Obama's Health Care Bogeyman Is Obama

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WASHINGTON--In a health-care town hall meeting in Portsmouth , New Hampshire this week , President Obama declared: "Because the way politics works sometimes is that people who want to keep things the way they are will try to scare the heck out of folks and they'll create bogeymen out there that just aren't real."

The president was referring to his Republican critics. In fact, the bogeyman is one that the president is creating, trying to dispel opposition to his own approach to health care. His Portsmouth proposition is that people who are against health care reform-or health insurance reform, as the president now refers to it-want to keep things the way they are.

This is simply not true. Over 200 bills have been introduced in this Congress proposing different elements of health care reform. Those who oppose the House Democrats' $1 trillion health bill, supported by Mr. Obama, have offered specific legislative alternatives.

Take the Empowering Patients First Act, H.R. 3400, sponsored by Georgia Congressman Tom Price, a physician and chairman of the House Republican Study Committee. At 268 pages, a quarter the length of the House Democrats' bill, the bill seeks to insure more people and cut costs.

The Empowering Patients First Act was introduced on July 30 and is awaiting committee action. Since it is sponsored by a Republican, it will have a long wait-possibly an endless wait in the Democratic House. The bill is worth noting because it presents new ideas and would not perpetuate the status quo.

The bill would insure more people by letting individuals take tax deductions for health insurance premiums that they pay, just as employers do. Workers with employer-paid insurance could retain it.

Low-income individuals would be given refundable tax credits in advance to help them pay premiums. States would be required to set up risk pools for those with chronic conditions who might otherwise be uninsurable.

The most innovative aspect of the bill allows-but does not require-employers to offer a monetary sum to workers so that they can purchase whatever insurance plan they choose in the open market, similar to defined contribution pension plans. Employers would still enjoy the same tax benefit for providing coverage, but workers would be able to choose from an entire range of options that they could carry with them when they change jobs. Now employees are generally limited to one plan, and lose that coverage when they change jobs.

The contrast with the House plan could not be starker. Rather than set up a new government, or "public" plan, as Mr. Obama insists, Mr. Price would allow Medicaid and Children's Health Insurance Program recipients to get vouchers to purchase their health insurance on the open market.

The bill attempts to cut costs by reducing malpractice awards. New health courts, called administrative health care tribunals, would be set up by the states to adjudicate malpractice complaints by patients. The bill would cap non-economic damages.

Tax credits are a crucial feature of another Republican proposal, The Patients' Choice Act of 2009, proposed by Wisconsin Congressman Paul Ryan and Senator Tom Coburn of Oklahoma, also a physician. Their bill uses state exchanges as portals where Americans could take new tax credits and choose private insurance. All insurance plans that are licensed in a state could participate in the state's exchange.

Under the Coburn-Ryan approach, health insurance plans could combine high deductible policies with health savings accounts. Or, underwriters could offer traditional managed care or fee-for-service plans. Those with chronic illnesses, such as hemophilia or diabetes, would be placed in special plans, such as high-risk pools with government subsidized premiums.

The Price and Coburn-Ryan bills also contemplate health savings accounts and high deductible coverage with lower premiums. Such insurance allows individuals to set aside funds for routine care free of taxation, and buy high-deductible insurance to cover extraordinary expenses. Now used by over six million U.S. residents, these plans hold the potential to reduce costs because they encourage patients to shop for the coverage and services that suit them best.

It is troubling that health savings accounts and high deductible plans would be discouraged under the House Democratic plan, because they do not meet the criteria for a "qualified health benefits plan."

Here's why. The House Democrats' bill would create a national Health Insurance Exchange, where qualified health benefit plans would be allowed to advertise to individuals and employers. In order to achieve the status of a qualified plan, an insurance company has to offer a certain package of benefits, including physician visits; inpatient and outpatient hospital services, and equipment and supplies used for treatment; dental, vision, and hearing care for children; and mental health and substance abuse services. No high deductible policy need apply.

Senator Coburn, Representatives Ryan and Price, and many other Americans want to change the health care system-they just don't want Mr. Obama's approach. Why not hold a televised debate between Democratic and Republican legislators on the merits of the different approaches? Then, let the people decide.

Diana Furchtgott-Roth, former chief economist at the U.S. Department of Labor, is senior fellow and director of Economics21 at the Manhattan Institute. Follow her on Twitter: @FurchtgottRoth.   

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