Imagine what the health care industry would look like if the reforms I have proposed so far were all enacted. Although not yet complete, here is a snapshot of what it is shaping up to be:

Because of the birth of a free market system based on options, variety of products, and competition, all Americans would have access to affordable, private health insurance that is tailored to their needs and is not tied to an employer or government program. The uninsured are able to safely choose and assume the risk of going without insurance and have the risk minimized by equal tax treatment and a percentage cap on the amount charged. If worse came to worst, the family supports the needs of the individual and receives the tax credit from the government to pitch in. The poor and elderly who qualify for Medicare or Medicaid after the reforms are enacted, are given vouchers to private insurance and are empowered to pick a qualified option that is best suited for their needs. Employers are still able to attract and retain top talent through health care as a form of compensation by providing competitive vouchers to private health plans – insurance, co-ops and health shares. This new and vibrant market, invigorated by new players, customers and forces, innovates product solutions for the poor, the rich, the healthy and infirm.

Part of this new structure and environment facilitating this competition is the health care exchange proposed by the president with four adjustments:

1. No Government health plan

2. The exchange includes national health care plans – not just state plans. Opening up the market to our-of-state plans opens the doors to so many more options that are essential to creating choice in health care. The CATO institute reports that “One study estimated that that adjustment alone could cover 17 million uninsured Americans without costing taxpayers a dime (Footnote 1).” The barrier on out-of-state written plans needs to be lifted. It is the equivalent of an iron curtain on health care on a state-by-state basis. This iron curtain protects the insurance companies – not the consumer.

3. Include non-insurance options such as co-ops and health shares

4. Not limit who can participate. Currently, both the house and senate bills on health care limit the participants within the exchange to those who are not eligible for employer or government health care. Accordingly, the exchange in these plans is of benefit to only those without insurance. In effect, the exchange in the current bills does nothing to create a marketplace for health care. These limitations further entrench the employer sponsored health plan and the government’s health care programs. People need to have options and freedom to choose among them.

With these adjustments, the health care exchange proposed by the President and Congress is perfect.

An open and free health care exchange would create the marketplace where individuals could find a health care option that fits their health status, income, and health care goals. Without the kinds of reforms I have discussed in the preceding articles, the health care exchange would be like an out-dated mini-mall on the outskirts of town that no one voluntarily stops by to shop in. Yah, there might be something there but it sure doesn't look promising. In the kind of marketplace I described above, there would be a myriad of options, products and companies to choose from – similar to your favorite shopping mall – where there is something for everyone – all within the reach of the consumer through the exchange.

A free market health care exchange is the perfect vehicle to facilitate the kind of marketplace that will be created as a result of true reform in the health care industry.

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Footnotes

1. http://healthcare.cato.org/free-market-approach-health-care-reform