Just and Holy Principles

Above you see the previous health care bill (1,018 pages); multiply that by two and you’ll have the most recent version (2,047 pages).

The Democrats have rolled out their latest proposal for health care reform. This 2,047 page version closely resembles previous versions and would push the nation one giant step toward a government takeover of America’s $2.4 trillion health care system. To become law, the bill needs to clear a major hurdle tonight in the Senate. For the sake of freedom, prosperity, and all that is American, I hope the bill stumbles and falls flat on its face.

As I’ve written previously, any proposal such as this one that requires individuals or employers to purchase health insurance will diminish individual liberty and distort markets in a way that perpetuates existing problems with the system and even makes it worse.

Despite their good intentions, the authors of these proposals are aiming at the wrong target. Their target is to help every American hold a health insurance policy when it should be to create an environment in which every American can get the health care they need. Health insurance is not the answer, high-quality, available health care is.

Insurance is one vehicle that helps people get needed care, but it is only one of many available and is not necessarily the most effective or efficient one. Forcing every individual to purchase a certain type of insurance is like forcing everyone to buy a vehicle from General Motors. A GM automobile might benefit some people well enough, but it can’t fulfill everyone’s specific needs. And because government is becoming so highly invested in the industry — whether automobiles or health care — those who provide needed products and services will have to answer more and more to government rather than to individual consumers whose preferences and choices should drive industry decisions.

Undeniably, our nation’s health care system needs serious attention. But as I’ve outlined in a previous post, there are far better ways to fix the system than what is being proposed on Capitol Hill today. Almost always, innovative people, organizations, and businesses working together to solve problems are the answer — not government.

What do you think?

Related posts:
-How not to fix health care
-How to fix health care

1,018 page health care bill

I think we can all agree that America’s health care industry needs help. Costs are rising quickly, the system is riddled with inefficiencies, and many people aren’t receiving needed care. Getting people to agree on what is causing these problems and how to fix them is harder than breaking the land speed record on Lake Michigan. In my previous post I described what I believe some of the problems are and argued that President Obama’s plan will do little to fix them and may even aggravate them. In this post, I offer some alternative solutions.

But before we can talk solutions, we must first paint a picture of a better health care world. Consider the following hypothetical story that illustrates the kind of health care system we could have:

Herbert, a 33 year-old mechanic, does not get health insurance from his employer; in fact, nobody he knows does. Instead, he went on-line, researched various options with companies in four different states, and purchased a “catastrophic” insurance policy that costs only $500/year for himself and his family. He uses this insurance to cover only major medical expenses such as long-term hospital stays, high-tech laboratory tests, and surgeries. For all other expenses like routine checkups, prescriptions, and dental work, he uses money he invests in a health savings account (HSA).

Herbie and his family know that doctor visits might cost a little more than today’s $10-30 co-pay, so they make sure to eat well, exercise, and avoid hazardous situations. When they do need professional care, however, Herbie can afford to pay for it because his insurance premiums are low and medical costs are not exorbitant. Why are costs not exorbitant? Because doctors compete with each other for individual customers rather than answering mostly to insurance companies and the government.

Herb chooses any doctor he wants, even specialists, based on the quality of the services they provide and the prices they charge for them. When he needs to fill a prescription, he shops around various pharmacies to find the best value available. When he is dissatisfied with a product or service provided, he goes elsewhere. This shopping around forces medical providers to offer the best products and services they can for the lowest price possible.

One year, Herb lost his job but still paid his medical bills the same way because his insurance wasn’t connected with his job. Although unemployed for a year, he was able to survive using funds in his HSA. Toward the end of unemployment, his HSA was exhausted and he was low on cash, but he was able to receive charity care at a free clinic in his neighborhood. Once he found a job, he started replenishing his HSA.

In Herbert’s world, health care is high-quality and affordable. He has the freedom to choose what products and services he wants and knows exactly how much he pays for them. Doctors, hospitals, drug companies, and insurance providers are accountable to customers who hold purchasing power.

Herbert is very familiar with this type of system because it generally mirrors his work as a mechanic. He charges his customers specific prices for basic repairs and only deals with insurance companies when a customer has had an accident. Government’s involvement is limited to simple regulations regarding safety and emissions and some guidelines to keep insurance companies honest. This system is much like every other market for any product or service. In most cases, the best way to get it to work is to leave it alone.

