Summary

We have an opportunity and an obligation to seek solutions to the health system problems that have put insurance out of reach for millions of Americans. However, we must also recognize the limitations of policies that are narrowly focused on increasing the number of newly-covered individuals without also addressing broader system issues. Those issues have an impact on everyone who uses health care in this country, whether or not they have insurance.

The uninsured are not easily characterized. They come from every sector of society and their reasons for not having health insurance vary, but cost is the dominant concern. Some individuals simply cannot afford insurance even though they need it. Others may be able to purchase coverage but do not think the value outweighs the cost.

The mismatch between cost and value is at the heart of our health system crisis. We spend over $2 trillion annually for health care, but there is a growing sense that we are not getting our money's worth. This crisis is driven principally by perverse economic incentives, massive information failures, uncompetitive markets, and a health system that does not adequately meet the needs of high-cost patients.

Work is proceeding on many fronts to correct these problems and to promote a more efficient and effective health system. Many states, most notably Massachusetts, have developed innovative solutions through the use of Medicaid waivers. Employers, insurers, and providers are developing new approaches that could reduce unnecessary health spending and enhance the quality and effectiveness of care.

The Congress has indicated its intention to expand the State Children's Health Insurance Program (SCHIP) by $50 billion over the next five years. Such an expansion could draw substantial numbers of children out of the private coverage that they already have and into the public program. Better targeting of the funds and enhanced state flexibility to manage their programs would minimize this crowd-out effect and direct our subsidies to those who are most in need. That is particularly important when budget resources are scarce, as they are this year.

Although a great deal of attention will be paid to the SCHIP reauthorization, Congress should take the opportunity to address broader health system problems. The high cost of health care is driving efforts in both the public and private sectors to improve the performance of the health system. Congress has an opportunity to build upon those efforts with policies that promote better value for our health care dollars. We can and must find ways to slow the growth of health spending, improve the effectiveness of care, and make health insurance more accessible for the uninsured and more affordable for everyone.

The text of this testimony is available here as an Adobe Acrobat PDF.

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