through your life and through your career, you can change what you buy; and then, when you enroll in Medicare, you don't necessarily have to change just because you turn 65. That's an important principle, the idea of allowing people to have continuity in the coverage that they have. There are a lot of difficulties in making that happen, but the principle is very sound.

Another point that I would emphasize is that Medicare beneficiaries under the Senator's bill would have the choice of staying in traditional Medicare or opting out completely. The material that I read from his office doesn't mention the "V" word--voucher-- but essentially, the Senator has come up with a way to give people the value of Medicare while allowing them to buy on the private market the kind of coverage that they think they want.

There are real issues here. Since this would be voluntary, selection bias could be a problem. Leaving that aside, a system that allows Medicare to transform itself, not abruptly but over a period of time, is a sensible objective, but the details need to be worked out.

There are carrots associated with this. One of the carrots is that you get various kinds of tax breaks to buy private insurance, which will stay with you if you opt out of the traditional Medicare program and buy private insurance. That's a gigantic carrot.

There is also a stick. The Senator would take the President up on his proposal to eliminate the indexing of those income thresholds for Part B premiums. As you know, starting this year, higher-income beneficiaries have to pay a somewhat higher premium to participate in the Part B program. The Senator basically would allow that schedule of higher premiums to remain constant in nominal dollars so that over time more people would be required to pay higher premiums. If the traditional Medicare program looks worse and worse, seniors will be more likely to consider another option.

I think there isn't enough focus in the proposal on slowing the growth of health spending. If Senator Coburn's bill could be passed, changes that would gradually accrete to the system would be very positive. But the problem is that the crisis is now, and we've been in that crisis for decades. So part of the package ought to focus on cost-reduction policies that could take effect now.

Another element of the problem that needs to be dealt with is health information technology. [The federal government has spent $200 million to date trying to establish health IT. However, the principle responsibility for IT should remain in the private sector. The government] ought to get out of the way of progress as well. One of [Senator Coburn’s] proposals is to take a look at the Stark restrictions that prevent private subsidies to encourage the adoption of health IT systems. All I'm saying is that there are some issues that can be dealt with, and health IT is the easiest one to describe.

We also ought to work on comparative effectiveness research. Information is a public good, and the government is in the best position of all to collect information. In fact, Medicare collects information on millions of medical treatments and then doesn't use it to better understand what works and what does not. That should be fixed.

One could argue that there isn't enough detail in the bill, but Congress would take care of that. The first rule of Congress is, "If in doubt, micromanage." So the real issue is not a lack of detail, but the need to worry about allowing too much detail in the law as you go along. On the other hand, not enough detail is a CBO scoring problem, and as everyone knows, CBO scoring is a short-term analysis, not a long-term analysis. I think you've got real challenges there--we all do--in terms of reforming the system.

I don't think you allow enough competition in the Medicare program. Not on the Medicare Advantage side--you allow plenty of competition there-- but the traditional program is going to be with us for a long time. I think we need to foster competition there as well.

Let me finish with one last point: This proposal has too many big ideas. There was a great article in the Wall Street Journal recently that got it exactly right. Quoting Mike Franc of The Heritage Foundation: "Republicans are still too preoccupied with health care small-ball." In other words, which procedures should be covered by Medicare, how much should generics cost--the details of running the health system as opposed to getting the broader picture. As Mike says, "This is still outside their intellectual comfort zone, and Republicans never do well in that situation. But to win this debate--the defining issue of the next 40 or 50 years--they are going to have to address it forcefully, head-on, and with every bit of their intellectual firepower."
Senator, I think you've started the ball rolling.

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