To help America develop a system this efficient would require some major reforms and many years. But here are some specific initiatives government can take to get started:

1. Eliminate the employer-based system. For now, money spent on employer-sponsored health insurance is excluded from federal income and payroll taxes. Government could stop encouraging employers to offer insurance as a benefit by removing this tax break.
2. Encourage HSAs. Government could offer a limited tax credit for money spent on insurance and HSAs. It could also encourage individuals to participate in a guaranteed medical loan program to help fill any gaps between HSA savings and insurance coverage. This reform would give individuals more opportunity to pay for their own medical expenses.
3. Reduce government intervention. The federal government could gradually phase out Medicare, Medicaid, SCHIP, and other programs that fund health care for specific populations. Doing this would help make doctors and insurance companies more accountable to patients which would reduce costs. If nothing else, the feds could at least reform these programs so they don’t go bankrupt in the next decade or two.
4. Reform medical malpractice laws. In most states, patients can sue medical practitioners for unlimited amounts of money for mistakes made and often for “frivolous” claims. To be sure, doctors should have some liability for mistakes, but excessive legal awards drive up the costs of health care. State governments can help reduce excessive awards and false claims through various reforms, such as putting caps on damages awarded for malpractice.
5. Eliminate state barriers. For now, people can only buy insurance from companies approved by their own state. Allowing insurance companies to compete across state lines would help lower costs and give individuals more options.

These reforms won’t fix everything, but they will put us on a path to productive change. Remember that people are the answer to most of our problems, not government.

What do you think?

Related post: How not to fix health care

Ever been pressured by a salesman to purchase something immediately or risk losing a sweet deal? That’s a tell-tale sign that something behind the deal will cause you grief later on and you should just walk away. President Obama is the latest salesman knocking at your door. He’s trying to rush through Congress a health care reform bill that someday (sooner than later) Americans will regret buying into.

What’s wrong with the Obama-Democrat health care proposal? Space will allow me to address only four major problems with the 1,018 page bill.

1. Employer mandate. Most employers (payrolls of $250,000+) would have to provide insurance for their employees or pay a tax (8 percent of payroll). This idea is probably the best way not to fix health care. Employers began providing health care in the 1940’s when government imposed wage caps on companies. Since they could not pay their employers as much as they wanted to, employers began to offer “fringe benefits” such as health care. Later on, Congress made employer health care benefits tax deductible. Since then, Americans have come to expect health care as an employee benefit rather than purchase it on their own.

This employer-based system encourages people to spend more than necessary on health care and to overuse insurance by tapping into it for basic medical procedures rather than just for emergencies or major procedures. It causes doctors to be more accountable to insurance companies than to patients. It usually forces employees to open a new insurance policy every time they change jobs (non-portable). All these problems have contributed to skyrocketing health-care costs. Thus, it makes no sense whatsoever to require employers to provide health insurance because doing so will only perpetuate and exacerbate the problems we are trying to solve.

2. Individual mandate. Under the Democrats’ plan, every American would either have to purchase health insurance or pay a tax (2.5 percent of their income). This idea is disturbing because it uses government to force people to do something they may not want to do or be able to do. For example, almost one-third of uninsured Americans are between the ages of 19 and 29 and are likely healthy and don’t want to buy insurance or don’t have enough money to pay for it. President Obama recognizes this fact and still wants to force them to pay up because their cooperation might help other people obtain insurance.

Actually, the Democrats’ plan is an ingenious way to dupe Americans into adopting entirely government-run health care: require every individual to purchase insurance and every employer to provide it, then when millions of Americans still don’t have insurance, which will be illegal, government, in its great benevolence, will have to step in to help them. As government so often does, it creates a problem and then steps in to save the day by “fixing” a problem it created, which ends up creating more problems to be fixed. As the Washington Post has astutely observed, “in a nation that prides itself on having freedom of choice, it is striking that such a wide and diverse coalition has formed around the individual mandate.”

3. Public option. Again, the public “option” is government’s way of slowly transitioning the nation to a government-run health care system without you noticing. Certainly, insurance and pharmaceutical companies share in the blame for our health care woes, but space does not permit to describe how government programs such as Medicare, Medicaid, SCHIP, and many others have distorted the health care market. Government health insurance is not the answer.

4. Rising health care costs. The main objective of the Democrats’ plan is to help insure people who can’t afford the escalating costs of health insurance. Unfortunately for them, the Congressional Budget Office (CBO) has reported that not only will their current plan not contain costs but could cause them to rise even more. And according to CBO estimates, Congress would spend at least a trillion dollars to help insure 69 percent of the uninsured for 9 years at a cost of $27,000 per person, or $3,000 per year, and 17 million Americans would still be uninsured. Today, most people can buy decent health insurance for $1,200-2,000/year.

In the end, all this bill does is shift the exorbitant costs of health care from the private sector to government and restricts the liberty of Americans to pay for their health care in a manner best suited to them and their families. As someone wise once told me, “never make an expensive purchase without taking ample time to think about it first.” Our chief executive and representatives in Washington might want to sleep on this health care proposal — for a long, long time.

What do you think?

*My next post will offer some alternative solutions to our health care problems.

This speech by Ronald Reagan is particularly pertinent to today’s health care battle:

Do you think health care is a right, a privilege, or neither? If neither, then what is it?

I just wrote an article for the Salt Lake Tribune on this topic. Please have a read and let me know what you think.

http://www.sltrib.com/Opinion/ci_10577523