PAs for Health Freedom
February, 2008 Newsletter
Below are
two summaries of Wall Street Journal Articles on health care plans under
Clinton and Obama -- it also criticizes Mitt Romney's plan. At
the end of this e-mail, I also included the actual WSJ article for you to read,
if you wish. This will help for those of you
who will vote EITHER Democrat OR Republican.
1)
"A Question for Hillary" (WSJ Jan. 5, 2008)
o Hillary's State
spends most and covers least. Three government regulations make private
health insurance expensive: 1) 'Guaranteed Issue", 2) "Community
Rating", 3) Broad service requirements (luxury health: fertility
treatment, chiropractic tx).
FYI: the author is analyst from the
economically conservative think tank: http://www.manhattan-institute.org/
2) Saying No to the Schwarzenegger, Clinton Health Care Plans
In a
column in The Wall Street Journal, Reason Foundation's Shikha Dalmia details why
California Democrats derailed Gov. Arnold Schwarzenegger's universal health
care bill and what the defeat means for the national debate over health care.
Dalmia writes, "On Monday, California Gov. Arnold Schwarzenegger's
universal health care plan was shot down by a committee in the state's Senate,
7-1. The most vociferous opponents were not fiscal conservatives, but
labor unions that launched a last-minute revolt against its most crucial
feature: an individual mandate that would have forced everyone to buy
coverage. This defeat has national political implications. Hillary
Clinton, for example, has denounced Barack Obama for refusing to include an
individual mandate in his health-care plan. Yet many California unions argued
that a mandate would force uninsured, middle-income working families to divert
money from more pressing needs toward coverage whose price and quality they
cannot control. The unions are correct: This is exactly what is happening in
Massachusetts, where Mitt Romney enacted a similar plan two years ago as
governor. (And Mr. Romney's plan is the inspiration for both the Schwarzenegger
and Clinton plans.) The experience in the Bay State deserves a lot more
scrutiny than it has been getting." Why were Democrats suddenly worried
about the mandate? Dalmia finds premiums in Massachusetts rose 12 percent this
year, "double last year's national average...Before the hike, the cheapest
plan for uninsured couples in their 50s cost $8,200 annually. Now, unless
government bureaucrats hand them an exemption, they might well find it cheaper
to pay the penalty -- up to half the price of a standard policy -- than
purchase insurance. That is, pay to remain uninsured. This is legalized extortion:
TonySopranoCare...Mr. Obama is surely correct that part of the reason 45
million Americans are uninsured is not that no one is forcing them to buy it,
but that they can't afford it. It may be too much to hope that Mr. Obama would
embrace market-oriented measures -- such as deregulating insurance markets,
giving patients more control over their health care dollars, and fixing the
federal tax code to let individuals, like employers, buy health coverage with
pre-tax dollars -- to bring down insurance costs. But unlike Mrs. Clinton, he
at least seems to understand the perverse side effects of an individual
mandate. Should Hillary Clinton ever be in a position to bully people into
buying coverage, a coalition of labor and fiscal conservatives might well do to
HillaryCare what it just did to GovernatorCare."
FYI:
Author is from the Libertarian Magazine "Reason" -- Economically
conservative, Socially Liberal. http://www.reason.com/
A
Question for Hillary
By
TARREN BRAGDON
January 5, 2008; Page A8
New
York
Sen.
Hillary Clinton is running for president, in part, on a platform that calls for
more government health care. So let's ask a question that may hit a little too
close to home: Why does New York spend more on Medicaid -- a health-care
program for the poor -- than every other state but still have a larger portion
of its population walking around without health insurance than states that
spend far less?
Last
year, New York spent $48 billion on Medicaid. That amounts to about $2,100 for
every man, woman and child. Yet 13.5% of the state's population lacks health
insurance. Pennsylvania, meanwhile, spent closer to $1,300 on Medicaid for
every state resident and ended up with an uninsured rate of 10.5%.
New York
is the third-largest state in the union and about as good a laboratory as we'll
find for the national health-care market. It has 2.2 million adults and 367,000
children without health insurance. Over the past decade, the state has
attempted to reduce the number of uninsured residents by expanding eligibility
for government-sponsored health care. This approach is not solving the
uninsured problem.
