printable versionVoucher proposal goes where others fear to tread
BY SARA SELIS
A newly published proposal to use vouchers to provide universal health-care coverage would cost little or no more than what the nation spends under the current health system, according to co-author Victor Fuchs, PhD, who is one of the nation's foremost health economists and the Henry J. Kaiser Jr. Professor, Emeritus.
At a time when few policy makers are offering proposals for a sweeping overhaul of the way health care is delivered, Fuchs' plan—published in the March 24 issue of the New England Journal of Medicine—presents a viable blueprint for comprehensive, universal health-care coverage in a way that would satisfy concerns of legislators across the political spectrum. On the one hand, it guarantees health care for all. On the other, it preserves consumer choice and market competition.
At the inception of the proposed plan, every American under age 65 would receive a voucher that would pay for a standardized package of health services, including doctors' visits, hospital care, preventive services, mental health care and prescription-drug benefits. Patients would choose a participating health plan from several alternatives. Those who wanted additional benefits could purchase them with their own after-tax dollars.
The delivery of health care would not be run by the government but would continue to be provided through the existing system of private health plans, clinics and hospitals. To oversee the system, a federal health board would be created that would define the basic benefits package, set reimbursement rates for providers and offer guidelines for regional boards, which would be responsible for administering specific geographic areas. Under this plan, Medicaid would disappear and employer-based health insurance would likely fade away—as companies' health insurance premiums would no longer be considered tax-exempt income for the employees. As the population receiving the vouchers aged, Medicare would be phased out.
Fuchs, a faculty member at Stanford's Center for Health Policy/Center for Primary Care and Outcomes Research, wrote the proposal with Ezekiel Emanuel MD, PhD, an oncologist, bioethicist and expert on medical decision-making at the end of life. An accompanying editorial in the journal called their plan a "thought-provoking suggestion" for "a universal coverage system … that would be less chaotic and more affordable."
Fuchs and Emanuel published an earlier version of their plan in a November 2003 op-ed in the New York Times. But the latest version not only adds more detail but also includes a rough economic analysis of the cost. And that is significant, coming from Fuchs, one of the founders of health economics and one of the nation's foremost empirical economists, who is a past president of the American Economic Association and winner of some of the most prestigious economic awards.
In analyzing the financial impact of the voucher system for their latest article, Fuchs and Emanuel found that initially total use of health-care services would rise by about 5 percent as those who were uninsured receive care they weren't getting before. These associated costs, however, would be offset by huge administrative savings; most of the $100 billion now spent on the sales and administrative costs of private insurance, for example, would be saved. The exact cost of the plan can't be calculated until the benefits package parameters are set.
Although the authors acknowledged that the voucher proposal and other major health-care reforms are not now politically feasible, they noted: "There will come a time when the inequities, inefficiencies and costs of the current methods of financing health care will be so intolerable that the public will not only accept but demand comprehensive reform. At that time, the political feasibility of the voucher system will be compelling."
The plan would be funded through an earmarked value-added tax—a general consumption tax assessed on the value added to goods and services. Such a provision may not be politically palatable today, Fuchs said, but that doesn't mean it can't be on the table in the future when voters are demanding that their representatives take action. "This is a more efficient and equitable way to replace the expenditures currently made by employers, state government and the uninsured," Fuchs said.
Fuchs and Emanuel found that over time this system would lower spending on health care. Part of the reason for such a cost reduction is that their plan features the creation of an independent Institute for Technology and Outcomes Assessment, which would assess the effectiveness and value of medical interventions. The institute would be funded by a dedicated portion of the earmarked tax and would help to determine which services would be covered in the benefits package, leading to higher quality, more cost-effective care.