CED: Employer-Based Health Care System is Failing

As we noted in yesterday’s post on the Health Plan Innovation Blog, the powerful business-led group, Committee for Economic Development (CED) released its report on the U.S. employer-based health care system.

As expected, the group announced that the U.S. employer-based health care system is failing and suggest that the root causes of the problem lie deep within the structure of our health-care system. No one, the report says, has an incentive to seek, or provide, quality, cost-efficient health care; there is no meaningful competition in our employer-based health insurance system.

The report goes on to suggest that the nation needs a new system to replace employer-provided health insurance, but makes it clear that a government-run command-and-control system will not succeed saying that devolving complex medical decisions from doctors to patients will not lead to more affordable care.

The CED report states that health care can improve when incentives for employers, employees, and providers all encourage quality, affordable care and goes on to establish on one the main tenants of their plan: Individuals, not employers, should choose the health care plan that best meets their needs, from a range of options; no one should be forced into a particular type of plan.

The report then lays out two keys steps for establishing such a market for quality, affordable health care..

  1. In the first step, the report suggests that the federal government should establish independent regional “exchanges” that would provide a single point of entry for each individual to choose among competing private health plans.
  2. In step two, subject to progress by the exchanges and the willingness
    of the public to provide the financing, every household would receive a fixed-dollar credit sufficient to purchase the low-priced quality health plan offered in its region. Every individual, therefore, would be able to buy quality health insurance at no out-of-pocket cost.

With health plans competing to attract cost-conscious consumers, the CED says we can expect our health-care system to change for the better. Health providers, they predict, would be accountable for quality and cost. And, with health plans competing to attract cost-conscious consumers, our health-care system can be expected to change for the better. Health providers would be accountable for quality and cost.

The CED recommends a transition path toward this restructured system in gradual, incremental steps that would be manageable for our political system and our economy. It would begin with the new exchanges providing access to health insurance for small businesses, which by itself would be a major improvement in the health-care marketplace – where small-business employees today often are on their own seeking coverage for themselves and their families.

These may be some warmed-over ideas from the Jackson Hole Group days of the early 90’s, but they are deserve to be a part of the debate about the future of U.S. health care.

Read the whole report at http://www.ced.org/