Overall Health Care Costs
Currently, this nation spends approximately 14% of gross domestic product (GDP, a measure of the size of the nation's economy) on health care. If health care costs rise faster than the rate of growth in GDP, health care will crowd out other important needs. Both control of rising health care costs and continued strong GDP growth is important.
Medicare Prescription Drug Benefit
There is no logical reason why Medicare would cover one type of medical need and not another. We need to add a prescription drug benefit to Medicare. This benefit should be mostly paid for by premiums, with premium-payment assistance limited to those in the greatest need.
Medicare HMO Reimbursement Rates
We must work to end the regional biases built into the Medicare HMO reimbursement rates. The Medicare reimbursement rate per senior in Florida is approximately $780 per month, while the Medicare reimbursement rate per senior in Minnesota is approximately $400. Florida seniors can therefore for a fee of between $45 and $65, purchase an HMO plan with full prescription drug coverage. The same plan in Minnesota will cost $265 or more per month. The reimbursement rate also varies within states, placing out-state medical providers at a disadvantage.
Prescription Drug Prices
Other nations place caps on the prices drug companies can charge. That has the effect of driving up prices in this country, as drug companies seek to recover lost revenue. We need to find a way of preventing this situation. This could be accomplished by allowing the importation of drugs by pharmacies or consumers, or it could be accomplished by a specific mandate requiring drug companies to charge no more in this country than in foreign nations (with the possible exception where drugs are sold at considerably lower prices in poor nations, for humanitarian reasons). Either solution would cause drug companies to reject some caps imposed by foreign nations, which would relieve upward pressure on U.S. drug prices.
Patients Bill of Rights
I fully support enacting a patients' bill of rights, which would precisely outline what patients have the right to expect from their health care providers, and resolution paths available to them. Litigation should be an option, but only after other resolution alternatives are exhausted.
Covering the Uninsured
For the first time since 1987, the number of people without health insurance decreased, from 44.2 million in 1998 to 42.5 million in 1999. Two reasons were cited: 1) With a strong economy and a tight labor market, employers were offering health coverage as a way to attract and keep employees, and 2) The Child Health Insurance Program (CHIP), created in 1997 to help low-income families.
It should be noted that 10 million of the uninsured are children, and that 7 million of these children qualify for assistance under CHIP. The federal government needs to do a better job of informing the uninsured about this program.
It should also be acknowledged that some of this group -- no one knows how large this group is -- are uninsured by choice. If insurance is not provided automatically by the employer, some individuals make the conscious choice to purchase other discretionary items rather than health insurance. This is particularly unfortunate, because in the event of the need for emergency treatment, this group imposes a cost on the rest of society. Hospitals are forced to provide emergency treatment. Uninsured individuals are mostly unable to pay these bills, and ultimately the costs are borne by the rest of society, either through taxes used to subsidize county hospitals, or through higher insurance premiums.
Then there is the remainder of the 42.5 million, those that are uninsured because they lack the resources to pay for health insurance. It behooves us as a society to find a method of insuring these individuals. Much of the cost of providing emergency health care for these individuals is already being paid for through public subsidies to county hospitals, and through higher health insurance premiums. Some argue that the cost of providing this emergency health care to the uninsured is higher than providing full health coverage, because individuals are waiting to seek medical care until the condition becomes an emergency.
Provided we can find a revenue source, or offsetting budget cuts, I favor a subsidy to these individuals (either in the form of a medical voucher, or a tax credit) to purchase health insurance.
Ultimate Solution
Ultimately, we need to separate the link between employment and health care. This link might have been appropriate in another time, but because of the mobility of our work force is no longer appropriate. Capitalism thrives on the fluidity with which its resources are reallocated. Our current health care system inhibits this mobility, and therefore has become counterproductive to economic growth.
We should move to a system where the link is directly between insurance company and individual. Changing a job would not mean changing insurance companies. A medical savings account would be established for each individual. Employee and employer would contribute to this fund through payroll deductions and employer matches. Health insurance coverage would be purchased from funds in this account.
The current system also places unnecessary administrative burden upon small businesses. Businesses would prefer making simple contributions to workers' medical savings accounts rather than incurring the administrative burden of providing a health care benefit
Individuals could also contribute directly to their medical savings accounts. For those whose payroll contributions were inadequate, and lacked the means to make additional contributions sufficient to purchase health insurance, government assistance would be provided.
Individuals would retain property rights over their medical savings accounts, thus providing an incentive for each individual to use medical services judiciously. Contributions would be made on a pre-tax basis, and balances would accrue tax-free. Individuals would control investments in these accounts within certain standards. At death, an individual's medical savings account balance is considered part of the estate, and therefore can be passed along to children or other heirs.
Back to Issues Questions or Comments
Prepared and paid for by James Gibson for U.S. Senate
PO Box 50264, Minneapolis, MN 55405-0264, 612-521-5350