From the US Chamber of Commerce

As the U.S. Chamber has spelled out, and the Congressional Budget Office (CBO) has also made clear, there are many ideas out there to get health care costs under control. As you can see in the House- and Senate-passed bills, many in Congress believe the best way to control costs is to raise taxes on health care products and insurance, slash payments to doctors and hospitals, create and expand government-run programs for health insurance and long-term care, and force individuals and businesses to purchase what they don’t want or can’t afford. At the Chamber of Commerce, we prefer proposals that will actually increase choice, competition, and consumerism.

Real choice doesn’t come from a new government program. In fact, the “public option,” which might end up as the only option, would be just one more plan, and would cost more than private insurance. Why not break down state barriers, allow consumers to choose from thousands of insurance plans, instead of forcing them to stay in consolidated markets with burdensome coverage mandates? The CBO said that this option alone would both cut health care costs by 5% and save the federal government at least $12 billion. Allowing small businesses to pool together and purchase plans outside of state bureaucrats’ control would save billions more by getting people off of Medicaid and into new, more affordable employer plans.

If we want real competition in health care, we should let people and plans see the costs and quality of providers and procedures. That’s a big project and it will take time, but it could be jump-started by releasing patient-protected CMS claims data to quality reporting organizations. Overnight, we could have massive amounts of data on thousands of hospitals and doctors, and could let people truly see the costs of care. This used to be called the “Clinton-Gregg-Obama” bill.

Once people see the real costs of health care, those costs need to matter – which means a purely third-party-payer system needs some change. For starters, we need many more high-deductible health plan (HDHP) options to give people skin in the game. People often expect their health insurance to cover everything, because it costs so much; HDHPs have lower premiums but do not immediately kick in to cover all costs. But the plans need work – the accounts they are paired with should be able to pay the plan premiums, should have much higher contribution limits (especially for those with chronic conditions or low incomes), and they need to be tweaked to work better with innovative health programs like Patient-Centered Medical Homes and accountable care organizations.

Enact these changes, and we have already cut health care costs, insured more Americans, and created real competition between health plans and providers – while helping people be better health care consumers and giving them the tools to be smart shoppers. And we saved money for the government, without taxes and without infringing on individual or employer autonomy. These few items would not be a comprehensive reform plan, but they would certainly be a good way to start – and they could all garner bipartisan support.

From the American Thinker

By Linda Halderman, MD

According to the health care reform bill being debated in the U.S. Senate, there’s an easy way to solve the problem of the uninsured in this country:

1. Force Americans to buy health insurance just like we do with auto insurance.

2. Make insurance companies accept everyone who applies, including those who buy insurance only when they’re sick.

3. Don’t let insurance companies sell plans that don’t cover everything.

These three forms of health insurance regulation-individual mandates, guaranteed issue and coverage mandates-have been attempted in a number of states, including California, Massachusetts, New Jersey, New York and Washington. The results are described below.

Individual mandates: “You’ll buy it or else.”

A popular theme in the healthcare reform debate is “shared responsibility.” Attempting to increase individual responsibility, a number of states have enacted a mandate that all citizens must purchase health insurance.

The theory behind individual mandates is that insurance becomes more affordable when purchased by a larger, healthier group of applicants. Adding individuals to the risk pool who are less expensive to insure (and currently the least likely to buy it) would theoretically lower the cost for all those insured.

But in practice, individual mandates have had a different effect on what people pay for health insurance. The impact of mandates on insurance premiums is in large part a consequence of “Guaranteed Issue” described below.

Part of the problem with individual mandates is enforcement. Voters have consistently rejected mandates that would use the tax code or wage garnishment to ensure compliance.

Without “teeth,” mandates provide no compelling reason to purchase expensive, unwanted insurance policies before an individual becomes ill. And even harsh penalties would miss the unemployed and non-citizens, who represent a large percentage of the growth in the uninsured.

This has the effect of driving up costs as less-healthy individuals requiring expensive treatment expand the insurance pool, while healthy individuals avoid buying policies.

Some proponents of individual mandates try to make an analogy to the auto insurance industry. But this is not a logical comparison:

• Auto insurance is mandated only for those who drive, a far smaller pool than those who would be mandated to buy health insurance.
• Consumers shopping for auto insurance have competition on their side; policies can be purchased from insurance companies offered in other states, driving down premiums as agencies try to compete with other carriers. Inexpensive policies are available across state lines, unlike health insurance plans sold only within a single state. Bostonians are prohibited from buying North Dakota health plans that cost 60% less than those sold in Massachusetts.
• Limited coverage auto insurance policies can be purchased, offering only the liability coverage required by law rather than more expensive comprehensive plans. Under California’s Low Cost Auto Insurance Program, premiums can be less than $25 per month. State regulations bar the health insurance industry from offering low-cost plans with limited coverage even when the consumer wants that choice.
• Despite the fact that all 50 states mandate auto insurance coverage for drivers, up to 25% of state residents remain uninsured. Even with far simpler opportunities available for enforcing the auto insurance mandate (e.g., requiring proof of coverage before obtaining a driver’s license and registration), the California Department of Insurance estimated in 2003 that 14.3% of all registered vehicles were uninsured. This does not account for unregistered vehicles or those with expired registrations, of particular importance in parts of the state with a high percentage of undocumented immigrants on the road.

