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  • The Free Market Works for Health Care

    Advocates of big-government health care have ruthlessly attacked Representative Paul Ryan’s (R–WI) proposal to reform Medicare, which would give seniors a contribution to apply to the health plan of their choice. Under this “premium support” system, insurers would compete in newly created Medicare exchanges and would face pressure to offer high-value coverage at the best price possible.

    According to opponents, this would force seniors to pay for a growing portion of their health coverage as medical costs rise. But real-world examples prove that applying free-market principles to health care can in fact reduce costs and improve patient satisfaction.

    Employers have increasingly struggled with the rising cost of providing health benefits for workers. In a recent article, Kaiser Health News writer Julie Appleby highlights a popular solution that draws from the concept of Ryan’s Medicare plan: Rather than offering employees a defined health benefit package, employers are beginning to offer a defined contribution, with which employees can choose a health plan that best suits their needs from a private exchange.

    Mike Sarafolean, the CEO of Orion Corp. based in Minnesota, recently switched from a one-size-fits-all plan to making monthly contributions to individual health reimbursement accounts. His employees then use the accounts to pay the premiums for the health plans they choose.

    The switch benefited Sarafoleans’s employees in two ways. First, they now can purchase a plan that best suits their needs. One employee with a chronic illness said, “I haven’t heard anyone who is unhappy with the current insurance, because it was all individualized.” Second, the defined-contribution approach has led to savings for both Sarafolean’s business and his workers. Prior to converting, the company faced a 40 percent increase in premiums in one year. Now, Appleby reports that “the company is saving 10 percent over its previous year’s cost of insurance,” and “Many of his workers also spend less.”

    Starting in 2014, Obamacare creates state health exchanges. But rather than encouraging a marketplace with a wide variety of options, heavy government involvement will stifle competition and choice. A researcher at the Employee Benefit Research Institute asks, “As of 2014, why will the private exchanges be needed?” A better question is why the Obamacare exchanges are needed if the private sector has already begun to offer patient-centered solutions without the burdensome rules and regulations that will accompany the federally created exchanges. Instead, reform should encourage the growth of such solutions from the private sector.

    Ryan’s proposal would improve and sustain Medicare by using the same principles that are working for Mike Sarafolean’s employees. As Heritage research shows:

    Giving people purchasing power and options would pressure insurers to offer plans of better value that respond to popular demand, and intense competition among insurers would control costs. As a result, the Medicare program would see serious savings. Giving seniors a defined contribution adjusted by income and health status as Ryan proposes would allow Congress to fashion a rational budget. Seniors would have a vested interest in ensuring health dollars were spent wisely, and they would seek out the best value in health plans and medical services. Seniors and taxpayers would thus become partners—not opponents—in efforts to control Medicare costs.

    Experiences in market-driven health care reform show that it is the most successful way to reduce costs and maintain patient satisfaction. Putting patients back in charge of their health-related decisions can achieve these goals with minimal government involvement.

    Posted in Obamacare [slideshow_deploy]

    8 Responses to The Free Market Works for Health Care

    1. cjones, Medford says:

      Two problems with some of your most recent comments. First, unfortunately there is not a free market for health care in this country and second Mr. Ryan's proposal amounts to nothing more than rationed health care. What insurance company is going to provide comprehensive health care for our seniors based on his proposed voucher system? I don't see the insurance industry proposing to provide coinsurance or major medical stop gaps to the Medicare why? Ryan's proposal is at least a starting point. One of the real problems is that no one knows the real cost of health care delivery. Just look at any provider's bill and then look at the actual reimbursement. What about the drug program? Another unfunded mess just like our wars.

    2. West Texan says:

      Ryan's plan is a good stop gap at best. Obamacare's exchange would be fine for Illinois. The truth is both parties need to work at eventually returning control of domestic public affairs back to the respective states where such powers rightfully and constitutionally belong. The only federal input should be congressional oversight of interstate compacts.

    3. yvetteyee says:

      You guys should stop complaining because, one the health care we have now isnt as good as it was supposed to be. also the law has just been signed so give it some time. so if u want to say u have the right to choose tell that to ur congress men or state official. If you do not have insurance and need one You can find full medical coverage at the lowest price search online. If you have health insurance and do not care about cost just be happy about it and trust me you are not going to loose anything!

    4. Wildcat from Dallast says:

      It appears to be a great deal of semantics with Ryan’s proposal and patient choice by financial rationing. Why not collect actual “cost” data from providers nationwide, captured covertly by mystery shoppers who negotiate their price for a particular service(s) then make Medicare and Medicaid reimbursements slightly less while companies offering Medicare Supplement policies compete for business by offering various levels of additional benefits for increased premium but developed and marketed nationally, not approved state by state. The cost of developing one set of policies for everyone in the American market versus one set for each state (to meet each state’s regulatory requirements) should be less in every aspect compared to that of a set for each of the 50 states. That cost savings can then be spread to paying benefits and premium savings.

    5. Bobbie says:

      When people are living in freedom, appropriate is the power to purchase by the individual so ones own health care remains in ones own control, where discipline OF ones own, builds the minds ability to be responsible FOR ones own.

      My father's lady friend has been in the hospital since last Thursday because of a 500 reading of her blood sugar. It's been 5 days and her blood sugar, under the supervision of medical staff, continues to remain out of control! They haven't been exercising her or making adjustments of her insulin in accordance to her food intake. This is her health THEY are in control of AND manipulating. They're getting her ready of transitional care (make work) she wouldn't have needed if SHE HAD ADEQUATE MEDICAL TREATMENT AND IF TRANSITIONAL CARE WASN'T MANDATED FOR MAKE-WORK! especially by mind manipulation.

      If anyone has family/friends that can help out, it really throws the TCU off when you say "what can YOU do that WE as a family can't do FOR her at home?" Their mouths are agape! Unfortunately my father's girl has a selfish son who supports the transitional care unit to further his hopes for her permanent stay in a nursing home. Even though my father is her primary caregiver! The more control is taken away and the more she's away from her home, the less it's thought about. What it's ALL about is manipulation. Oh and make work! GET THE FEDS OUT! WHAT THEY INSIST IS DANGEROUS! It's like they're keeping her in the hospital until SHE DECIDES to go into transitional care. Until she says "yes." It's not right on so many levels.

    6. susan, oregon says:

      If it truly does put patients in charge of their health care and encourages them to participate with their docs by asking lots of questions (from treatments to costs), than I support it. I found this video helping when forming questions: http://whatstherealcost.org/video.php?post=five-q

    7. Clark says:

      So says the Heritage Foundation that Created the Individual Mandate, the Waiver system and the Exchange System that are in the Healthcare Bill.

      Why do Conservatives oppose their own ideas when Democrats agree to it? Why was it Constitutional when Conservatives where for it, and how did it become Unconstitutional when a Democrat supported it?

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