It is now clear that the health care reform legislation before Congress will not meet President
Obama’s primary goal of reducing future medical costs.(i) Unfortunately, since members of this
administration have little or no private sector experience, they fail to comprehend that the only
way we can discover the lowest price for a product or service is through competition among
suppliers. Unless this becomes the cornerstone of medical insurance, costs will continue to rise.
Here are four proposals that have been proven to work:
First, we must allow medical plans to be sold nationally so that consumers have a much wider
choice of medical plans. This requires breaking down state and federal regulatory barriers that
stifle competition.(ii) Imagine how much auto insurance would cost if Hawaii had as few
competitors as we have for health insurance.
Second, we must implement aspects of the medical insurance scheme developed by Safeway
Stores, the nation’s fourth largest supermarket chain, which has in the last five years reduced
costs by 40 percent in their non-union stores from what the costs would have been without the
changes they made.
Safeway’s plan capitalizes on two key insights.(iii) The first is that 70% of all health-care costs are
the direct result of behavior. The second is that 74% of all costs are confined to four chronic
conditions (cardiovascular disease, cancer, diabetes and obesity).(iv)
Safeway’s medical insurance plans differ only by using discounts for those who take care of their
health; those who do not smoke, are of normal weight for their body size, and who regularly
exercise, and they couple the discounts with companywide encouragement of health and wellness
programs.
Safeway says, “By our calculation, if the nation had adopted our approach in 2005, the nation’s
direct health-care bill would be $550 billion less than it is today.” That alone is enough to take
care of all the uninsured