Health reform: examining the alternatives

This Issue Brief examines the major issues of the health reform debate. The issues that must be resolved before reform can be enacted include: allocation of health care resources, universal coverage versus universal access, composition of risk pools, employer and individual mandates, and distribution of health care services' costs. This report also contains short descriptions and analyses of the following proposals: McDermott-Wellstone, Clinton administration, Cooper-Breaux, Chafee-Thomas, Michel-Lott, Nickles-Stearns, and Gramm. Proposals without an individual mandate will not achieve universal coverage. An individual mandate raises significant enforcement issues. An employer mandate will not achieve universal coverage by itself. Depending on the number of hours an employee must work to be included in a mandate, an employer mandate could potentially extend health insurance coverage to as many as 85 percent of the currently uninsured. Each individual has a risk of needing health care services. Restructuring the health insurance market is accomplished by changing the way individuals and their risks are pooled. The composition of these risk pools will determine the costs of health insurance and the distribution of these costs. The theory behind medical saving accounts is that the market for health insurance currently leads to health care cost inflation because many events covered under most health insurance plans are not truly insurable. There are two issues involved in medical savings accounts--the impact on low-income individuals and individuals' ability to evaluate the quality of care they receive. The present market does not provide individuals with adequate information for assessing the quality or effectiveness of medical care. Among the critical issues in health reform is how to reduce the rate of health care cost inflation. The effect of proposals that impose explicit budget caps or price controls on health care cost inflation can be more easily estimated than other means of controlling costs if it is assumed that the political will exists to hold these caps and price controls at the levels set in the proposal. It seems unlikely that shortages or queues would develop in the near term if a single-payer health system were enacted. Currently, the U.S. health care system is characterized by overcapacity. In the longer term, however, with restrictions on hospitals' access to new technology and funds to invest in new equipment and beds, shortages and queues might develop.