REFORM: My Mother Always Told Me… Hate is a Nasty Word

The fight about how to prevent a Medicare physician fee cut from going into effect (and more importantly whether Congress will take money from private Medicare health plans to pay the doctors) rages on. The Senate stalemated last week before the July 4 break; the administration froze payments temporarily to forestall cuts. We have purposefully not ventured into the weeds during this debate (except to say that the yearly process of passing a "doc fix" is a perfect example of why we need wholesale reform of how we pay providers). Nonetheless, our ears did perk up when we read this line in Scott Gottlieb's Wall Street Journal opinion piece (subscription required), "Democrats hate Medicare Advantage and have been trying to cut it for quite some time, because they don't like health-care markets."

Gottlieb's comment gave us pause. Historically, it is true that some Democrats have been slow to embrace health care markets, but in the past 18 months Democrats have come a long way in demonstrating that they believe properly reformed private health insurance markets can work for all Americans. We should praise this momentum instead of  exaggerating the past. Likewise, we should take notice of the growing number of Republicans in Congress willing to talk about covering all Americans and reforming the health insurance marketplace. This is progress. But we digress...

Nothing in the proposals put forth by the major presidential candidates during the just-concluded primary season suggests that Democrats intend to eliminate private insurance markets. Furthermore, a host of Democrats have signed onto legislation relying primarily on private coverage.

What most Democrats will not accept is the private insurance market "as is"...and rightfully so. The individual insurance market works best for the very young, very healthy, and very rich. Consequently, it leaves insurance physically or financially out of reach for many Americans who need it the most. If we are going to cover all Americans through private insurance, this must change.

So what's the answer? At an event last year cosponsored by the New America and Heritage Foundations Senator Robert Bennett (R-UT) said, "What is the magic of market forces? The magic is it drives up quality and down prices as people try to compete for the dollars by saying come to me for better quality. Or come to me for lower prices." Bingo! Health insurers must compete based on price and quality, not their ability to market their products or select the healthiest individuals. In order for this to be possible, reforms are necessary, and many Democrats (and Republicans) seem ready to help.