Seven Simple Rules for Health Care Reform

Richard E. Ralston, Executive Director of Americans for Free Choice in Medicine, has the following nice piece on genuine health care reform:

Seven Simple Rules for Health Care Reform
by Richard E. Ralston (April 30, 2008)

The status quo in American health care is indefensible—an expensive regulatory and bureaucratic mess. What that calls for, however, is not more layers of regulation and complicated mandates. Nor should government take over health care completely and run it as part of a political spoils system.

State government proposals have proven too expensive in California and have collapsed. In Massachusetts expenses for mandatory insurance after one year are spiraling out of control faster than budgets can be printed. New recommendations in Colorado and elsewhere are being shelved because they are also too expensive to be considered at present. The alternative is one of elegance and simplicity: adopt changes now that require no new government expense, but that remove regulatory complexity and allow freedom of choice. To achieve that end, we need to adopt a few simple rules.

The first simple rule: Make all medical services, insurance and personal savings for such expenses exempt from all federal, state and local income and payroll taxes. Those who complain about the cost of medical care and insurance must be confronted with the fact that if we cannot afford medical care, we surely cannot afford to pay taxes on the money we set aside for it.

The second simple rule: Allow an individual or corporate tax deduction equal to double the value of the service for all charity care by medical care providers. At one time America had a vigorous network of private charity care, which was largely destroyed by the government barging in. We need to restore that environment of private charity, which was more efficient, effective and compassionate.

The third simple rule: Pass legislation now proposed in the U.S. Congress that would give every individual or business the ability to purchase insurance in a national market, from insurance companies in any state. That would allow for ownership of health insurance that is more affordable and can follow individuals from job to job and state to state. The increased competition between insurance companies would restrain the cost of insurance.

The fourth simple rule: Allow the purchase of basic health insurance with high deductibles and low premiums that covers major illness or injury and annual exams, in conjunction with tax-free accounts for out-of-pocket expenses, such as deductibles. That, more than anything, would make insurance premiums more affordable for Americans who fear the financial consequences of health misfortune.

The fifth simple rule: Broaden the availability of optional coverage provided by Medicare Advantage, but allow for additional tax-deductible premiums to be paid by those seniors who elect such options. More choices from more options should be available to retirees—but not paid for by taxpayers. This would allow for expanded and more efficient coverage, and reintroduce an element of competition to those who seek to provide health care to seniors.

The sixth simple rule: Allow Medicare patients to utilize their Health Savings Accounts to pay for services from their Medicare physicians. This could bring thousands of doctors back into the Medicare program overnight and eliminate the ridiculous and unjust prohibition on those who want to spend their own money on their medical care.

The seventh simple rule: Limit non-economic or punitive damages in all malpractice or other litigation against medical providers or drug and medical equipment firms to a maximum of $250,000 (indexed for inflation). This would wring the bonanza for a few law firms out of the current ocean of litigation—and the high cost of "defensive medicine" now practiced by providers as protection against such legal extortion. The effect would be a reduction in the cost of medical care and insurance for everyone.

While these changes would result in more efficient, affordable and uncomplicated health care, achieving them will be no simple matter—thanks to those who oppose any improvements as an obstacle to massive new government controls. But we can stop new regulations, mandates, taxes, government spending and administrative agencies. We can uphold the rational alternative—freedom and personal choice—which can improve the quality and affordability of health care without government spending.

Gorman and Donze LTEs in the Rocky Mountain News

The May 3, 2008 Rocky Mountain News printed Linda Gorman's LTE debunking false information from Families USA:

Yet another bogus Families USA story
Linda Gorman, Director, Health Care Policy Center, Independence Institute, Golden

On April 22, Rocky Mountain News.com carried "Report ties Medicaid cuts to job losses". The story simply repeated the substance of a press release from Families USA.

In fact, the Bush administration has not proposed Medicaid budget cuts. Its FY 2009 budget proposal increases Medicaid spending by $12 billion to $13 billion over expected spending in FY 2008. This is in addition to FY 2005-2007 spending increases of about 10 percent. What the Bush administration is proposing is a slightly smaller budget increase, about 7.1 percent rather than 7.4 percent. The 2009 budget numbers are available on Page 61 at http://www.hhs.gov/budget/ 09budget/2009BudgetInBrief.pdf.

