In the keynote speech on July 24, the last day of the Consumer-Directed Health conference, J. Edward Hill, MD and president-elect of the American Medical Association, outlined the AMA’s proposed reforms to U.S. health care and fielded questions from the audience of benefits professionals.

Consumerism figures strongly in the AMA proposal, which centers on changes not in medicine but in how we pay for it. The AMA would restructure the federal tax subsidy from its current model — in which tax exclusion offers greater benefits to the wealthy than to the impoverished — to one in which tax credits are inversely proportional to income.

To ensure that the new system encourages healthy behavior and wise insurance-buying decisions, the AMA recommends that the tax credits be refundable, advanceable (so that individuals may obtain coverage without waiting for a year-end credit), and contingent on the purchase of health insurance.

Under the AMA model, employers’ taxes would not change. In essence, said Hill — borrowing familiar terminology from the retirement-planning side of employee benefits — the proposal shifts health care from a defined-benefit structure to a defined-contribution structure.

Hill noted that consumerism’s potential benefits include greater price transparency and health education. CDHPs, he noted, could reduce the involvement of third-party payers, thereby restoring the patient-physician relationship.

He cautioned, however, that price transparency “hasn’t happened yet” — and without it, consumer-driven health care could put patients at a disadvantage. Consumerism hinges on patients’ ability to make informed decisions, and the availability of price information will be a key factor in those decisions.

Hill also raised the possibility that for doctors the predicted efficiencies of consumerism might not materialize. The hassles and costs of insurance paperwork, instead of being streamlined, might just be replaced by the hassles and costs of collecting fees from patients.

Physicians, said Hill, must be more aware of patients’ financial limitations and needs. Likewise, patients must be more willing to talk to their doctors about the cost of their care. Consumerism could facilitate the growth of a culture in which such conversations are more accepted.

Because it hinges on rearranging the subsidy, rather than on creating additional expenditures, Hill called the AMA proposal “budget-neutral.” Indeed, if tax credits and consumerism lead more patients to seek preventive care, under the AMA plan the government might actually see its costs drop, since the high expense of treating the uninsured at emergency rooms would theoretically be reduced.

Hill pointed out that the U.S. spends $824 billion annually to treat medical problems stemming from just eight preventable behaviors, including poor nutrition, the abuse of tobacco and other substances, and unprotected sex. Yet, he said, “we don’t mandate health education.”

Education — with an emphasis on wellness and prevention — could be a major remedy for the country’s physical and financial woes alike.

Both presidential candidates have proposed a tax credit for health care, Hill noted, but their proposals are lower than the AMA’s by several thousand dollars. The AMA proposal states that “at the lowest income levels the credit must approach 100% of the premium” — that is, the credits must be large enough to allow nearly all Americans to purchase coverage.

The AMA is particularly concerned with providing coverage to the 46 million Americans who are uninsured — a number Hill described bluntly as “a national disgrace.” The AMA predicts that its plan would lead to health coverage for 95% of Americans, in part because tax credits could be used to purchase either individual or employer-sponsored coverage.

Hill ended his speech with a plea that echoed the previous day’s keynote speaker, Dr. Rex Cowdry, who described the patient’s experience as the “true north” of the health care system.

“At the end of the day,” said Hill, people are “not just consumers of health care but patients — patients who depend on physicians to protect their health and well-being. . . . I hope you’ll keep our patients — including the uninsured — at the forefront of your thinking.”

The full text of the AMA proposal is available online at www.ama-assn.org/go/insurance-reform.