The Wrong Health Care Debate

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Once again Washington has it wrong. The current debate over health insurance reform has been cast as a choice between letting health management organizations (HMOs) control your health care choices or letting the government do it. That's a choice that is guaranteed to make you sick.

But there is a third choice -- a better choice -- that is being leftoutof the debate: giving consumers control over their own health caredecisions.

Today most Americans have no choice of health insurance. They mustacceptthe plan their employer chooses for them. Employers, understandablyconcerned about rising health care costs, are increasingly choosing managedcare plans that hold down costs by restricting access to certain servicesand specialists. Workers, stuck in plans they dislike, have turned to thegovernment for relief.

Think what would happen if you went to buy a new car and were toldthatjust one model was available. Since cost was an issue, the sole choice wasa stripped-down model without any options. If you wanted a stereo or powersteering, even if you could afford to pay for it, you'd be out of luck. Itwouldn't be long before Congress started a movement for a car buyers' billof rights, with Democrats and Republicans arguing over what color the onemodel of car should be painted.

Of course that doesn't happen with cars, because you can always go to thelot next door and pick a different model. Why can't you do that withhealth insurance?

The reason lies in an anomaly in our tax code. If your employergives youhealth insurance, it is tax-free for you. But if you purchase healthinsurance on your own, you receive no such tax break. That means that ifyou don't like the insurance plan your employer offers, you cannot goelsewhere and buy your own coverage without incurring a substantial taxpenalty.

Here's an example: Let's assume that you earn $30,000 and youremployersupplies a health insurance plan with the local HMO that has a value of$5,000. You pay taxes on only $30,000. What if you don't like that HMOand want to go someplace else for your health care? You could tell yourboss to give you that $5,000 he was spending on your HMO coverage and thengo out and buy your own insurance. But if you did, you would have to paytaxes on $35,000 instead of on $30,000. That could cost you an additional$2,000 or more in taxes. You are effectively stuck with your boss'spolicy, like it or not.

In health insurance, as in so many other things, whoever controlsthemoney controls the game. If the government controls health care spending,the government will control health care. If your boss controls your healthcare money, your boss will control your health care. But if you controlthe money, you can control your own health care.

Rather than debating how to best regulate your boss's policy orwhetheryou should be able to sue the HMO that your boss chose for you, Congressshould be seeking ways to give you a greater choice of health plans. Inshort, Congress should put the money back in your hands so that if youdon't like your boss's plan you can simply go someplace else and buy oneyou do like. Some people will stick with HMOs, accepting slightly fewerservices and less choice of doctors, while pocketing the extra money.Others will choose to spend a little more to get more choice and extraservices. The choice would be up to each individual worker.

Congress can do this by changing the tax code to give individuallypurchased health insurance, or for that matter health care you pay for outof your own pocket, the same tax break as you get for employer-providedhealth insurance. Congress should create a universal health care taxcredit available to all Americans, regardless of where they buy theirhealth insurance. That would empower individual Americans to choose thehealth insurance plan best for them.

It doesn't have to be more power to the government or more power totheHMOs. It could be power to the people.