UpDate - Vol. 13, No. 39, Page 3
August 4, 1994
Another perspective; National health-care card is prof's
'prescription'

     As pundits, politicians, patients and physicians debate about the
country's health-care system, Laurence Seidman, professor of
economics, has developed a "prescription for national health" that
represents both the conservative and liberal points of view.
     Under his plan, each citizen would be issued a government health
card, similar to a credit card, to be used for any medical treatment.
The government would pay for the treatment and then bill the user for
a percentage of the cost, depending upon his or her ability to pay.
     The plan would be financed by taxes, but this cost would be
offset by not paying insurance premiums, Seidman said. Insurance
companies and credit card companies would be used under contract to
the federal government to administer the plan and collect payments.
     Seidman said the concept that everyone pays for a portion of
their medical treatment, even if it is only a small percentage, was
proposed by conservative Harvard University economist Martin Feldstein
in 1971. Free medical care plans tend to become stingy, treatments are
postponed and there are long wait. Also, patients are unaware of the
actual costs of their care. If patients pay for their care, they are
more cost-conscious in making choices about doctors, hospitals and
medical procedures, according to Seidman.
     The idea of a health card to promote universal government health
insurance was proposed by Democratic Rep. Edward Roybal (now retired)
who chaired the U.S. House Select Committee on Aging.
     "Modern technology and the evolution of the credit card industry
are relatively new developments, which have changed and simplified
financial transactions in ways that were not possible a few decades
ago," Seidman said.
     Along with his own proposals about health care, Seidman has
combined these two concepts into one plan. He said that the Clintons'
insistence on universal health care is basically right, but he said
that reforming the health-care system through private insurance is not
the route to go.
     "Private insurance companies are like any business. They have to
look at the bottom line and make a profit. But, one way to make a
profit is to exclude people with high medical costs.That is why
universal coverage and peace of mind are so hard to achieve with a
system of private insurance.
     "As long as people are covered by a large organization and
continue to work for that organization, such as employees at the
University, their health-care needs are covered. But, if someone
becomes unemployed, employed by a small company or self-employed, the
picture changes. Insurance companies look at these families and, if
there are pre-existing conditions that may cost them in benefits, they
charge high premiums or refuse to insure these individuals.
     "So far, all efforts of the government to create pools and to
encourage insurance companies to insure these individuals have not
worked. Even with regulations, the insurance companies find loopholes.
With the government as sole insurer, everyone would have access to
health care but at the same time would have to pay up to a certain
amount for services," Seidman said.
     One important proviso of his proposal is that there must be
complete confidentiality about each patient's income and the amount of
cost-share they pay.
     Another is that the maximum amount anyone would have to bear in a
year would be limited according to family income.
     As an economist, Seidman is against any regulations for pay caps
for health providers. He said he feels that patients themselves can
determine what they are willing to pay for. There are differences in
doctors' training and abilities, and that difference should be
reflected in fees. Among other factors, the financial incentive is
important in encouraging doctors to excel, Seidman said.
     Seidman's health card proposal appeared June 4 on the op-ed page
of The Philadelphia Inquirer  and in the July/August issue of
Challenge  magazine.
     Seidman's area of research is tax policy and social insurance. He
is the author of Saving for America's Economic Future, written for a
general audience, and a textbook entitled Macro Economics.
                                                  --Sue Swyers Moncure