If Families USA were a real family making $50,000 a year, these budget numbers would be the equivalent of having an expected windfall of $53,700 reduced to $53,550.

Families USA is known for approaching health care with a well-defined ideological slant and for producing lousy numbers on all manner of health-care issues. One hopes that, next time, the Rocky will take the Families USA reputation for inaccuracy into account, and that it will check before it unquestioningly reproduces their press releases as news.

The May 2, 2008 Rocky Mountain News posted the following LTE by Terry Donze on the government's role in rising health insurance costs:

Legislature has made health insurance so high
Terry W. Donze, Wheat Ridge

RE: Fair Act, HB-1389, RMN, 04-24 and 25-08 Regarding Colorado’s health insurance, Representative Morgan Carroll asks, "Why are our premiums higher?" All she needs to do is get the plank out of her eye and look in the mirror.

The legislature has mandated so many items (40+ and counting) for the health insurance industry to cover, what does she expect? They have run several health insurance providers out of Colorado over the past several years, such that it is extremely difficult to find affordable individual coverage because of limited competition.

Yet more regulation as proposed by her will only add to the costs, not only in higher premiums but also in higher taxes to pay for yet more government.

If she is really interested in bringing costs down, instead of more regulation Carroll should be demanding rescission of the mandates already on the books.

For Better Health, Repeal Political Controls

Ari Armstrong, guest writer at the Independence Institute, has written the following excellent piece on affordable insurance. It also appears here on the Independence Institute website:

For Better Health, Repeal Political Controls

My wife and I pay $132 per month total for high-deductible health insurance, hundreds of dollars less than we would pay for comprehensive insurance. Our goal is to never need to make an insurance claim. We pay for all of our routine medical care -- doctor visits, eye glasses, dental work, prescriptions -- out of pocket, and we like it that way.

Our medical expenses come out of our Health Savings Account (HSA), which means that it's all pre-tax money. Unfortunately for us, various enemies of HSAs have been trying to undermine them at the national level.

By paying less for high-deductible insurance, we've been able to pay off debts faster and prepare for a family, something that has been difficult given our high tax burdens.

If Colorado wants to keep and attract young working families, the legislature ought not further muck up health insurance by loading in a bunch of new expensive mandates, Nor should the legislature require such couples to further subsidize others through higher taxes and/or insurance premiums.

If the legislature wants to make health insurance more affordable for more people, it should repeal existing political controls that have driven up insurance costs and priced some people out of the market.

However, we should realize that the broader problem with health insurance is that, because of federal tax policy, most insurance is tied to one's job. Lose your job, lose your insurance. Because of the tax benefits of "paying" people with insurance coverage, such insurance is really pre-paid medical care that discourages economic provision and consumption of health care.

Our society has largely forgotten the proper purpose of insurance when it comes to health. Most people remain healthy into middle age, when risks for various diseases start to increase. Through insurance, we voluntarily pool our resources to pay for the care of the few who get unlucky. If federal policy had not driven health insurance off track, we'd buy insurance when we're young at a low rate and keep the same policy long-term, and we'd also pay for routine and expected expenses directly, which would encourage healthy competition.

All of the commonly cited problems with medicine have been caused by decades of political intervention in medicine. For details, see "Moral Health Care vs. 'Universal Health Care'," by Lin Zinser and Paul Hsieh, MD, at WeStandFirm.org.

Yet, rather than act to repeal the controls that are the cause of the problems, many of today's politicians want to impose still more controls. If they succeed, the result will be worse health care that costs even more.

Here in Colorado, the legislature has considered everything but repealing the controls that are the cause of the problems. In 2006, then-Governor Bill Owens signed into law Senate Bill 208 to create the Blue Ribbon Commission for Healthcare Reform. That commission rejected the only free-market proposal and recommended such measures as massively expanded taxes and forcing everybody to buy insurance. The Commission's recommendations basically went nowhere.

