|Cato Policy Analysis No. 210||June 13, 1994|
by Tom Miller
Tom Miller is the senior policy analyst for the Competitive Enterprise Institute and director of its Economic Policy and Regulatory Reform program.
The Consumer Choice Health Security Act, of which Sen. Don Nickles (R-Okla.) and Rep. Cliff Stearns (R-Fla.) are primary sponsors, is one of the leading proposals for health care reform. Unfortunately, it sets contradictory objectives: universal coverage and increased consumer choice, individual responsibility, and competition in health insurance markets. Absent a major overhaul, it will neither ensure that health care markets remain private and voluntary nor make them more competitive, efficient, and responsive to consumers' wishes.
The primary virtue of Nickles-Stearns is that it avoids the worst features of the Clinton administration's proposed Health Security Act. Nickles-Stearns would make health insurance more portable, avoid structural disruptions in coverage, and encourage individuals to choose health insurance in a more cost-conscious manner.
However, the legislation (as introduced last November) contains a number of serious flaws. It endorses the concept of compulsory universal insurance coverage and imposes a standardized "minimum" package of health insurance benefits. Its cost-sharing requirements would undercut the appeal of Medical Savings Accounts. Its efforts to eliminate risk selection in insurance markets are both futile and counter-productive. It provides inadequate incentives for restraining health care costs and hampers the use of more effective devices to do so.
By failing to provide a clear alternative based on market principles, Nickles-Stearns blurs opposition to Clinton-style health care legislation. By focusing the political debate on the wrong issues, it opens the door to extensive political interference in private health care decisions.
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