Unfunded Mandate

In today’s Utah Policy Daily, LaVarr Webb writes, “Utah’s Health Care Reform Task Force will soon get underway amid hope and optimism that, over time, we can control skyrocketing health care costs and expand insurance coverage to nearly everyone.” Here’s to hoping that this political process won’t simply mess things up worse than they are at present. (An obviously vain hope.)

Webb knowingly says that meaningful health care reform will entail a lot of sacrifice and pain. Consider the stakeholders in the current system. Webb counts “people, institutions and groups – doctors, hospitals, drug companies, medical equipment manufacturers, insurance brokers, agents and companies” that all make “a lot of money from the current system.” Never mind the patients. And in our current system, we don’t mind them.

The only way to curb costs is to cut income to those that make money from the current system, opines Webb. “We won’t have health system reform without some pain,” he writes. I would go on to say that without serious reform, we won’t have a decent health system at all. This should be apparent if we follow the current semi-private highly socialized system to its logical conclusion.

But what kind of reform can be expected from a gathering of groups that owe their livelihoods to our current mess? One element that continues to rear its ugly head is requiring each individual to be covered by health insurance. The citizens of Massachusetts are seeing the harsh realities of this policy. The California Assembly wisely killed Gov. Schwarzenegger’s plan to do the same there. Sen. Obama (D-IL) argues with Sen. Clinton (D-NY) that this is a show-stopper. And Sen. Bob Bennett (R-UT) has joined with Sen. Wyden (D-OR) to push a bipartisan national plan that includes the same.

Politicians frequently toss around the term “unfunded mandate.” Usually what this means is that a higher level of government mandates that a lower level of government provide some service without providing funding to cover the requirement. In this case, we have government passing an unfunded mandate onto its citizens.

The argument, of course, is that medical costs are being raised by the uninsured. Emergency treatment cannot be denied those without insurance. When medical providers are unable to collect from some patients, the costs are borne by everyone else in the form of higher prices. Another argument is that the uninsured refuse preventative care, waiting until problems rise to costly critical levels before seeking treatment. The answer, of course, is to force everyone to be covered.

“Giving everyone insurance won’t help a bit if costs continue to soar,” writes Webb. And he’s right. Universal insurance will certainly enrich insurance companies, their shareholders, and their executives. But it has already proven not to reduce costs or improve care. In fact, in Massachusetts it is doing exactly the opposite. One MA care provider said (see here), “Forcing people to buy substandard care they cannot afford is not universal care. It is a hoax.” In Canada, the Supreme Court found that universal coverage often actually buys a place in line rather than actual care.

I am concerned that Utah’s task force is going into the project with a preconceived notion that everyone must be covered by insurance. Of course, no one will be permitted to select only catastrophic coverage or high deductible coverage. That kind of thing would be useful for the young and healthy on limited incomes. Instead, they will be forced to subsidize those who place higher demands on the system. This is a recipe for increasing the rate at which health care costs are already rising.

The way it is looking, a coalition of politicians, “doctors, hospitals, drug companies, medical equipment manufacturers, insurance brokers, agents and companies” will succeed in mandating that you and your neighbors have no option but to buy their products and to subsidize those that can’t afford to buy those products. They will call it market-based reform. They will pat each other on the back, host a fancy awards dinner, and hold a news conference with a bunch of smiling people — smiling because they will have succeeded in creating a legally mandated revenue stream from your pocket to theirs.

Unfunded mandate, indeed.