A Breakthrough Policy on Healthcare?

Yesterday the Committee for Economic Development (CED), a think tank composed of businesses and university presidents, had the East Coast launch of its healthcare reform policy. (Full disclosure I am married to the event organizer). The event was keynoted by Senators Bennett and Wyden, cosponsors of the closely related Healthy Americans Act. Congressman Jim Cooper and Dr. Alain Enthoven, a widely respected figure in the field of health policy, also spoke.

The CED's plan would seek to cut costs in the healthcare field and boost productivity by giving individuals discretion where they spend their healthcare dollars. The idea being that they will select more efficient providers and shun unnecessary tests if given the choice.

The federal government would create a series of regional exchanges in which every individual would be guaranteed the right to choose between multiple private insurance plans. Premiums would be flat in respect to age and preexisting conditions and "fine print" would be standardized. A "Health Fed" would be created to risk adjust the premium revenues to each insurer, that is compensate insurers for signing-up relatively more people who were likely to make claims.

This plan is significant in that the group five years ago called for an employer-centric solution to skyrocketing health costs. CED now believes government intervention is necessary to prod insurance markets and health providers into healthy competition.

This is only a tiny first step for this particular policy. The plan still has numerous details to be hammered out. For example, how the "Health Fed" will be organized and adjust for various conditions will be an incredibly contentious and complicated issue. (Holland, which has implemented a similar plan is having problems appropriately adjusting premiums for all pre-existing conditions.) Furthermore, as Rep. Cooper noted, there is $2.15 trillion in spending under the current system and there will be a lot of groups fighting to protect every penny they currently get.

Still, a policy that combines universality (for the Democrats) with cost-cutting (for the Republicans) might just stand a chance of success.