EBRI Issue Brief
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
- 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.