Friday, February 8, 2008

Schwartz on Compulsory Insurance in RMN

Brian Schwartz's recent OpEd on insurance mandates has also been published by the Rocky Mountain News on February 7, 2008:
Health care commission wants to punish you

Remember grade school, when teachers would punish the whole class for the actions of just a few troublemakers? This is collective punishment, which is typically practiced during wartime or under martial law.

Collective punishment has now arrived with compulsory medical insurance. Known as an "individual mandate," it's the law in Massachusetts, and California's State Assembly has approved it. In Colorado, it is central to the "Blue Ribbon" Commission's recommendations, which commissioners [presented] to the General Assembly on January 31.

Politicians peddle compulsory insurance under the guise of eliminating the "cost shift from the uninsured" by making people "responsible." The story is that the uninsured get medical care without paying, which increases premium costs for the insured. So why not simply force everyone to buy insurance? Because it scapegoats the victim and empowers the true perpetrators of our insurance mess: politicians.

According to the Commission's "Baseline Coverage and Spending" report, the cost shift attributable to increased premiums is around $200 million annually. This "free from provider" cost is just $85 per privately-insured resident, or one percent of an average premium.

But the Commission's proposed billion-dollar "cure" is itself a huge cost shift. To encourage compliance with mandated insurance, the Commission's plan includes tax-subsidized premiums and Medicaid expansion. Per privately-insured Colorado resident, the tax increase would cost about $400. Worse yet, Medicaid itself increases insurance premiums by short-changing doctors.

And why expect *this* government bureaucracy to stay within budget? The Boston Globe reports that to contain costs, Massachusetts medical authorities will "probably cut payments to doctors and hospitals, reduce choices for patients, and possibly increase how much patients have to pay."

Second, holding people "responsible" would mean punishing freeloaders themselves and allowing providers to prevent freeloading. Compulsory insurance is the opposite: it forces the innocent to buy insurance determined by political interests, rather than their own needs. That’s collective punishment.

What if we applied the Commission's rationale to freeloaders who leave restaurants without paying the bill? This certainly increases prices, but forcing all citizens to buy "diner's insurance" punishes the innocent.

Third, government controls already punish the innocent – insured and uninsured alike – by making medical care and insurance prohibitively expensive.

Federal tax policy deeply discounts employer-provided insurance. This chains us to our jobs and employer insurance options. Insurance companies need not please us — they know we must change jobs to buy a competitor’s product. Shall we further pamper insurance companies by forcing everyone to buy their products?

Since income is taxed but premiums are not, consumers end up buying "insurance" that is really prepaid medical care. Insulated from medical costs, patients spend like business travelers on a company expense account, so medical providers need not compete on price.

On the state level, medical providers and disease constituencies lobby to force insurance to include benefits that many customers do not need. For example, Colorado law compels widowed wives to pay higher premiums for prostate screening, maternity, and marital therapy. How’s that for a cost shift?

These and other mandates increase Colorado premiums by 21 to 54 percent. This dwarfs the one-percent increase attributable to the uninsured. Colorado's Chief Medical Officer told the Washington Post that 2,500 Coloradans lose insurance for every one percent increase in premiums.

When government controls increase insurance costs, the young and healthy drop coverage first. Those remaining have a higher medical risk, so premiums rise again, which again drives out the healthiest remaining customers.

Reformers have some nerve to support policies that make insurance prohibitively expensive, and then make criminals of those who do not buy it.

Compulsory insurance is based on collective punishment, a perverted form of justice found where troops patrol streets and spitballs go splat. It punishes both the insured and uninsured for the misdeeds of politicians. Colorado legislators should not scapegoat the uninsured for the mess they've perpetuated. They should repeal legislation that inhibits the free market from delivering affordable high-quality
medical care.

Brian Schwartz is a resident of Boulder. The author's free-market proposal to the Blue Ribbon Commission is at