Key Principles of Healthcare Reform

In previous blogs here and here, I’ve been highly critical of the “public plan option” that is a part of most of the healthcare reform plans we’ve seen to date. It’s been easy to discredit a trillion dollar reform plan that relies on the efficiencies gleaned through federal involvement. But criticism without ideas can devolve into finger-pointing, and so I’d like to outline some principles I think should be part of healthcare reform.

To be sure, many of these ideas have been brought to the forefront by other health reform advocates. Most notable among them is Newt Gingrich, former speaker of the House and founder of the influential Center for Healthcare Transformation (CHT). So many good ideas have been espoused by the Center in recent years, it’s a wonder the Obama administration ignores many of them.

The principles included below also reflect my own experience as an entrepreneur and small employer. I believe that healthcare reform must include:

• Changes to the structure of the employer-based system that puts discretionary funding directly in the hands of healthcare consumers, including big tax breaks for employers who offer health savings accounts. Consumer awareness of the actual costs associated with both care and unhealthy lifestyle choices is the only path to improved health, greater prevention, and less delivery of unnecessary care.

• Real incentives for healthcare providers and consumers to pursue wellness and prevention, like the ones recently employed by Whole Foods, Humana, and Safeway.

• Truly portable insurance plans that become the property of the insured and not employers—and that can be carried over state lines. This could be achieved by creating tax incentives that give individual consumers the same tax benefit for buying health insurance on the individual market that is currently available only for buying through an employer.

• Tax benefits for individual health insurance that mirror those of employer-provided insurance. The horror stories the President has been talking up in his town hall meetings are stories of people who have individual insurance, which, due to outdated government incentive structures, is ineffective. Ironic, isn’t it?

• An overhaul of the civil justice system and medical malpractice law, which escalate health expenditures in this country without truly addressing the issues of medical errors or even fairly compensating injured parties.

Members of Congress are using the August recess to take the temperature of their constituencies, and recent polls suggest that lawmakers will find a growing number of Americans who are deeply uncomfortable with a trillion-dollar-or-more healthcare overhaul. Americans seem to be wary that the “public plan option” is simply a euphemism for a single-payer system—step 1 in making the Federal government that single payer.

And the tipping point for public opinion this go-around may be skepticism over President Obama’s most quotable campaign pledge that he would not increase “by a single dime” the taxes paid by anyone making less then $250,000. Hidden taxes are taxes just the same, and it’s on this point that the U.S. media has finally begun to look more closely at the Administration’s claims. But easy as it may be to sit in the crowd and boo with the masses, it won’t get us closer to meaningful healthcare reform. For that, we’re going to need great ideas and specific, actionable steps to get us there.

It’s no surprise that the principles listed above are already being espoused by members of the private sector, where reform has a much greater chance of success. Three private companies—Whole Foods, Humana, and Safeway—have demonstrated that smarter approaches to healthcare, including “skin in the game” for their employees, goes a long way toward better care at a lower cost.

Mike Hennessy is Chairman and CEO of MJH & Associates. Click here for more Hennessy's Highlights