Free-markets, Affordability, & Individual Rights

proposal · in the media

Regarding health care reform, Bill Ritter claims to "refuse to throw more money at a problem without addressing the root causes of the crisis."  Unfortunately, the 208 Commission on Health Care Reform does exactly that. 

By focusing on the "crisis of the uninsured," the Commission's favored proposals simplistically "solve" this problem by making it a crime not to have insurance.  These involve two politically-controlled compulsory insurance schemes: a "single payer" system or an "individual mandate."

"Single payer" is a government-controlled monopoly where, as Canadian Chief Justice Beverly McLachlin wrote, "access to a waiting list is not access to health care."  For a chilling picture of what this looks like, visit FreeMarketCure.com for video interviews with Canadian patients and reports on how, under "single payer," patients die waiting for care.

Just as bad as single payer are individual mandates.  Under this compulsory insurance scheme, you'd face fines and ultimately prison for peacefully refusing to purchase "insurance" - as defined by politicians.  That's unethical.

The rationale for compulsory insurance is the "cost shift from uncompensated care" provided to the under- and uninsured, "which makes private insurance more expensive."  But this cost shift is trivial.  Health Affairs reports that such uncompensated care is "only 2.8 percent of total personal health care spending," of which our tax dollars -- not increased premiums -- fund at least 80 percent

The Commission wants to increase this.  To implement compulsory insurance, the Commission proposes tax-subsidized insurance and Medicaid expansion that would cost taxpayers $1.4 billion.  This is itself an annual cost shift of about $500 to each privately-insured Colorado resident.  Let's not let the fox guard the hen house.

Alas, politicians love compulsory, politically-controlled insurance because lobbyists will throw money at them in hopes of having their services covered.  As P.J. O'Rourke observes, "When buying and selling are controlled by legislation, the first things to be bought and sold are legislators."

Indeed, politicians have already succumbed to special interests by forcing insurance plans to cover many benefits that you may not need. These mandates, not the uninsured, increase your premiums by 21 to 54 percent. They also reduce wages and are responsible for as many as 25 percent of the uninsured.

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Instead of expanding politically-controlled medicine, the Colorado Legislature should expand eligibility for "mandate-lite" policies and phase out mandated benefits.  It should promote the Health Care Choice Act, which would allow you to buy insurance that meets less damaging regulations of other states.

Reform should also remedy the insurance-friendly tax code.  Because the tax code exempts employer-provided health insurance, you’re essentially stuck with your employer’s high-cost non-portable choices.  Hence, insurance companies need not please you; they know that losing you as a customer requires that you change jobs.  

Tax-exempt insurance coddles insurers by encouraging you to waste money on  more expensive coverage than you need, rather than keeping that money for yourself.  Why save $100 on a more economic policy when after taxes you're only left with around $45?  You might as well keep the costly insurance, even though you probably won't utilize those high premiums and you could be saving.

This penalty on saving has resulted in our demanding prepaid medical care instead of real insurance.  Since medical care appears almost free at the point of service, patients over-consume with little attention to cost, and providers need not compete on price.  Providers need not satisfy you - as you are not a customer, your insurance company is.  Yet, the RAND Health Insurance Experiment has shown that patients with higher-deductible policies spend much less than those with prepaid plans - with negligible difference in health outcomes. They also seek more preventative care and motivate physicians to improve customer service.

To champion fairness and affordable quality medical care, the 208 Commission should support a tax code that treats out-of-pocket medical expenses and insurance equally, regardless of who pays insurance premiums.  Phasing out the employer tax exemption and lowering taxes commensurately can achieve this.

Making all medical expenses and insurance tax-exempt may be more politically feasible.  For example, allow anyone to open a tax-deductible Health Savings Account, regardless of one's insurance plan.  Allowing us to purchase insurance with HSA deposits would free us from our employer's insurance, empower consumers, and encourage competition.

The 208 Commission foolishly supports Medicaid expansion. As shown in FAIR, my free-market proposal at WhoOwnsYou.org, Medicaid fails to meet the Commission's criteria of increased access, personal responsibility, financial stability, and fairness.  Instead of unfairly competing with insurance companies with Soviet-style government-controlled insurance, Medicaid could at least mimic Food Stamps by providing insurance vouchers.

This would be an improvement, but it's still unjust.  For every dollar expropriated from you to fund Medicaid, private charities lose a potential donation.  Tax credits for donations to medical charities would partially level the playing field. The threat of lost revenue would motivate Medicaid administrators to be effective, and taxpayers would have more freedom to fund charities they deem worthy.

Government controls cripple medical care.  Effective reform requires phasing out destructive controls and programs, not creating more of them.  Paraphrasing Colorado activist Robert LeFevre, government-controlled medicine is a "disease masquerading as its own cure."  

Proposal: Download PDFPDF (local copy)  Answers to Commissioner Questions

In the Media: