Comments Before the Subcommittee on Consumer Rights, Protections, and Responsibilities of the President’s Advisory Commission on

Chairman Thomas, Commissioners, good afternoon. My name is Michael Cannon and I represent Citizens for a Sound Economy Foundation, a non-profit, non-partisan consumer group with 250,000 members. Citizens for a Sound Economy Foundation believes consumer choice and competition among health care and coverage providers are the keys to consumer protection. These tools enable consumers and health coverage providers to discipline those providers who fail to offer a quality product.

As I have told this subcommittee previously, Citizens for a Sound Economy Foundation is concerned with the approach this Commission is taking in an attempt to enhance consumer protection in the health care industry. I believe the example of “gag clauses” illustrates the problems with the Commission’s approach.

Along with numerous interest groups and members of Congress, the Commission identified the problem of “gag clauses” in health plan contracts as an abomination and a target for reform. Had it not been for the General Accounting Office (GAO) finding these “gag clauses” do not actually exist, it is conceivable that with its limited knowledge of the issue, the full Commission would have recommended legislation to ban such clauses, complete with a new federal regulatory structure to implement the ban. As the GAO has demonstrated, such efforts would have been unnecessary and wasteful.

By itself, this subcommittee is looking at numerous services and trying to decide what level of these services consumers should be forced to purchase. Yet the subcommittee’s understanding of these other issues are likely to be as limited as its understanding of “gag clauses.” How many of these other crises might further study prove non-existent?

Decisions about what services will be purchased inevitably involve tradeoffs in terms of money and other services forgone. Yet this subcommittee does not have the necessary information about consumers’ needs to make these tradeoffs for every consumer of health coverage.

I will gladly concede that when it comes to consumers’ health coverage needs, each member of this subcommittee knows more than anyone in America. But you cannot know more than everyone in America about what will most benefit each individual. Making tradeoffs for others with such limited knowledge will inevitably lead to unnecessary harm.

Not only is this subcommittee’s knowledge too restricted to prescribe how the market should function to meet the needs of consumers today, it cannot know how the needs of consumers will change in the future. Yet Health and Human Services Secretary Donna Shalala, a co-chair of this Commission, has indicated this Commission’s recommendations will become the basis for legislation that will lock tomorrow’s health care consumers into today’s imperfect perception of what consumers need.

Citizens for a Sound Economy Foundation believes the objective of this subcommittee and this Commission should be to help return the power to direct changes in the health care market to those who have the most information about consumers’ needs: individual consumers themselves. Not government. Not employers. Consumers.

How can this be done? When it comes to reasons why health coverage does not meet the needs of individual consumers, the federal tax code’s bias against those who purchase their own insurance is the elephant standing in the middle of the room that everyone pretends not to notice. This bias and countless federal and state mandates have given us a health coverage market too often driven by the needs of government and employers, rather than consumers. Citizens for a Sound Economy Foundation believes these existing obstructions to consumer choice are better objects for this subcommittee’s attention than any additional obstructions that will further remove consumers from the decisions that affect the health care they receive.

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