A Plan for ‘Responsible National Health Insurance’

Abstract

Prologue:In December 1975, at a hearing convened by a House health panel, Chairman Paul Rogers declared: “Today the Subcommittee on Health and the Environment begins its consideration of national health insurance—a concept which was articulated more than 25 years ago by President Truman and one which, as health care costs spiral and as more and more gaps in health care coverage are identified, has far-ranging implications for every segment of our society…. At the same time that this country is spending nearly $120 billion each year—or about $547 per person per year for health care—approximately 25 million Americans have no health care coverage, public or private.” The numbers have changed since 1975, but the issues remain largely the same: How to provide universal access to medical care to all Americans at a politically acceptable cost? During that fifteen-year period, the confidence in the capacity of government to effectively administer a national health plan has diminished, thus giving proposals that rely on alternative approaches greater weight. One such proposal is that offered by Mark Pauly and Patricia Danzon, both of whom are economists at the Wharton School and the Leonard Davis Institute of Health Economics, University of Pennsylvania; Paul Feldstein, an economist at the University of California, Irvine, Graduate School of Management; and John Hoff, a lawyer in private practice in Washington, D.C. Their plan is based on a belief that the allocation of resources to health care should rest on individuals' choice of insurance, in light of their different needs and desires. This will drive a competitive market and improve the efficiency of the health care system. Individuals would be required to obtain a basic package of benefits geared to their ability to bear health care costs and would be given government assistance as necessary to purchase such insurance.