Tuesday, April 01, 2008

Real Choice Curbs Medical Expenses - Mandates Don't

“An insurance policy for a single male resident in mandate-enforced Boston costs five times more than a policy for his identical twin in mandate-free Tucson.” —David Gratzer and Paul Howard

I have expressed my displeasure with Utah’s leap in the direction of a Massachusetts-like health care system (see here and here). HB133 established a health care task force that consists of politicians and various groups that make a lot of money from the current system. The hope is that competing incentives will produce an even-handed result. The likely outcome is that this hand will reach out to grab even more citizen money than it does at present.

One of my central gripes with Huntsman-care, or whatever you want to call it, is the Governor’s encouragement (insistence?) of an “individual mandate.” This means that everyone would be forced to purchase health insurance that meets the state’s specifications. Those that are judged to be unable to afford this insurance would have it provided at taxpayer expense. This is a government attack on your individual liberty.

David Gratzer and Paul Howard explain in this City Journal article how the argument works for both liberals and conservatives.

“Liberal proponents think of mandates as social insurance. Many of the uninsured are younger and healthier, they note, so forcing them into insurance pools will result in lower average premiums. Some conservatives, meanwhile, argue that uninsured people use emergency rooms but often don’t pay, offloading their health costs onto the rest of us. It’s not simply about coverage, in other words; it’s also about personal responsibility.”

This panacea ignores the reality that that insurance “costs are influenced much less by mandates than by consumers’ ability to buy a broad range of competing health-insurance products.” When states begin to design insurance policies via public policy, they drive up costs unnecessarily. The quote at the top of this post is evidence of this.

It has been claimed that the uninsured that consume medical services but don’t pay add up to a “hidden tax” on each of the rest of us to the tune of $900 annually. But “uncompensated care costs” to federal and state governments constitute less than 2% of total health costs. This means that the $900 figure doesn’t add up.

Over the past year and a half as my Dad has worked through stroke related issues, we have never had the remotest clue up front the cost of any medical service or product provided to him. In most cases, this information has not become clear until 120-150 days after the service was provided. Each actor bills separately and it takes a great deal of detective work to piece together everything related to a given event.

Compare this with retail care clinics that, for example, offer a quadruple bypass at a flat $30,000 rate. There are no extra charges for a nurse administering painkiller and no separate bills by the surgeon or anesthesiologist. You pay one flat rate, period. And you get a 90-day guarantee, something you won’t find anywhere in the traditional medical industry.

OK, if mandates are not the answer, what is? Gratzer and Howard suggest generating competition by “allowing people to buy health-insurance policies across state lines,” requiring medical service providers to “to post their prices for common procedures, including rates that the uninsured will pay,” malpractice reform, and repealing “regulations limiting the availability of inexpensive retail-care clinics.”

The citizens of Massachusetts are discovering the horror of their utopian mandated RomneyCare health plan. Initially it was estimated that it would cost about $125 million for 2008. By last year that was pushed up to $380 million. Now they are scrambling to come up with $870 million, and the administration is saying that real costs will be closer to $1 billion. Yet citizens are finding that these expensive insurance plans buy them substandard care.

Now, that sounds like a plan to emulate! (sarcasm) But that is exactly what proponents of state-mandated health insurance want to do in Utah. And because many businesses stand to make a lot of money from this, a lot of businesses are on board. The Salt Lake Chamber of Commerce regularly runs ads promoting this as a “market based” or a “bold” solution. As folks are discovering in Massachusetts, calling it market based doesn’t make it a competitive free market solution.

This is a plan that is designed to reduce the freedoms of every citizen of Utah in order to enrich businesses (and politicians’ war chests). But, hey, at least we’ll all be covered! So, as your politicians work with businesses that stand to make lots of money from ‘reforming’ the health care system, it is wise for you to put your hand on your wallet and firmly tell them no.


Chris said...

Can we attribute any of the apparent enthusiasm for this sort of reform to Utah's love of Romney?

Scott Hinrichs said...

I don't know. Huntsman is/was not a Romney guy, and he's the biggest champion of this thing. In fact, he would have preferred to just jam it down everyone's throat without the farce of a study group.

I think most Utahns are totally oblivious to this. It's below the radar. But, since medical costs are continually going up, many sure want the government to do something about it. They won't know whether to be happy about it or not until it starts pegging their pocketbooks.

E Melander said...

I haven't quite figured out why so many states are willing to jump on the bandwagon when it is so clear that the Massachusetts plan has failed. I have been disappointed by Gov. Huntsman. Such a plan should never have been proposed by a Republican governor who is supposed to support smaller government.

Scott Hinrichs said...

Ummm... Gov. Huntsman would be a Democrat if that were a viable position to take in Utah politics. Instead, he just governs like a Democrat. But Utahns just love him, apparently.

Actually, not all Democrats would be willing to go so far as do the mandate thing. This is a bone of contention between Sen. Clinton (yes) and Sen. Obama (no). And when Gov. Schwarzenegger tried to pass this off in CA, it was the Democratic controlled legislature that killed it (at the behest of unions).