Politics & Policy

Universally Bad

Candidates would be wise to review the health-care disasters of the past.

When it comes to health care, all eyes are on the Presidential candidates. A gaze back to the myriad experiments in our laboratories of democracy is instructive. States have long been tinkering with health reform; giving most of the ideas espoused by today’s Presidential candidates a road test. The news is not happy — at least for those who want to provide us with universal insurance. Most reforms either sink on the rocky politics of increasing taxes and spending, or falter when it’s time to implement, which means actually getting real people to write real checks for insurance.

Reformers pretend that Americans can have more health insurance for less money. The plans invariably rely on leveraging Other People’s Money (OPM)—that is, federal tax dollars, an option not open to national candidates. They recapture dollars that are allegedly lost due to inefficient transfers, such as to the uninsured in emergency rooms. They seek to force companies to offer insurance to everyone. And they put in claims for administrative efficiencies and good health savings.

Massachusetts gets credit for kicking off the latest bi-partisan idea for achieving universal coverage with its 2006 law requiring individuals to purchase insurance. It may be the most important; it gave a Republican blessing to the individual mandate and required employer contributions. The Bay State is important and a political success, but it really wasn’t the first.

Oregon took the bold step of reforming its health care system in 1989 with a refreshingly honest approach of formalizing rationing. It didn’t work. When people were actually forced to pay a bit for the plan, the bottom fell out. Enrollment plunged. Today Oregon, like the Hawaiian play-or-pay scheme before it, is rarely mentioned.

Why should that be? Policy experts, politicians, academics, and concerned citizens moved on to the next great idea—pulling down federal dollars, OPM, to subsidize low-income uninsured and provide reasonably priced insurance for the uninsured. Here too, MA wasn’t the first. Maine stepped up in 2003 with its Dirigo Health Reform Act, which promised to get 30,000 uninsured insulated from unexpected health costs immediately and ramp up to 140,000 Mainers by 2005.

Today, enrollment remains at 25-percent of projections, as some people simply don’t want to pay for health insurance. They tend to be healthy, only occasional users of the system, perhaps with few assets to protect. Others, however, jump at the chance to get cut-rate insurance. They tend to be older, less healthy, and, well, heavy users of the system.

Massachusetts’ leading thinkers had time to learn from Maine, so they added a few innovations, most notably the individual mandate. Like Maine and Oregon, Massachusetts at least proved to be politically successful. Reform hasn’t busted up yet, but the hour is early. Signs point to some trouble ahead, as enrollment in plans requiring premiums is low, and even program supporters are fretting about the program’s inability to control costs.

Sober analysis pointed out that MA couldn’t be replicated. The California Health Care Foundation, for example, estimated that it would cost CA roughly $10 billion to do so. With a Republican governor, one might have thought that would put an end to it. It didn’t. Romney was the toast of the media set. Raising taxes, regulating the health insurance market, and forcing people to purchase policies seemed a good idea.

The CA Governor’s plan of “shared responsibility” held little attraction to the state Democrats, the Republicans, and the radicals in the nurses’ lobby who keep a constant flame lit for single-payer medicine. They did, however, approve of Schwarzenegger’s taxes on business and mandates on insurance companies and passed a bill endorsing such. Schwarzenegger vetoed it, and proposed on October 9 yet another plan to bring the Bay State’s plan to California. Even if this $14 billion plan is passed, the taxes to fund the plan will get put to a direct vote of the population in November 2008. It will fail.

In most states the pure politics deep sixes political dreams of grandiose reform.

In Illinois, the same governor who defied federal law and spent nearly $1 million of taxpayer money to import drugs for 3,689 citizens, decided to go long on comprehensive health care reform. The legislature balked at the plan’s hefty price tag, voting it down 107 to 0.

In Wisconsin, a plan to double the state’s taxes to install single-payer health care passed the state Senate but met its demise in the lower legislative chamber.

In Connecticut, politicians cringed at the price tag on a universal plan.

In Pennsylvania, Governor Ed Rendell pushed a comprehensive plan to increase payroll and tobacco taxes, expand the procedures nurses can perform, and crack down on medical errors. He’s still pushing for the taxes.

Colorado will go next year. Politicians there too will promise the moon but fail to even provide moonshine.

We have a large number of uninsured because insurance is expensive. Insurance is expensive because the product for which it pays — the world’s most advanced medical interventions — doesn’t come cheap. It’s also expensive because regulations severely limit the free-market’s ability to develop inexpensive, less comprehensive plans.

Few politicians are willing to deregulate.

The only levers left to pull are the ones bureaucrats love: price controls and rationing. This is why Hillary speaks of “fair prices.”

This is where the proverbial rubber meets the road and why most state health reforms explode or fade away. It’s why those promising universal coverage at the national level are in reality promising voters — most of whom are well insured and insulated from health care costs — increased taxes, fewer choices, and longer waits for care. That’s not a menu off of which many voters will want to order. It’s why the more reserved and reality-based proposals by Republican candidates should very well win the day.

Sally C. Pipes is president & CEO of the Pacific Research Institute. She is author of Miracle Cure: How to Solve America’s Health Care Crisis and Why Canada Isn’t the Answer. She is a health care advisor to the Giuliani campaign.

Sally C. Pipes is the president, CEO, and Thomas W. Smith Fellow in Health Care Policy at the Pacific Research Institute. Her latest book is The False Promise of Single-Payer Health Care (Encounter). Follow her on Twitter @sallypipes.

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