Health Care Reform - The Battle is Joined

A Case for Patient First Health Care Reform

I don't know who will be our next President. I do believe Hillary Clinton has a lock on the Democratic nomination. The race in my party is far from done, but I think it is becoming a two man race quickly between Mitt Romney and Rudy Giuliani. I endorsed Mitt Romney months ago, and believe he is the one gaining momentum as more Republicans get to know him and his extensive record of experience and accomplishment both in the private sector and as Governor of Massachusetts. The McCain campaign is done. They just haven't found the exit door. And, I believe Fred Thompson has already peaked and will continue to fade. The rest of the field contains many good men with plenty to offer. None of them, however, have the ability to get the nomination since the abundance of early primaries means that both party nominees will likely be known by February 5 – less than 110 more days.

What I do know is that Hillary Care – government operated universal health care – will be an issue to be dealt with whether she ultimately wins the presidency or not. Democrat majorities and the heightened concern about access and affordability of coverage throughout the voting population guarantee that the issue will be front and center during the campaign, and with the next Congress and Administration. As evidence of the growing public sentiment about fixing our health care problems, we even offer a prayer at Sunday Mass in my church for a solution.

In Colorado, as in Washington, the same debate is happening. Bill Ritter made coverage for all Coloradans by 2010 part of his campaign for governor. His health care commission reportedly is considering five proposals for reform with the intention of recommending one to the governor and legislature to be place on a statewide ballot. Four proposals are projected to cost more money. One -- universal government coverage -- is supposed to create billions in savings through administrative efficiencies and bulk purchasing capabilities.

By some estimates as much as 30% of health care cost is administrative overhead, so undoubtedly savings could be realized by streamlining and consolidating paper work. But, where did all this paper work and regulation come from? Right! From the government with a big assist from trial lawyers hungry for a lawsuit. Do you think doctors and hospitals intentionally create more paper work for themselves?

And, now how do they propose to fix it? With more government! Remember that one definition of insanity is doing the same thing over and over, expecting different results. Either they are crazy, or they believe we are to believe this stuff.

Government can take credit for some things, but reducing paper work, being the most cost effective and efficient is not among its finer qualities. To pretend that long term a government operated program will be more cost efficient than the private sector (if government would leave them alone) is more that ridiculous. Which government agency is the gold standard of administrative efficiency: the IRS, Social Security, CMS (the Medicare-Medicaid people)? There is a government health care system already, the Veteran's Health Administration, and the greatest complaints were always slow response, lost records, delayed wait times for doctor appointments.

With regard to purchasing efficiencies, does anybody really believe that the mega-hospital providers and insurance providers don't have the negotiating power to offer best pricing? The only way the state could have greater leverage is by imposing price controls or eliminating services, procedures, or pharmaceuticals. Richard Nixon imposed price controls during the energy crisis of the 1970s with disastrous results. They never work long term. And, in this age of rapid medical advancement, consumers expect to have access to the full spectrum of procedures and treatment options. Government limitation of health care services is a completely impractical option to even consider. Politicians will continue to cave in to constituent demands and increase coverage and thus cost.

Any pretense that universal government controlled health care coverage is a net savings is just that – pretending. Proponents of socialized medicine – which is what it is – should at least be honest with the voters.

It looks to me like the fix is in for Colorado, especially with the dummied up projections for savings that the commission is apparently relying upon to project savings for universal coverage. Sen. Ken Gordon (D-Denver) apparently agrees and as reported in the Rocky Mountain News, he already stated so in mid-September. Since Gordon is the Majority Leader of the Senate, his opinion carries more than average weight. And, being a Democrat like the Governor, he has more than just a slight incentive to get Colorado in line with the objectives of Hillary once she is their nominee.

At the federal level, the battle has already been joined on Capitol Hill. As discussed elsewhere in "A Glimpse into Hillary's Collective" in this issue, the reauthorization of the State Children's Health Insurance Program (SCHIP) is less about kids and a lot about the progressive march to socialized medicine. Sen. Max Baucus (D-MT), Finance Committee Chairman and a supporter, said "Everyone realizes that the goal of this legislation moves us a giant step further down the road to nationalizing health care."

The government-knows-best crowd is fighting to maintain control of the nationalized education system for our children. Health care is in their sights, and with Democrat majorities and possibility of the White House, it may be within their reach. What would be next?

* Our farms in the name of food safety and efficiency and for the greater good?
* Financial institutions? Almost certainly. It's easy to demonize bankers.
* Transportation systems – Air lines and railroad. Amtrak is a start, and next time and airline gets in financial trouble, instead of a bailout the government could just take over. That would be in the name of guaranteed service, not to fail.
* The automakers are struggling, too. Government should just as well take them over. No more bailouts or loan guarantees. This would likely be for the stated purpose of protecting jobs. Then government could really control what fuel we used, miles per gallon, how big vehicles are. Get those SUVs and big trucks off the highways, and save us from our wasteful, abusive selves.
* Every state has a department of transportation, so government just as well do all of the construction and maintenance, and with expanded union powers like Gov. Ritter wants to put in place, government could easily bypass private contractors completely. They'll likely find a private contract scandal to demagogue, and also point to all the job protected state unionized employees that they need to be kept busy.

