Business Coalition Offers Health Reform Contradictions

May 07, 2007

A new coalition of nearly 40 businesses launched a political campaign this week to push for health care reforms intended to reduce health care costs that are hurting their competitiveness and to decrease the number of uninsured.  Unfortunately, their manifesto is a loose collection of good and bad ideas that result in a confusing contradiction for policy makers, according to experts with the National Center for Policy Analysis (NCPA).

"The Coalition to Advance Healthcare Reform's plan is a muddled mess," said NCPA Senior Fellow Devon Herrick. "On the one hand they promote market-based ideas to increase access and promote competition, and on the other they promote artificial controls on the market and mandatory coverage."

            Herrick notes that many of the coalition's good ideas are not new.  President Bush proposed a standard tax deduction for health insurance earlier this year.  The need for medical price transparency has been discussed extensively by policy makers and opinion leaders inside and outside of government.

            "If the coalition had just stopped there, they might have been on to something," said Herrick.  According to Herrick, the proposal includes several provisions that will have little impact on reducing the number of uninsured but will serve to drive up the cost of insurance.  For example:

• Mandatory coverage.  One need only to look at the example of auto insurance to see that a mandate doesn't guarantee people will purchase insurance.  All but three states mandate auto insurance, yet, as a percentage of population, there are almost as many uninsured drivers (14.6 percent) across the U.S. as there are people without health insurance (15.3 percent).
• Guaranteed issue.  Requiring insurance companies to sell policies to anyone who asks, is usually the option preferred by reform groups to address pre-existing conditions. Yet guaranteed issue involves overcharging the young to subsidize the elderly and infirm.

            "While I wouldn't write off the Coalition's ideas completely, I think there are enough contradictions to merit caution going forward," said Herrick. "Creating a competition-based health insurance market is definitely the way to, but imposing restrictions and mandates would then cancel out any progress."

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