But apparently one failed commission deserves another, so State Senator Bob Hagedorn is currently pushing Bill 217. If the bill passes, later this year Governor Bill Ritter will appoint "a panel of expert advisors" to come up with a bunch of new political controls for the legislature to consider in the future.

Originally, the bill encouraged the "panel of experts" to assume that all Coloradans would be forced to purchase politician-approved health insurance. The amended bill lists that only as an option.

Forcing people to buy insurance would cause two basic problems. First, you can't force somebody to buy something they can't afford, so any such plan must accompany massive tax hikes and subsidies. Second, once politicians force you to buy something, special-interest groups will constantly fight to include their pet service as part of the forced package, whether you want it or not. The result will be continual pressure to expand the scope of the forced insurance and make it ever more costly.

Much of the bill describes the creation of politician-approved "value benefit plans" for health insurance that would be subject to a variety of restrictions and substantially subsidized through taxes.

Yet consumers and providers have the right to decide through voluntary exchange what plans constitute a value to them. We don't need a new bureaucratic commission; we need liberty.

Ari Armstrong, a guest writer for the Independence Institute, blogs at FreeColorado.com.

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.

Medicare - the world's most expensive single-payer system

Medicare Faces Inadequate Financing

Spending Grew 44 Percent in Past 3 Years

Medicare—the world’s most expensive single-payer health-care program—is not adequately financed for the next ten years, according to the Medicare Trustees’ 43^rd report to Congress, released March 25.

The report notes that Medicare’s hospital (Part A) expenditures, which were $203.1 billion in 2007, are projected to more than double to $414.9 billion by 2017. But hospital trust-fund assets are projected to fall from $326 billion this year to $96 billion in 2017.

Total Medicare expenditures are expected to grow to more than $867 billion annually by 2017. “In the long range, projected expenditures and scheduled tax income are substantially out of balance, and the trust fund does not meet our test of long-range close actuarial balance,” the report emphasized.

Total Medicare expenditures amounted to $431.5 billion in 2007 (up from $301.5 billion in 2004). There about 44 million Medicare recipients. That means that the average amount spent per individual recipient was $9,807.00. But, more importantly, it is estimated that only about 180 million people are taxpayers in the US -- that is, about 60% of the population. So, for each of you taxpayers, your share of Medicare is $2,397.00 each year. Thus, it takes just four taxpayers to pay for each Medicare recipient's average share of benefits. That's in addition to any insurance costs you pay for your own family.

In addition to Part A’s $203.1 billion, last year’s Medicare expenditures included:

• $178.9 billion for Medicare Part B (physician visits, outpatient hospital, home health and other services) and
• $49.5 billion for Medicare Part D (prescription-drug coverage and premium and cost-sharing subsidies for low-income enrollees).

Medicare enrollment grew to 44.1 million people in 2007—36.9 million seniors and 7.2 million disabled—up from 41.9 million in 2004. That is a 5.24 percent increase over three years, while total expenditures grew by 44 percent. (Note: Table II.B1 states that total Medicare expenditures were $431.5 billion in 2007; Table V.F4 states that total Medicare expenditures were $434.7 billion in 2007.)

Source: “2008 Annual Report of the Boards of Trustees of the Federal Hospital Insurance and Federal Supplementary Medical Insurance Trust Funds,” March 25, 2008: http://www.treas.gov/offices/economic-policy/reports/medicare-report-2008.pdf

Congressional Democrats Backing Away From Healthcare Reform

Some good news at the national level from the April 23, 2008 edition of The Hill:

Dems hedge on healthcare
By Manu Raju

Congressional Democrats are backing away from healthcare reform promises made by their two presidential candidates, saying that even if their party controls the White House and Congress, sweeping change will be difficult.

It is still seven months before Election Day, but already senior Democrats are maneuvering to lower public expectations on the key policy issue.

In the back of their minds is the damage done to President Bush's second term by his failed attempts to change the nation's Social Security policy.

