Michael O. Leavitt: Health care reform: Less spending, less government control

Published: Tuesday, Jan. 18 2011 2:33 p.m. MST

House Speaker John Boehner of Ohio, right, accompanied by Majority Leader Eric Cantor of Va., gestures during a news conference on Capitol Hill in Washington, Jan. 6, 2011.

Associated Press

Editor's note: Former cabinet member and Utah Gov. Michael O. Leavitt is the newest member of the Deseret News Editorial Advisory Board. Last Saturday, Leavitt joined Newt Gingrich and Harvard economist Regina Herzlinger to discuss health care reform at a retreat for 240 Republican congressional representatives. This column summarizes his advice to them on the vote to repeal and replace the Patient Protection and Affordable Care Act.

On Wednesday, it appears the U.S. House of Representatives will vote to repeal the Patient Protection and Affordable Care Act (PPACA), also known as Obamacare. Republicans will succeed in a symbolic passage of the bill in the House, but not enactment. The Democrat-controlled Senate will choose not to act.

Although Republicans in the House of Representatives will not succeed in immediate enactment of a new law, this is an important moment. Passage of a repeal bill in the House of Representatives fulfills the first half of their campaign commitment to "repeal and replace." In the short run, it initiates a multi-front assault on the PPACA, using every tool available to them by virtue of their control of the House. In the long run, it constitutes the opening bell in a new round of an ongoing struggle between conservative and liberal philosophies of government's role in American society.

The health care debate is important for another reason. It will greatly influence U.S. viability as a global economic leader in the next quarter century. Health care's dominance in public budgets is causing neglect of education, infrastructure, research and development and energy development. Worse yet, our health-spending-driven deficit excess undermines global confidence in the dollar and our credit standing among nations.

I suggest five principles to guide congressional thinking on replacing Obamacare:

First, define contributions, not benefits. When government helps people buy insurance, the contribution should be a defined amount, not an unlimited entitlement. This has been done with success in recent decades. Most people now have a pension with a defined contribution. Medicare Part D, the prescription drug benefit, employs the same method. Rather than providing another unlimited entitlement, the government should contribute a defined amount. Insurance companies will compete to offer the best plan. If consumers want more coverage than their subsidy provides, they can buy it. Doing the same thing with Medicare Part A and B would transform Medicare.

Second, engage consumers. Until informed consumers have an incentive not to purchase health care from low-value doctors and hospitals, the cost of health care will not subside. Republicans should fight for policies that encourage account-based plans like health savings accounts by making them more attractive. They should also empower Utah-style insurance exchanges and change the way our tax system discriminates against people who buy insurance on their own.

Third, give states more flexibility. Soon, Medicaid (health care for those in economic hardship) will be a bigger contributor to our national deficit than Medicare. In the mid-1990s, the states were given more flexibility to transform welfare, and they did. Congress should give the states their share of the federal health care subsidies, outline basic standards of performance and let states decide how to best care for their citizens. States should have a bigger say on how economic hardship is defined.

Fourth, change the way doctors and hospitals are paid. We should transition quickly away from the fee-for-service system currently used to pay doctors and hospitals. It is the principal enemy of sustainability. It creates incentives for patients, providers and payers that are wrong, wasteful and debilitating.

Finally, move toward sustainable expectations. Traditionally, health care policy has not been an issue that helps Republicans win elections. The 2010 election was an exception. Why? It's not because Republicans offered a clear path forward. The truth is that people don't like Obamacare for three reasons: It represents too much debt, too much deficit and too much government.

Fixing the U.S. health care system is an economic imperative, but it will have to be accompanied by a change in what we expect of our government and ourselves. Republicans are right to hold government more accountable and to push for more fiscal control. We too, as individuals, must be more accountable for our health behaviors. More than 75 percent of all medical costs result from chronic disease that is preventable and manageable. To heal health care in this nation, we must embrace accountability at every level and have sustainable expectations about our government and ourselves.

Michael O. Leavitt served in the Cabinet of President George W. Bush (Administrator of the Environmental Protection Agency and Secretary of Health and Human Services) and as a three-time elected governor of Utah. He is the founder and chairman of Leavitt Partners, where he advises clients in the health care and food safety sectors. Learn more at www.leavittpartners.com.

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