Friday, February 1, 2008

208 Commission Minority Report

The 208 Commission has now presented its recommendations to the Colorado state legislature on health care reform, which includes numerous new forms of government interference in health care and health insurance such as insurance mandates.

However, there is also a noteworthy Minority Report sharply critical of the 208 Commission process and recommendations, written by Commissioners Linda Gorman and R. Allan Jensen. The following is a copy of an Independence Institute Press Release summarizing the key points from the minority report:
Contacts: Linda Gorman, (303.279.6536); R Allan Jensen (303.912.5490)

The final report of the Colorado Blue Ribbon Committee for Health Care Reform, presented to the Colorado Legislature on January 31, 2008, includes two minority reports, one written by Commissioner Mark Simon and one written by Commissioners Linda Gorman and R. Allan Jensen. In their report, Gorman and Jensen explain why the Commission has produced inadequate policy recommendations, offer alternative suggestions for real reform, and make three major points:

The Commission did not adopt any of the standard legal or academic methods for uncovering and agreeing on basic facts. As a result, many Commission policy recommendations rest on demonstrably incorrect or unprovable propositions. The lack of fact finding severely hampered the Commission’s ability to discover workable recommendations, for instance;

The Commission asserts that coverage for all will assure medical care for all. Unlike in the U.S., in virtually all health systems that have government imposed coverage for all, shortages of care deny access to basic and advanced medical treatment. The Commission cannot even guarantee that its recommendation for an individual mandate will substantially reduce the number of uninsured. The Commission recommendation for required individual coverage applies only to legal residents of Colorado. A substantial portion of Colorado’s uninsured are illegal aliens;

The Commission states that an individual mandate is enforceable and will eliminate free care to the uninsured. In the only state with an individual mandate, 20 percent of the uninsured were exempted after less than 18 months of operation, and fewer people are voluntarily enrolling than predicted;

The Commission says that health care providers gave $777 million in uncompensated care in 2007. It implies that this is paid for by the privately insured and that spending $1.5 billion on a Medicaid expansion and $550 on insurance subsidies will make people better off by obviating the need for the $777 million in free care. In fact, the largest fraction of that uncompensated care is generated by Medicaid and Medicare.

Many of the most important Commission recommendations have either had no real world tests or have already failed in the real world; The public program expansions recommended by the Commission have not operated as advertised in Massachusetts, the state plan which the Commission recommendations mimic. After roughly 18 months of operation, the Massachusetts health reform is $245 million over its $470 million budget. About 20 percent of people signing up for free care are new, the rest were previously in public assistance programs. There is no way to know how many people are dropping private coverage to participate in the state plan.

The extension of community rating and guaranteed issue to Colorado’s individual insurance market is billed as a way to keep costs lower for those who have chronic conditions, and to make health insurance more widely available. This has not worked in New York, New Jersey, Massachusetts, and other states in which it has been tried. Instead, health insurance has become more expensive and more difficult to get. Private experimentation with new and innovative ways to provide health insurance and health care has been stopped. Colorado already guarantees health insurance to everyone, regardless of medical condition, via a state plan called Cover Colorado.

The Commission majority repeated voted against analyzing reform options that increase consumer choice and accountability in favor of plans that rely on government control As a result, it turned away from considering any of the consumer-directed options known to have improved quality and to have reduced health care costs.

The Colorado Consumer Directed Attendant Support program for Medicaid patients is an example of a Medicaid reform that has both reduced spending on attendants by 20 percent and improved patient care.

Innovative health insurance policies are showing that changes in policy structure can reduce spending and improve care. At Wendy’s International, shifting to a health savings account based consumer-directed plan decreased claims by 14 percent and overall costs, including deposits to employee HSA accounts, by 1 percent in 2005.

The Commission did not discuss reducing state regulations on insurers and health care providers. Professor Christopher Conover of Duke University estimates that excess regulation adds 10 percent to annual health care costs. Dr. Gorman and Mr. Jensen invite the public to closely examine the minority report they authored for further details, and for expanded information.
The full Minority Report can be found here. A related shorter article by Linda Gorman and Ari Armstrong in the January 30, 2008 Rocky Mountain News can be found here.