For some senators, the promises made by Sens. Barack Obama (D-Ill.) and Hillary Rodham Clinton (D-N.Y.) outside of Washington may not match the political reality on Capitol Hill.

"We all know there is not enough money to do all this stuff," said Sen. Jay Rockefeller (D-W.Va.), a Finance Committee member and an Obama supporter, referring to the presidential candidates' healthcare plans. "What they are doing is... laying out their ambitions."

At least this will give the rest of us some more time to lay out the moral case against "universal health care", not just the practical case that it is too expensive. (Via Instapundit.)

Ralston LTE in Wall Street Journal

The April 25, 2008 Wall Street Journal printed several good LTE's supporting Health Savings Accounts, in response to their recent article warning about Congressional plans to regulate these plans to death ("Health Savings Sabotage"). The following LTE was by Richard Ralston, executive director of Americans for Free Choice in Medicine:

Don't Kill Health Savings Accounts With Regulation

Why would a group of politicians want to do anything possible to deny most Americans the means to provide themselves with affordable medical care? Why would those who maintain that most Americans cannot afford their own medical care insist that they can afford to first pay taxes on the money they use to pay for it? ("Health Savings Sabotage," Review & Outlook, April 19). The proposals you describe in the House Ways and Means Committee to require government bureaucratic review and approval of each individual expense funded by a Health Savings Account are a transparent attempt to destroy such accounts.

Perhaps what is really intolerable to these congressmen is the idea of Americans depending on their own choices and resources, rather than being forced to depend on politicians as their only source of medical care. That requires them to relentlessly oppose anything that makes health care affordable for most Americans as an obstacle to implementing politically-controlled medicine. Americans must decide if they want to control the medical care of their own bodies, or if medical and most other decisions of our daily lives must pass through the hands of those whose priority is maintaining a political spoils system.

Richard E. Ralston
Executive Director
Americans for Free Choice in Medicine
Newport Beach, CA

Most Businesses Oppose Insurance Mandates

According to the Watson Wyatt consulting firm:

Most Companies Oppose Single-Payer Health Care System, State Coverage Mandates

Washington, D.C., April 23, 2008 — Most U.S. companies do not support a single-payer health care system or state legislation mandating coverage. Instead, they prefer relying on private-sector solutions, according to research by Watson Wyatt Worldwide, a leading global consulting firm, and the National Business Group on Health.

More than three-quarters (84 percent) of employers do not support a single-payer system such as universal health care coverage. Instead, 78 percent favor private-sector solutions, according to the 13th annual Watson Wyatt/National Business Group on Health report. The organizations surveyed 453 large U.S. employers between November 2007 and January 2008.

(Via Martin Buchanan.)

Gorman Challenges More Families USA Falsehoods

Linda Gorman has written a strong piece challenging the myth promulgated by Families USA that draconian Medicaid cuts are in the works. Instead, she points out that, "There are no overall Medicaid cuts. The Bush Administration has chopped the rate of increase from 7.4 percent to 7.1 percent."

From her OpEd:

Making Up Medicaid Cuts
Families USA Is At It Again

By Linda Gorman

If Families USA were a newspaper, it would be a supermarket tabloid carrying articles about alien abductions. Its latest campaign is a series of press releases screaming that states will lose thousands of jobs and zillions of dollars due to the Bush Administration Medicaid cuts.

Local newspapers in Colorado are repeating the Families USA press release almost verbatim.

If you are in a tax and spend health care reform haven, you may soon be seeing quotes from the Families USA director, Ron Pollack, saying things like "These cuts in federal Medicaid payments will have a ripple effect through state economies that are already struggling during this economic downturn."

In fact, as the Heritage Foundation's Nina Owcharenko explains, the Bush Administration has not proposed Medicaid budget cuts. Its FY 2009 budget proposal increases Medicaid spending by $12 to $13 billion over expected spending in FY 2008. This is in addition to FY 2005-2007 spending increases of about 10 percent. What the Bush Administration is proposing is a slightly smaller budget increase, about 7.1 percent rather than 7.4 percent. The 2009 budget numbers are available from the federal government here on page 61.