George Orwell's 1984 has arrived, albeit a couple decades later than he predicted in his nightmarish prediction first published in 1949. The government is becoming every more powerful, and most frighteningly as Orwell foretold, it is happening with the consent and because of the naiveté of the masses. In our detachment and silent acceptance of this march to the left, the freedom originally provided in government of, by, and for the people is vanishing, replaced instead with government for government's sake.

Some reach the conclusion that we have no alternative but to embrace Hillary's plan for socialized medicine. I disagree and so do a lot of very thoughtful, informed people. Elsewhere in this issue, Congressman Tom Price (R-GA), himself a physician, offers his essay "Put Patients First in HealthCare Reform". No other single action would be as powerful putting patients in charge of their health care. A big part of the frustration, lack of understanding, and control of health care is because they don't have the freedom to choose and control their own health care decisions, primarily their choice of insurance. And, the government wants to "solve" that by giving us but one choice -- the government.

Most insurance in the U.S. is employer provided, and the masses think that it is a great benefit because they don't have to pay for it. I have news for you, as a former employer myself; your boss considers your health insurance cost and your salary as one in the same. It's all cost to him. And, so you are definitely paying for your insurance. However, in almost all cases, you don't have much if any choice in what provider he chooses, how much it costs, or the nature of the plan.

Federal Employees Insurance

Often the Federal Employees Health Benefit Plan (FEHBP) is cited as one of the best employer provided plans in the country, and I agree. Falsely, some proponents of universal coverage use FEHBP as evidence that government could effectively manage your health care.

FEHBP is not a one-size-one-way fits all health care plan. It is a defined benefit plan. The federal government contributes a fixed dollar amount of the total compensation to be spent on health care insurance. Each employee is offered a menu of about a half dozen different private insurance plans to choose from with varying coverage options and provider networks. Naturally, these plans also vary in price and the employee is free to choose the plan that best fits his family's health needs and the amount he is willing to supplement above the government's contribution. The reason federal employees like it is because they can control the cost and provider of their coverage. It's a great "patient first" model. Private sector companies are forever competing with pricing and coverage options to be included in the menu of plans offered, so efficiency and affordability are assured by the market place (such an old fashioned idea).

Hillary and the Democrats have but one idea – put them and their government in charge of your health care decisions and they promise to send you the bill for it.

There are a lot of better ideas. Here are but a few:

Reform the tax system: Government allows business to deduct the cost of health insurance for employees just the same as payroll salary expense. Many people feel trapped in a job they don't like just because they need the health care benefit. Individuals should have the same right. In fact, it would be a dramatic improvement if business provided either a defined benefit option like FEHBP or just paid workers more salary and let them choose their own insurance, but with full federal and state deductibility.

Home ownership was greatly enhanced by mortgage interest deductibility. Saving for education is enhanced by tax incentives. Why not level the playing field for everyone, not just big businesses that can afford it?

More competition and choice: Instead of removing choice from the market as Hillary-Care will do, consumers should have more options. Every time there is more competition for the consumer's dollars, better pricing, product and service result. Did you ever try to negotiate pricing or complain about service when you got your driver's license renewed? One choice is never a good option for the consumer.

Instead of driving insurance providers out of our market with increasing mandates and regulation, Colorado should encourage more providers to enter the market. Additionally, the federal government should pass legislation to allow consumers to shop across state boundaries to find best pricing. The same policy should not cost substantially more just because of a zip code. In the age of Internet shopping, and a highly mobile society it only makes sense.

Tax Free Savings for Health Care: The ultimate no-brainer! Instead of confiscating your money through taxes and redistributing it in a government program, both the state and federal government should provide the greatest possible incentives for people to set aside pre-tax dollars to be spent on their own healthcare expense. If the government wants to get more people insured, this is the smartest and easiest way to make it happen. Government can just not take money away in the first place so long as it is used to purchase health care benefits.

Greater Price Transparency: Patients have little knowledge or control of the cost of medical procedures, drugs, or equipment. It is not uncommon for the same procedure to be priced dramatically different from hospital to hospital in the same town. Just as consumers can shop and negotiate for best pricing for cars, clothes, food, loan rates, and professional fees, they ought to know the cost and be able to choose where to get medical treatment or purchase pharmaceuticals. The internet is very empowering and various states, such as Florida, have had great success in providing consumers decision making information with the click of a mouse.

Larger Risk Pools: Companies with big employee groups get advantageous pricing because insurance companies can spread risk across a larger population. Individuals, sole-proprietors, and small businesses should be able to align themselves in groups to get the same kind of purchasing power. Wal-Mart has enormous negotiating power because of their size. Small retailers should be able to align themselves by association and get the same kind of advantage.

Portability: Health insurance should follow the insured – not the business that might have paid for the policy. When someone changes jobs they take can take everything personal with them except too often their healthcare. COBRA was a big step in the right direction, but unless you hook up with another employer provided plan, you're on your own with limited options and no negotiating leverage. Employee ownership of insurance, such as accomplished through a defined benefit plan, would remove the uncertainty of getting dropped from coverage with a job change.

