1995 Apr⁠i⁠l – Backgrounder #16 – The Pr⁠i⁠va⁠t⁠e Sec⁠t⁠or Heal⁠t⁠h Care Revolu⁠t⁠⁠i⁠on

By: The James Madison Institute / 1995

Executive Summary

Although the major government health care programs, Medicaid and Medicare, are riddled with problems, Florida Governor Lawton Chiles and U.S. President Bill Clinton continue to promote plans that will force more and more people into government-intermediated health care programs. In Florida, Governor Chiles’ “Florida Health Security” plan would dramatically expand the scope of the state’s 11 new regional purchasing alliances by having them sell government-subsidized health plans to low- and middle-income residents.
Eighty-five percent of Americans have health insurance. In order to facilitate health coverage for the other 15 percent, the key issues facing Florida and the nation are: access and affordability. Rather than “universal coverage” – coverage that requires large, expensive, taxpayer-financed programs or mandates on business – Floridians and Americans would be best served by reforms that facilitate universal access and universal affordability in theprivate marketplace for health insurance.
The good news is that a private-sector revolution in health care is taking place in cities across Florida and America, where companies are developing a nearly endless variety of methods to make health care more accessible and more affordable. These include privately-sponsored (not government-run) purchasing alliances, the use of “Medical Savings Accounts” (MSAs) in tandem with low-cost catastrophic health policies, the development of databases and financial incentives to help employees comparison shop among competing medical providers, and other mechanisms.
The bad news is that the plans promoted by Governor Chiles and President Clinton will needlessly channel more taxpayer dollars into flawed, government-run schemes like Florida Health Security – schemes that contribute to rising medical costs by perpetuating the “third-party payer problem” – rather than seek solutions in the further expansion of today’s myriad of private-sector, no-cost-to-the-taxpayer innovations for making health care more affordable.
Florida legislators should draw a line against the expansion of Florida’s new health care bureaucracy, the Community Health Purchasing Alliances (CHPAs), and pursue measures to encourage the further development of private-sector reform. A seven-point plan for doing so is presented here. It includes requiring the CHPAs to compete head-on with private insurers by repealing the CHPAs’ annualized $3.1 million in state subsidies, the enactment of tax-law changes at the federal and state level to provide tax-treatment equity among conventional insurance plans and programs using Medical Savings Accounts, and other measures.