If Families USA and its fellow travelers were a real family making $50,000 a year, these budget numbers would be the equivalent of having an expected windfall of $53,700 reduced to $53,550. This small reduction in the rate of federal spending will, the people of Colorado are being told, cost Colorado "more than 3,500 jobs and an accompanying $135 million in wages," a neat trick given that Colorado is not an entity and does not earn wages.

If a newspaper in your area reproduces this nonsense, perhaps it should be politely reminded Families USA is known for approaching health care with a well defined ideological slant and for producing lousy numbers on all manner of health care issues. It might also be asked to check before reproducing Families USA press releases as news.

The original piece includes hyperlinks to a number of supporting documents.

Rebutting Claims About Insurance and Death

The April 23, 2008 Rocky Mountain News has published the following OpEd by Michael Tanner, rebutting the flawed Families USA study blaming 360 Colorado deaths each year to lack of health insurance. Here are some excerpts from Tanner's article:

Flawed health-care study poses own risks

...While it is almost certainly true that, all things being equal, it is better to be insured than uninsured, a greater danger is that this deeply flawed study will stampede policy-makers into taking action that will put far more Coloradans at risk.

The Families USA study was not a traditional "double blind" experiment with a control group and a treatment group. Rather, it is a retrospective analysis, which compared the rates of people who died with insurance to those who died without insurance. Since the proportion of people without insurance seemed to be higher than those with insurance, they extrapolated likelihood to project excess deaths due to lack of insurance. But there are just too many outside variables to make such interpretations valid.

...Similarly, a study published in The New England Journal of Medicine last year found that, while far too many Americans were not receiving the appropriate standard of care, "health insurance status was largely unrelated to the quality of care."

Of course this does not mean we should be indifferent to efforts to try to expand insurance coverage. We all want more Coloradans to be insured. However, Families USA's call for greater government control of our health-care system is a cure far worse than the disease.

One thing we know for certain is that government-run health-care systems frequently deny critical procedures to patients who need them. For example, at any given time, 750,000 Britons are waiting for admission to National Health Service hospitals, and shortages force the NHS to cancel as many as 50,000 operations each year. And in Canada, more than 800,000 patients are currently on waiting lists for medical procedures. According to Canada's Supreme Court, many of these individuals suffer chronic pain and some will die awaiting the treatment they've been promised.

Even in this country, excessive government regulations on health care cost lives. A study by Christopher J. Conover with the Center for Health Policy, Law and Management in the Terry Sanford Institute of Public Policy at Duke University found that as many as 22,000 Americans die each year from the costs associated with excess regulation.

Indeed, if Families USA is truly concerned with expanding the number of Coloradans with health insurance, they might start by attacking some of those regulations that make health insurance so expensive...

New Blog From Brian Schwartz

Brian Schwartz and the Independence Institute have a new blog on health care policy, concentrating on Colorado issues: Patient Power. It looks like it should be a good resource!

The Plot to Kill the HSA

The April 19, 2008 Wall Street Journal reports on moves by the current Congress to add more burdensome regulations onto Health Savings Accounts:

Health Savings Sabotage

...This week, the House passed legislation that included a provision to require every HSA transaction be reviewed and verified as a legitimate medical expense. Democrats say this is to ensure that consumers are using their tax-free withdrawals for a knee replacement, rather than a new iPod. In reality it adds a layer of bureaucracy that could sharply reduce the appeal and cost savings of HSAs.

But what is the real reason behind this new proposal?

...A key player here is Ways and Means Health Subcommittee Chairman Pete Stark, whose main purpose in politics is to give the U.S. a government-run health-care system. He is a known opponent of HSAs – once comparing them to "weapons of mass destruction" – because they introduce more individual choice into the health-care marketplace.

The WSJ correctly praises HSA's:

...This is health insurance many Americans can afford, and it doesn't force those who have better use for their scarce dollars to buy gold-plated insurance with special-interest mandates (cover the chiropractors!) that Democrats want to force on everyone. HSAs also give consumers more reason to care about prices, bringing much-needed market discipline.

