Health-care policy experts say that incoming Republicans in Congress may offer to American workers a health-care option that would be run nearly the same as their 401(k) retirement savings plans that already are in operation.
It’s a defined contribution plan.
Early today, a federal judge in Virginia ruled in favor of the state’s claim that the heart of Obamacare – the federal government’s demand that everyone buy a health insurance policy that the government specifies – is unconstitutional.
The case is expected to be appealed and, in fact, most say the U.S. Supreme Court shortly will be looking at the controversy.
Sign the petition opposing Obamacare.
The controversial plan was adopted by Congress, whose members admitted they did not read the thousands of pages of new requirements, limits and restrictions before their vote, earlier this year and signed almost immediately by Obama, who had made it a central issue of his administration.
Now policy experts are telling WND if the new GOP-controlled House of Representatives and strengthened Republican minority in the Senate are able to repeal Obamacare or otherwise watch its destruction, they will have to replace the legislation with something else, and a federal “defined contribution plan” is the right way to go.
“The only way to get out of the tidal wave of debt we are facing is to transform our entitlement programs into defined contribution models,” said Grace Marie Turner, president of the Galen Institute, a health policy think tank based in Alexandria, Va.
And researchers at the American Enterprise Institute, another free-market oriented think tank, based in Washington, D.C., and the Ethics and Public Policy Center (EPPC), have published a new paper on the topic which is now being passed around Capitol Hill.
The paper is entitled, “The Defined Contribution Route to Health Care Choice and Contribution” and is authored by Jim Capretta and Tom Miller, scholars at EPPC and AEI, respectively.
“Proponents of more government managed health care would oppose this because they believe the government can do better than a functioning marketplace in allocating resources efficiently and equitably in health care,” Capretta told WND in an interview.
Capretta’s paper notes that the focus over the political battle in health care is what, precisely, the federal government should do over rapidly rising costs. The paper notes that after World War II, the U.S., and the rest of the West, set up systems for pensions and health care. The U.S. pension system was reformed during the 1980s when it was found to be on an unsustainable track, and legislation created the 401(k) provisions.
“Instead of promising a formulaic annuity in retirement, these firms [large employers] began making fixed-dollar contributions into retirement savings arrangements on behalf of workers,” the paper notes. “These employers’ costs were fixed and predictable, and the annuity the worker would get in retirement would now be financed entirely by the accumulated reserves in an individually owned account.”
The transition to the defined contributions retirement plan happened over a number of years. In 1985, during the Reagan administration, 80 percent of all fulltime U.S. workers were enrolled in defined benefits pension plans sponsored by employers. By 2006, the number had dropped to a mere 20 percent. Most of the private sector employers now rely on 401(k) plans, and today’s balances in 401(k) retirement accounts in the U.S. exceed $2.75 trillion, according to the AEI’s research.
No such wholesale shift has yet occurred in the health-care context. But, switching to defined contribution health-care plans from defined benefits plans dramatically would downsize the federal deficit, advocates said.
Health care needs the same paradigm shift that has occurred in U.S. pension arrangements, experts tell WND.
‘Medicare and Medicaid could begin moving to the same model,” Turner tells WND. “We already see that this works in the private sector, as companies have moved from paying retirement pensions to 401(k) contributions.”
Having the government pay for nearly everyone’s insurance – kids, seniors, the disabled and low income folks – as President Obama and the congressional Democrats demanded with Obamacare, is not sustainable, the researchers note. According to the Congressional Budget Office, the real price of physician fees declined by 5 percent from 1997 to 2005.
But total spending increased by 35 percent as a result of rising costs and more “intensive” physician services. In other words, as the government cut the rates for Medicare and Medicaid reimbursement for specific medical services, doctors increased the number of services performed on each patient during each visit, thus increasing their billings for lower-priced services.
“If we don’t act soon, patients in these programs will start to face the same waiting times and limited access to new medical technologies that we have seen in countries with government-run health systems,” Turner said.
There are, however, problems with getting defined contribution plans passed through the Congress, another expert tells WND.
“As a pure health policy concept, defined contributions are a great idea,” Brenda Gleason, president of M2 Healthcare Consulting in Washington D.C., tells WND. “But there are major problems with providing defined contributions en masse for U.S. health-care consumers.”
Gleason reckons that the marketplace does not provide enough easy-to-access information for consumers to be able to comparison shop among competing health insurance plans. So they cannot easily find out the true costs of the services provided by doctors, hospitals and others.
That problem, Gleason said, is a matter of making the information available in a uniform way. The new GOP Congress could put in place laws that require health-care vendors to provide “transparent information” on pricing and services, said Gleason.
But the bigger, political problem comes after that.
“Saying a specific constituency deserves a benefit is much easier than saying they deserve a dollar amount,” Gleason said. “Politically, it is nearly impossible to provide benefits with clear dollar values with taxpayer money. Poor people get Medicaid. Old people get Medicare because the argument is either they deserve it or earned it. But arguing dollar amounts [for the general population] is a political loser.”
Thus far, no new congressman-elect has transformed the AEI paper into a draft bill, though Rep. Paul Ryan, R-Wis., includes ideas somewhat similar to Miller and Capretta”s in his “Roadmap” for entitlement reform.
“Congressman Paul Ryan’s Roadmap proposal is a closely related effort,” Capretta noted. “And it is a bill.”
Expect the forthcoming battle over free-market health care to be as contentious, perhaps, as the fight over Obamacare.
“It is easy to demagogue and easy to argue those dollars are better spent elsewhere,” Gleason told WND.