Block Grant Federal Money to States: Good ideas come from the bottom up, seldom are they top down. Instead of the federal government dictating not only the "what" but also the "how" of all the federally supported health care programs, the government should establish standards for performance, and then block grant money to the states. States would then become the incubators of the good ideas for how to accomplish the best systems of delivery for their population. Whether it's Medicare, Medicaid, SCHIP, etc. each state has a different population, geography, infrastructure, and physical and strategic alliances. By block granting to the states and allowing each state the freedom to determine the best and most efficient system of service, there would a multitude of "pilot studies" from which much would be learned about what really works as well as what doesn't. There has been a lot of talk about health care reform, this would be one way to grant states the freedom to put some ideas into practice and learn from it.

Required coverage: I reluctantly come to the conclusion that just as motorists are required to have auto insurance, and lenders require homeowners insurance, citizens should have to have health insurance. Of the 15-17% of the population that is uninsured, the U.S. Census Bureau reports that 56% are 18-34 year old young adults. It is impossible to know for certain, but many of these are no doubt uninsured by choice. Believing they are either permanently healthy, bullet proof, or both, they choose to spend their money on other things than health insurance. If they do get really sick or injured they know that they can go to any emergency room and get treatment whether they can pay or not because of federal law known as Emergency Medical Treatment and Active Labor Act (EMTALA). Some are certainly uninsured because they cannot afford the cost of insurance, but most could afford at least a portion of a monthly premium.

The reality is that when someone doesn't have insurance the cost of their health care is shifted to those that do in higher premiums, and to taxpayers who fund government programs. Cost shifting from the growing number of uninsured to the insured is a huge reality. The biggest challenge hospitals face is to adjust prices to insurance companies for paying customers to cover losses for services to non-paying uninsured patients they are required by law to treat. That invariably is reflected in higher insurance premiums.

What would King Soopers do if every sixth customer walked out without paying for a shopping cart full of groceries? Prices would go up to the paying customers because they have to cover their margins somehow.

Several states have taken on this challenge, so there is an accumulating base of experience to analyze. Massachusetts under Gov. Romney enacted a must-have law regarding healthcare. Romney stated recently at the University of Denver that about half of the uninsured have already enrolled. Those that haven't by the time they file their next tax return will be penalized for failing to comply, and he expects that will motivate most to sign up. It's far less expensive to enroll than to pay the penalty. For low income residents there is a sliding scale of premium support from the state to subsidize their insurance.

Common-sense says having insurance is better than none. Insured are far more likely to avail themselves of preventative care, get treatment earlier, and avoid serious acuity and expense. Benefits for pre-natal care and families with children are especially dramatic.

The libertarian side of me doesn't like to encroach on personal freedom, but in a civil society rules are imposed so as to prevent one person from damaging the rights or property of another. Without health insurance, the burden of cost is shifted to someone else to pick up, the market place is distorted, and public health is also put at risk from untreated communicable diseases. Every citizen has an obligation to be responsible, and in 21st century America that includes providing for their own health insurance coverage.

A final observation

Any objective observer with even minimal experience with our free market system understands that private competition with limited government interference works. Consumers control the power of the purse and can use it to effect product design, choice, delivery systems, and price. With multiple competing entities driven to be successful in order to survive, continued market evolution is assured providing advancements through improved technology and entrepreneurial creativity. The consumer is much the better for it.

Monopolies provide for none of this. And government run monopolies are the very antithesis of the benefits found in a free market society. The Soviet Union collapsed in large part because of the extreme inefficiency and inability of its collective system. Russia has begun steps to embrace private ownership again which is a cornerstone of the free market system. China's economic advances are clearly tied to their march to capitalism and individual freedom. As Alan Greenspan documents in his latest book, The Age of Turbulence, improved liberty and economic advancement across the globe are repeatedly and directly tied to nations that have embraced free market capitalism.

It is completely contrary to our heritage and our experience as Americans to even consider more government as the solution for something as individually personal and critical as health care. Americans have always been more independent and self reliant than that. And, they certainly tend to be more suspicious and untrusting of government than to turn over their family's well being to a bureaucracy.

Some argue that free market principles are already no longer part of our health care system. Indeed, between government regulation and mandates, the impersonal monolithic giant insurance companies, and mega-healthcare systems, it is easy to throw up our hands in despair and assume the consumer is powerless to control their own destiny. I don't believe that, nor am I willing to accept the argument. If one person chooses to buy a Chevrolet instead of a Ford, it may not have much impact. But, if thousands prefer Chevy, Ford will quickly get the message. If you have but one choice, consumer satisfaction no longer matters so much.

The tangled mess that has become our health care system was an incremental creation of our own doing, and it can be untangled by our own doing as well. It may not be easy, but I am certain of one thing. If instead of moving in the direction of Patient First Health Care, we continue down the path of a nationalized government system there will be no recovery and no return.


Steamboat Institute

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