One
reason is that New York has made private health insurance too expensive for
many people by imposing a long list of mandates. For a policy not purchased
through an employer, most individual New Yorkers have to pay about $500 a
month, and most families about $1,400. That's about twice the national average.
Three
mandates are largely responsible. Two -- "guaranteed issue" and
"community rating" -- are closely linked.
Guaranteed
issue hits those who are buying insurance on their own. It requires insurers to
sell a policy to anyone who can pay for it, regardless of health status. It
sounds fair, but drives up premiums for the healthy and induces them to drop
out of the insurance pool. It also encourages people to wait until they are
sick before they buy insurance. After all, if you can't be turned down, why pay
in when you are healthy?
Community
rating requires insurers to charge the same premium to anyone in a given plan,
regardless of age, gender or health. This forces the healthy to subsidize the
unhealthy, also driving up the cost of insurance.
Every
state mandates that insurers cover basic care. But a third New York mandate
goes well beyond the basics and requires insurers to cover 52 types of
services, ranging from chiropractic to fertility treatment to mental-health
services. This adds about 12% to the cost of insurance in the state.
Gov.
Eliot Spitzer has decided to enter the health-care fray by pushing a new
expansion of government health care -- in this case for children in
middle-class families. Or in the parlance of Albany, to extend Medicaid
benefits to children living in families earning up to 400% of poverty level
(about $80,000 a year for a family of four in New York).
Mr.
Spitzer says he wants universal health care for New York. Yet 68% of children
without insurance in the state are already eligible for government care, but
haven't signed up. Instead of just reaching out to these children, the governor
wants to make hundreds of thousands of middle-class children, many of whom
already have private insurance, eligible for Medicaid. If this leads parents to
drop their kids from their insurance and enroll them for government benefits,
Mr. Spitzer will have succeeded at expanding the Medicaid rolls while doing
little to solve the uninsured problem.
A better
path would be to reinvigorate the private, direct-pay health-insurance market.
Thirty-three states have created a new "risk pool" for high-cost patients
without jeopardizing access to private insurance for everyone. This pool, which
is often subsidized by a tiny surcharge on other policies, allows insurance
companies to charge rates that more closely track the actual cost of providing
health care to individuals. If New York had a similar risk pool, those in fair
health could buy unsubsidized private coverage at competitive rates.
The
evidence suggests, moreover, that almost everybody could buy private insurance
if carriers were allowed to tailor plans to meet consumers' needs.
Consider
WellPoint's "Tonik Health Plans," which are cheaper because they are
tailored to the needs of the consumer. In Connecticut they allow people between
the ages of 19 and 34 to buy insurance at a cost of $105 to $203 a month,
depending on age, gender and plan selected. About 78% of those who buy Tonik
plans were previously uninsured.
There is
similar innovation underway with consumer-directed plans. These combine
high-deductibles and low premiums with a tax-free Health Savings Account, and
allow individuals to save for out-of-pocket costs. The best-selling
HSA-eligible plans -- costing $120 a month for singles and $270 for families --
are sold to people in their 20s. For those 30 to 54, single coverage costs $176
a month, and family coverage is still an affordable $385. But in New York,
HSA-eligible plans for individuals are illegal.
So-called
temporary plans also help people find health-insurance coverage. In Washington,
D.C., a 40-year-old person can buy a six-month health-insurance policy with a
$500 deductible for just $119 a month. But in New York (and four other states)
temporary plans aren't permitted.
If Mr.
Spitzer freed the private health-insurance market and backed regulations that
promote competition, affordable private health insurance would be available to
nearly everyone. Precious taxpayer dollars could then be directed to the truly
indigent and uninsured.
Mr.
Bragdon is a health-policy analyst with the Manhattan Institute's Empire Center
for New York State Policy.
Saying
No to CoerciveCare
By
SHIKHA DALMIA
Wall Street Journal, January 31, 2008; Page A16
On
Monday, California Gov. Arnold Schwarzenegger's "universal"
health-care plan was shot down by a committee in the state's Senate, 7-1. The
most vociferous opponents were not fiscal conservatives, but labor unions that
launched a last-minute revolt against its most crucial feature: an individual
mandate that would have forced everyone to buy coverage.
