An Entrepreneur's Take On Healthcare Reform
As the President of Capterra, a small business that provides full health insurance benefits for its employees, I can't help but think that we are contributing to the healthcare problem in America. While I fully support our generous employee benefits, I also recognize that the single largest contributor to our country's insanely high healthcare costs is very likely the fact that most people do not pay for their own health insurance, but rather receive it as a benefit from their employer or the government.
Just like with any other instance when someone else picks up the tab, it is human nature to worry less about what something costs. But Capterra will continue to offer healthcare benefits for the same reason that other employers do - because only employers can buy health insurance with pre-tax dollars. Thanks to old federal tax laws, the American citizen is forced to pay with post-tax income when buying health insurance directly.
I believe that healthcare reform is necessary in this country, but not the kind for which most politicians seem to be advocating. I recommend the following three steps. First, any proposed healthcare reform should eliminate decades-old discrimination and treat all citizens the same - whether they buy their own health insurance directly or through their employer. As soon as the playing field is leveled, we would immediately offer every employee a choice to continue to receive health insurance coverage through us, or to accept a higher salary and buy it on their own. In the long run, most citizens would likely buy insurance on their own so they could purchase the right plan for their personal situation as opposed to the "one size fits all" approach of their employer. Both employees and employers would stand to benefit.
The second necessary step is tort reform. Frivolous lawsuits increase the cost to practice medicine in America by billions of dollars annually, and over half of all dollars awarded to patients go to their trial lawyers. With so much at stake, this special interest group will fight tort reform to the bitter end. Fortunately, not only is there significant precedent for having specialized courts established for highly complex areas such as medical malpractice, but it is also in the best interest of our country if we truly want to contain healthcare costs. This is a great example of reform that should be tested by the states before being considered at the federal level. As doctors and residents of states begin to reap the benefits, the other states will likely follow suit.
The third and final step may have the most impact. Every citizen should be allowed to purchase health insurance from any provider that they choose, including providers from other states that should remain free from the burdensome mandates that may exist within the citizen's home state.
Currently, state laws prohibit this, but it seems to be exactly what the Commerce Clause of the Constitution was designed to protect. As soon as competition is open across state lines, we will have many more choices available and this will stimulate long-needed innovation within the health insurance industry. Insurers will develop mechanisms to protect consumers against being dropped due to pre-existing conditions, encourage healthier lifestyles and facilitate better communication between doctors and patients. If they don't, they will fail to compete and be run out of business.
As an online marketplace for the business software industry, Capterra witnesses this sort of innovation every day. Regardless of the kind of software, businesses have dozens - even hundreds - of options to choose from, and this forces software vendors to develop increasingly innovative and user-friendly products. If the absurd scenario existed whereby companies were unable to buy software across state lines, there is little doubt that competition would be stymied and innovation would deteriorate, just like it has in the health-insurance industry.
Our politicians need to stop putting forth false debates. Most Americans on both sides of the political spectrum agree that healthcare reform is necessary and furthermore that everyone should have access to health care. Saying otherwise misrepresents the other side and gets us nowhere. At the heart of the matter is determining the best way to reduce healthcare costs for all while maintaining our high level of care and doing so without violating the core American principle of limited government.
I believe that the plan I advocate would be supported by most reasonable Americans - at least those who do not work for the special interests. All three steps deal with the problem of having tens of millions of uninsured Americans by addressing the root causes of high health insurance costs. This plan should help us to avoid the more extreme measures currently being considered, whether it be a government-run plan which history has shown is always more expensive than originally anticipated, or a government-run insurance marketplace when there are numerous such marketplaces that already exist. Of course, these marketplaces are handcuffed by their inability to cross state lines. If we simply set them free, we will likely realize that yet another exchange - especially a highly regulated one financed by tax payer dollars - is the last thing that we need.
We need to learn from the mistakes of the past and come up with real solutions for the future. This is what entrepreneurs do. Our politicians need to follow suit.