Governor Mitt Romney succeeded in imposing an individual government mandate on the citizens of Massachusetts. Taxpayers in that state now fund subsidies for insurance premiums that have risen more than 30% since the Governor’s plan was enacted.

Individual mandates, though popular in political rhetoric, do not address the fundamental problem people face when buying health insurance: it is expensive.

Read the rest of the article.

On Monday, October 19, Senator Jon Kyl of Arizona shared with his colleagues in the Senate what he has been hearing from his constituents on Health Care Reform. Senator Kyl gave a 20-minute presentation in which he aptly articulated the concerns most Americans are expressing about the Health Care Reform bill.  Although it is a bit long, this is a “must-see” speech for everyone who cares about the future of health care in America.

This is a presentation given by Dave Racer at the annual meeting of Association of American Physicians on October 2, 2009.  Click here to order copies of Racer’s book, “Facts Not Fiction on Health Care.”

Posted from the Wall Street Journal

Competition” has become a watchword of Team Obama’s push for its health-care bill. Specifically, the Administration has defended its public insurance option as a necessary competitive goad to the private health insurance industry.

Health and Human Services Secretary Kathleen Sebelius routinely calls for more choice and competition in health care. In his weekly address this past weekend, President Obama raised the issue directly: “The source of a lot of these fears about government-run health care is confusion over what’s called the public option. This is one idea among many to provide more competition and choice, especially in the many places around the country where just one insurer thoroughly dominates the marketplace.” We take it this refers to a state in which one insurer holds most of the business.

It is no secret that this page is all for competition in the marketplace. If indeed that’s the goal, allow us to suggest a path to it that will be a lot easier than erecting the impossible dream of a public option: Let insurance companies sell health-care policies across state lines.

This excellent idea has been before Congress since at least 2005, when Rep. John Shadegg of Arizona proposed it. It came up again recently in an exchange between Chris Wallace of Fox News Sunday and John Rother, executive vice president of AARP.

Mr. Wallace: “If you really want competition why not remove the restriction which now says that if I live in Washington, D.C. I’ve got to buy a D.C. health plan, and instead create a national market for health insurance, so that if there’s a cheaper plan in Pennsylvania, I could buy in Pennsylvania?”

Mr. Rother: “There are states and localities where health care is much less expensive than others, and if we allow people to buy all their insurance from those places, it will raise the rates there. And it’s called risk selection. It’s a real problem, given the fact that health care costs can vary substantially from one place to another. So I think while the idea sounds appealing, the consequence would be it would make health care more expensive for those people who live in those low-cost areas.”

How did Mr. Rother arrive at this conclusion?

His claim assumes that what makes insurance expensive in places like New Jersey—where the annual cost of an individual plan for a 25-year-old male in 2006 was $5,880—is merely the higher cost of medical services in the Garden State. He sounds an alarm in the rest of the country by suggesting that an individual living in, say, Kentucky—where an annual plan for a 25-year-old male cost less than $1,000 in 2006—would be asked to subsidize plan members living in high-priced states.

That’s not how interstate insurance would work. Devon Herrick, a senior fellow with the National Center for Policy Analysis who has written extensively on this subject, notes that insurance companies operating nationally would compete nationally. The reason a Kentucky plan written for an individual from New Jersey would save the New Jerseyan money is that New Jersey is highly regulated, with costly mandated benefits and guaranteed access to insurance.

Affordability would improve if consumers could escape states where each policy is loaded with mandates. “If consumers do not want expensive ‘Cadillac’ health plans that pay for acupuncture, fertility treatments or hairpieces, they could buy from insurers in a state that does not mandate such benefits,” Mr. Herrick has written.

A 2008 publication “Consumer Response to a National Marketplace in Individual Insurance,” (Parente et al., University of Minnesota) estimated that if individuals in New Jersey could buy health insurance in a national market, 49% more New Jerseyans in the individual and small-group market would have coverage. Competition among states would produce a more rational regulatory environment in all states.

This doesn’t mean sick people who have kept up their coverage but are more difficult to insure would be left out. Congressman Shadegg advocates government funding for high-risk pools, noting that their numbers are tiny. The big benefit would come from a market supply of affordable insurance.

Mr. Rother also said “risk selection” is a problem. But the coverage mandates cause that. As more healthy people opt out of health insurance because it is too expensive relative to what they consume, the pool transforms into a group of older, sicker people. Prices go higher still and more healthy people flee. High-mandate states are in what experts call an “adverse selection death spiral.”

Interstate competition made the U.S. one of the world’s most efficient, consumer driven markets. But health insurance is a glaring exception. When the competition caucus in Team Obama has to look for Plan B, this is it.