11/ 21/ 2006
Health-care costs have been the No. 1 issue facing small-business owners for two decades. No wonder. Over the last 10 years, premiums for small firms (those with three to 199 workers) have increased by nearly 10 percent per year, according to the Employee Benefit Research Institute.
To help lower health-care costs, the president has called on Congress to allow small businesses and civic and community groups to form Small-Business Health Plans, which would allow them to join together across state lines to purchase health insurance. SBHPs would give small businesses the same advantages enjoyed by big companies and labor unions. The president has also urged Congress to pass medical liability reform and increase the tax deductibility of health savings accounts.
But there is one solution that won't require an act of Congress. It's what Ronald Reagan called "the magic of the marketplace."
It's when consumers know what they're buying and how much it costs, so they can compare quality and price and make decision that are best for them. It's when sellers' prices are known, and when the quality of service is measured and made public, so that sellers continuously attract customers by constantly making improvements. It's competition based on value—where every transaction is an informed choice that drives improvements in price and quality.
That's the secret to America's success, and that is what we are working to bring to the health-care market. There are four steps we can take to bring better value to health care:
- Publishing prices: Making sense of medical prices by first defining what procedures and services are covered for each “episode of care” and then putting that information at patients' fingertips.
- Publishing quality: Adopting reliable and consistent standards of quality, and then making that information public.
- Connecting the system: Setting standards so that all health-information systems can quickly and securely communicate and exchange information.
- Creating positive incentives: Establishing arrangements that reward both those who offer and those who purchase high-quality, competitively priced health care.
Last August, President Bush signed an Executive Order committing federal programs to these four cornerstones of better health care. We're also asking the nation's employers of all sizes to join us. Small businesses can ask--and expect--their insurers and providers to take these steps. Everyone benefits when price and quality information are public and comparable.
That is the magic of the marketplace; the power of competition. That is the way to ensure that small-business owners enjoy more choice and more control, the way to ensure that they and their employees get the best care and the best value for their health-care dollars.
Mike Leavitt is secretary of the U.S. Department of Health and Human Services.
