Universal health care done the right way

Competition and consumer choice are the keys

http://www.fosters.com

It continues to be spoken of in glowing terms on this year’s presidential campaign trail. For some it seems to have become the Holy Grail — the shining light of salvation.

Over the last two weeks, however, the light has grown dim, dulled by financial reality.

In Massachusetts, state officials have gone begging to Washington. There they are asking to be saved from the financial tidal wave the state’s new mandatory health insurance program has created.

According to most recent estimates, Massachusetts needs to find more than $400 million next year to fund its Commonwealth Care program. The given reason: State officials badly underestimated the number of uninsured Bay Staters. These officials hope Washington will pick up half the tab, i.e. pass the bill along to taxpayers in the other 49 states.

In California, hopes to institute universal health care appear to have been taken out at the knees last week by a state Senate committee. By a 7-1 rejection, committee members decided the proposed program “could expose the state treasury to billions of dollars in unanticipated costs,” as noted by The Associated Press.

The common theme here is that universal health care, as currently defined, isn’t going to save money. It is going to cost … and cost big.

In Massachusetts, it was predicted the cost would be mitigated by forcing uninsured residents to buy state-subsidized policies and by strong-arming even the smallest of employers to fund the state program, if they weren’t now going to sponsor plans of their own.

Needless to say, this bully-in-the-school-yard approach is not working.

Why?

Because it removes free market forces that would otherwise create downward pressure on health costs, something many employers learned the hard way decades ago.

Don’t believe it? How about a history lesson?

At one time it was very common for employers to pick up 100 percent of the cost for employee health insurance plans. That was until yearly renewals started demanding double digit increases, year after year after year.

While not solving the problem completely, many employers found that by asking workers to pay at least part of the bill costs started to come under control. The reason was simple. Workers who were using their own money began spending more wisely, not heading to the doctor for a hangnail. They also now had reason to shop around for a better price from health care providers.

At the same time, Congress fine tuned a federal statute known as ERISA, which allows companies to self-insure, i.e. better control their own health insurance fate. Key to these self-insurance programs is their exemption from state laws which often mandate expensive coverage at the will and whim of state legislatures.

The combination of these changes — shared costs and self-insurance — now allow consumers to have a more direct impact on their health insurance costs.

If there is ever to be something close to universal health care, it must be affordable. That means those who incur the costs must have greater control of those costs.

Efforts are already under way in Congress to expand access to self-insurance plans, to allow employee groups to band together across state lines to purchase insurance, and to establish employee health savings accounts that provide incentives to shop and compare.

Other proposals would promote electronic record keeping and eliminate much of the paperwork work which adds dramatically to health insurance costs.

Congress also needs to revisit tort reform which would rein in frivolous lawsuits, estimated to trim at least a few percentage points from malpractice insurance and rising health insurance costs.

Massachusetts, and now California, teach a valuable lesson, one supported by history. Affordable health care must be promoted through greater competition which, in turn, reduces costs. It cannot be mandated.
see original