Finally, it concludes that the proposed new rules are a dishonest way of trying to destroy HSA's:

...Having lost the policy argument when HSAs were created, Democrats are now trying to kill them with regulatory subterfuge. The new scheme purports to ensure that money saved tax-free in an HSA is actually used for health expenses. But this is a nonproblem: Any withdrawal from an HSA is already subject to a federal tax audit, just as individual tax returns are. In any case if people cheat on their HSAs, they are only cheating themselves. When a medical expense arises below the insurance deductible, they will be the ones paying for it, whether from their HSA or another bank account.

(Via Kevin MD.)

Do We Need Individual Mandates?

Linda Gorman and R. Allan Jensen ask this important question in their recent article, "State Health Care Reform: Key Questions and Answers," (National Center for Policy Analysis, Policy Report No. 311, April 2008).

They make the following noteworthy economic points:

* The imposition of an individual mandate with minimum coverage requirements will likely mean that thousands of people who currently have health insurance will find that their policies do not meet the minimum standards because their deductibles are "too high" for the officials defining the minimum standards, or because their policies lack certain benefits.

* These decisions will be made by a regulatory body that has no direct knowledge of the incomes, assets, health status or values of the individual policyholders.

* This is what is happening under the failing Massachusetts health reform plan.

From an individual's point of view, a mandate is a tax:

* By forcing people to buy a product they may not want at a price they cannot control, the individual mandate functions as a potentially unlimited tax for health insurance.

* People who currently get health care but have no insurance will be required to purchase insurance, thus increasing their costs.

* People who are allegedly unable to purchase insurance because it is unaffordable will have to be subsidized to a larger extent than they are at present.

* Funding those subsidies will require direct tax increases that will raise costs for all citizens, whether those increases are in the form of taxes on insurance premiums, provider taxes, sales taxes or increases in the income tax.

These are all economic consequences of the broad fact that a mandate forbids people from spending their own money according to their best judgment for their own benefit; instead they are forced to spend it according to a bureaucrat's judgment as to what's best for some "collective good".

Armstrong on Insurance Mandates

Not only are Massachusetts-style individual insurance mandates popular with liberals, but conservative organizations such as the Heritage Foundation have praised them, often under the guise of promoting "individual responsibility". Libertarian writer Ronald Bailey also supports such mandates.

Fortunately, Ari Armstrong has written a good critique summarizing the errors of Bailey's position.

Lin Zinser Talk Radio Interview

Lin Zinser's interview on April 15, 2008 with the Boston-based Bottom Line Radio can be heard online here:

Health Insurance Mandates - Dangerous and Immoral Public Policy

Join Lin Zinser, executive director of Freedom and Individual Rights in Medicine (www.WeStandFIRM.org) in an expose of the dangers inherent in socialized medicine and what can be done to prevent it. This program is must-listening for small business owners, political activists, and others concerned with the loss of liberty.

The interview is approximately 1 hour long.

If you wish to download an MP3 version, go to the main site for the show and look for the "Download" button on the 4/15/2008 entry.

Costs Keep Rising in Massachusetts

More reports are coming from the national media on problems with Massachusetts-style mandatory health insurance. Here are some excerpts from this April 12, 2008 Associated Press story:

Costs soar for Mass. health care law
By STEVE LeBLANC, Associated Press Writer

BOSTON - Two years after the state's landmark health law was signed, the cracks are starting to show.

Costs are soaring and Massachusetts lawmakers are weighing a dollar-a-pack hike in the state's cigarette tax to help pay for a larger-than-expected enrollment in the law's subsidized insurance plans.

...Anyone earning more is required to get health insurance through their employer, on their own, or by purchasing lower-cost plans through the Health Care Connector, the independent state agency overseeing the law.

Businesses are also on the hook. Those with 11 or more full time employees who refuse to offer insurance face $295 annual penalties per employee. Already, 748 employers have failed to meet that threshold and have paid $6.6 million to the state.

Rick Lord, president of the Associated Industries of Massachusetts, said the state must be "very mindful of placing burdens on businesses that don't exist in other states."

