Gorman on Mandates and SB217

The April 27, 2008 Pueblo Chieftain printed the following OpEd from Linda Gorman of the Independence Institute:

Mandate repeats mistakes of other states

With Senate Bill 217, which has passed the Colorado Senate and awaits House action, state lawmakers who believe that higher taxes and more spending constitute health care reform have sunk to new depths of legislative trickery.

If SB217 passes, the basic laws that created the failing Massachusetts health care plan could take effect in Colorado in as little as 24 months. Sponsored by Sen. Bob Hagedorn, D-Aurora, and Rep. Anne McGihon, D-Denver, the bill creates a politically appointed panel to create a set of recommendations for rules governing Colorado health care. The rules prepare the way for the panel to recommend that every individual in Colorado purchase state-defined "credible" health insurance. State tax law would "enforce the requirement."

Because even legislators know they cannot force people who have no money to buy health insurance, the panel likely will move to create a subsidy program to "assist low-income individuals and families in paying the premium costs for health insurance."

Judging from the recommendations of the Colorado Blue Ribbon Commission on Health Care Reform, this is an expensive proposition.

The commission recommended that families of four making up to $84,800 be eligible for low-income subsidies that would increase state spending by an estimated $2.3 billion. In a blow to those who peddle individual mandates as a way for the insured to save money, it estimated the subsidies would save about $777 million in spending on the uninsured.

SB217 creates a Connector program, "health marts" "through which an individual eligible for the state subsidy may select" one of the state designed "Value Benefit Plans (VBP)." The health insurance offered through VBPs would be designed by a government committee.

People who would buy "Value Benefit Plans" insurance would have to pay with their premium dollars for some odd things, like "educational materials" that show people how to use the Internet to get health information.

The Hagedorn-McGihon bill envisions prohibiting these plans from helping people to save money on health insurance premiums by paying cash for routine preventive care. It seeks to mandate preventive care and an unspecified grab-bag of wellness programs. The plans also would "encourage" insurers to use a "pay-for-performance system for reimbursing health care providers" and "evidence-based medicine."

Pay-for-performance measures may not be safe for patients.

Experts at a 2001 American Society of Transplantation conference were so concerned about the effects of forced switching from brand name to generic immunosuppressive drugs that they called for patients to be taught to inform their physicians of any switch to or among generic alternatives.

Meanwhile, the pay-for-performance program at Blue Cross Blue Shield of Michigan paid physicians $100 to switch patients from brand name drugs to generics.

SB217 contemplates the Colorado panel finding "a dedicated source of revenue" to support the new programs. But it also says the new revenues may be spent on "the premium subsidy program or other new state costs," so this dedication is a smoke screen. In practice, the new revenues will fund whatever the Legislature fancies. If the governor agrees with the expert recommendations, and he will, SB217 would require that they be submitted to the Legislature on the "third legislative day" of the 2010 session. They then would pass through the Legislature like grass through a goose. People in favor of tax and spend health care reform know that the more voters know the less they like tax and spend reform. Speedy passage limits public debate.

Speedy passage reduces the possibility that people might find out that individual mandates are failing in Massachusetts, where about 20 percent of the uninsured already have been exempted because buying insurance costs them too much. They might be reminded that insurance is not health care, especially when Massachusetts controls costs by cutting payments to doctors, creating a shortage of doctors in the program and ridiculously long waits for care.

They might also be reminded that government officials routinely understate program costs. When campaigning for the Massachusetts plan, then-Gov. Mitt Romney said it would cost $125 million. After it passed in April 2006, his administration issued bonding documents estimating costs at $276 million. As of January 2008, Massachusetts Gov. Deval Patrick was requesting $869 million to cover estimated 2009 costs. (Seven times the original estimate!)

Like Gov. Romney on costs, Colorado politicians mislead the public by saying there will be no mandates this year. In February, Sen. Hagedorn reportedly told the Rocky Mountain News, "There's no mandates coming down this session, pure and simple."

Sen. Hagedorn must have changed his mind in the last two months. He undoubtedly knows his bill contains a program that will impose a health insurance mandate in 2010.

By hiding under an expert panel subject to gubernatorial approval two years from now, he gets to have his mandate and deny it, too.

Linda Gorman is director of the Health Care Policy Center for the Independence Institute, a free-market think tank in Golden. She co-authored the minority report of Colorado's 208 Commission on Health Care Reform.