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Five ways to improve our health-care system

America's health-care system is larger than the entire economy of France; it's also one of our least effective markets. At a time when we are finally making some headway from the financial collapse of 2008, we must do better for American families and for the businesses that run that very economy.

A Gallup poll from this year cites health-care costs as one of the most important financial problems facing American families. In 2016, prices of the most popular plans sold on the exchanges are projected to increase by about 7.5 percent. And employers are incented to reduce hours due to the mandate of health-care coverage for employees who work 30+ hours per week. Neither of these are good outcomes for Americans.

health practitioner
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Every American should have access to affordable, high-quality health care. This is possible through one overarching remedy: transforming the model from one that is government-led to one that is market-led.

The Committee for Economic Development (CED) has developed a set of policy remedies to put our health-care system on sound footing:

Provide each family or individual with a refundable tax credit, usable only to purchase health insurance. By doing so, we also eliminate the need for the divisive individual and employer mandates. The amount of the tax credit should be the cost of the base insurance plan available in that consumer's region. If a plan can convince consumers that it is worth more than the base premium, great, then the consumer can pay the incremental cost. That way, plans and providers will have every reason to deliver the highest quality care at the lowest possible price. It's called "competition," and it works everywhere else in our economy.

Allow employers to offer plans to their workers and to serve as exchanges to their workers. No plan would be permitted to refuse consumers or to charge higher premiums for pre-existing conditions. Plans that cover people who are sick should benefit from risk-adjusted premiums (as are used in the Medicare Part D prescription drug system).

Allow health insurers and exchanges to offer plans across state lines to lower costs through more competition. Each individual state, as the ACA mandates, may not necessarily be an appropriate area in which to operate a health-insurance system. Natural markets for the delivery of health care might be either larger or smaller than states. CalPERS (the California Public Employees' Retirement System), for example, divides the state of California into five separate markets.

Shift away from the fee-for-service model, which rewards the number of services that patients receive rather than the quality. This will encourage more innovative, affordable care. Under the current structure, providers simply have less of an incentive to adopt cost-saving practices. A system that compensates providers based on outcomes will drive better coordination, result in fewer duplicated services and, ultimately provide higher quality care at a lower price for consumers. Capitated prepayment is the simplest and most effective approach.

Reorient the ACA's Independent Payment Advisory Board (IPAB) to provide information for, rather than inject remote government judgment into, the physician-patient relationship. This will help doctors and their patients make better decisions. Data gathering and research must be expanded to inform physicians and patients about what treatments work best in which circumstances. Using these data, we also can reform the tort system by formulating rebuttable or "safe harbor" standards of sound practice –saving time and money.

We started health-care reform with the ACA but the system still is broken. Let's create a system with market-based competition to provide Americans with care that's both affordable and high quality.

Commentary by Steve Odland, CEO of the Committee for Economic Development and former CEO of Office Depot and AutoZone. Follow him on Twitter @SteveOdland.