This
defeat has national political implications. Hillary Clinton, for example, has
denounced Barack Obama for refusing to include an individual mandate in his
health-care plan. Yet many California unions argued that a mandate would force
uninsured, middle-income working families to divert money from more pressing needs
toward coverage whose price and quality they cannot control.
The
unions are correct: This is exactly what is happening in Massachusetts, where
Mitt Romney enacted a similar plan two years ago as governor. (And Mr. Romney's
plan is the inspiration for both the Schwarzenegger and Clinton plans.) The
experience in the Bay State deserves a lot more scrutiny than it has been
getting.
Massachusetts
uses a sliding income scale to subsidize coverage for everyone up to 300% of
the poverty level -- or a family of four making around $60,000. Everyone over
that limit is required to pay for their own coverage if their employers don't
provide it. All this has inflated demand, which, combined with onerous
regulations on insurance suppliers, has triggered premium increases of 12% for
this year -- double last year's national average.
No one is
escaping the financial sting. The state health-care bill for fiscal 2008-2009
is expected to touch $400 million -- 85% more than originally projected. Still
the state won't be able to fully shield those it subsidizes from the premium
increases. But uninsured folks who don't qualify for government help really get
pounded. Before the hike, the cheapest plan for uninsured couples in their 50s
cost $8,200 annually. Now, unless government bureaucrats hand them an
exemption, they might well find it cheaper to pay the penalty -- up to half the
price of a standard policy -- than purchase insurance. That is, pay to remain
uninsured. This is legalized extortion: TonySopranoCare.
The
government response to rising premiums is, unsurprisingly, price controls. The
Commonwealth Health Insurance Connector Authority -- the bureaucracy created to
oversee RomneyCare -- is considering prohibiting underwriters from raising
premiums more than 5% for unsubsidized plans, meanwhile requiring them to cover
40-odd benefits from hair prostheses to chiropractic services. If companies
can't scale back coverage, they'll have to compromise care; and the Connector
is perfectly willing to assist.
As
reported in the Boston Globe, the Connector is encouraging insurance companies
to include only a limited network of cheaper physicians and facilities in some
plans to hold down premiums. Patients who wish to see more expensive providers
will have to dig into their own pockets. Dr. Steffie Wollhandler, a professor
of medicine at Harvard University, worries that the Connector will revive Gov.
Romney's original idea of enrolling poor people in plans that only offer access
to neighborhood health centers ill-equipped to treat anything beyond routine
ailments. Forcing people to buy substandard care they cannot afford is not
universal care, she says. "It is a hoax." And so Massachusetts is
marching toward a system of two-tiered medicine -- the alleged market inequity
that universal care is supposed to cure.
How about
enforcing the mandate? In Massachusetts, non-compliers lose their personal tax
exemption -- about $220 -- the first year, followed by fines in subsequent
years. California was planning to garnish the wages or impose liens on the
mortgages of the uninsured to pay for coverage. "This bill was like
telling someone who is in need of help, 'I'm going to give you food, but I'm
going to take away your clothes," Leland Yee, a Democratic senator from
San Francisco, told the California Chronicle.
The
problems with RomneyCare have prompted Mr. Romney himself to abandon it. And
Mr. Obama is surely correct that part of the reason 45 million Americans are
uninsured is not that no one is forcing them to buy it, but that they can't
afford it. It may be too much to hope that Mr. Obama would embrace
market-oriented measures -- such as deregulating insurance markets, giving
patients more control over their health care dollars, and fixing the federal
tax code to let individuals, like employers, buy health coverage with pre-tax
dollars -- to bring down insurance costs. But unlike Mrs. Clinton, he at least
seems to understand the perverse side effects of an individual mandate.
Should
Hillary Clinton ever be in a position to bully people into buying coverage, a
coalition of labor and fiscal conservatives might well do to HillaryCare what
it just did to GovernatorCare.
Ms.
Dalmia is a senior analyst at the Reason Foundation.