...Michael Tanner, a senior fellow at the libertarian-leaning Cato Institute, said the law has been an unqualified failure.

Tanner was critical of the connector authority, a "super-regulatory agency" which has mandated levels of coverage. He also noted the vast majority of the newly insured are receiving subsidized care.

"They said it would get us universal coverage and reduce costs and it's done neither," Tanner said.

The biggest challenge is rising costs.

In 2006, a legislative committee estimated the law would cost about $725 million in the fiscal year starting in July. In his budget, Patrick set aside $869 million, but those overseeing the law have already acknowledged costs will rise even higher.

Even the very liberal California state legislature rejected a similar plan back in January 2008, on the grounds that it would cost too much. As more people around the country are realizing that the Massachusetts plan is a bad idea, Colorado should not rush headlong to embrace it. (Via Thrutch.)

Schwartz on Mandatory Insurance

The April 15, 2008 Rocky Mountain News posted the following LTE by Brian Schwartz in its online edition:

Politicians shouldn’t force grown-ups to buy insurance

In "Health-care reform for grown-ups" (April 6), the Rocky's editorial board says "it can live with" mandatory insurance proposed in Senate Bill 217 if "value benefit plans are indeed viable and available at modest costs." But real grown-ups can't "live with" politicians treating them like children.

Attempting to justify this nanny-state proposal, the editors perpetuate the fallacy that the "cost-shift from the uninsured" makes insurance so expensive: Such "uncompensated care totals $600 million ... according to the blue ribbon commission." Wrong.

In a January 26 Speakout printed here, Commission member Linda Gorman showed that the Commission's figure was much less, and that the maximum annual cost-shift was "about $85 per insured individual." How much will SB 217 cost taxpayers?

Maybe mothers can force their four-year-olds to eat their vegetables, but politicians shouldn't force grown-ups to buy insurance. As grown-ups, we have the individual right to make that choice ourselves.

Brian T. Schwartz, Boulder

Shurts on Mandatory Insurance

The April 11, 2008 Denver Post posted the following LTE by Russell Shurts in its online edition:

Piling on Poor Coloradans

In football, in order to forestall injury a player is penalized when he piles on to a player who is already down. In politics a government that has repeatedly injured it's citizens with it's past actions is not only not penalized for the harm it has already done, but is encouraged to pile on to it's citizens a little bit more.

Such is the situation we find ourselves in with our legislature about to pass a bill (Senate Bill 217) that will make it a crime for you to not buy health insurance.

Once again the government in addressing a problem which it is solely responsible for; the skyrocketing cost of health care due to its decades-long continuing takeover of the health care market, will make the situation worse by piling on ever more restrictions.

After over a century of evidence that the more you restrict people's free choices in any particular market, the more expensive and less available everything becomes in that market, our socialistic leaders STILL think that the next batch of restrictions is going to make it all wonderful.

It won't, and several years from now when this latest intrusion into our lives has made health care even more costly and less available than it is now, the same people who are ramming this bill through will be demanding ever more power to dictate what your health care choices will be and how much they will cost.

When this cycle will end is when you/we the people decide to go back to the principles of freedom that this country started with. Until then 'enjoy' the consequences of your government’s latest trampling on your rights and intrusion into your lives.

Russell W. Shurts, Centennial

Liggett and McCoy Against Mandatory Insurance

The April 12, 2008 Denver Post printed two LTE's against mandatory health insurance:

Gina Liggett wrote:

I disagree with The Post's editorial praising Senate Bill 217's "foundation for universal health care in Colorado." State Sen. Bob Hagedorn's bill will squash real reform. Real reform means upholding the rights of individual consumers and providers to freely contract for care under mutually agreeable terms. Real reform means that your money isn't taken away from you to subsidize someone else while you're also paying for your own family.

Good examples of real reform are Health Savings Accounts, eliminating legal barriers to obtaining insurance plans in other states, slashing mandates, and stopping the runaway legislative train of government-run programs.

In the words of Dr. Phil, "What were you thinking?"

Gina M. Liggett, Denver

Jeffrey McCoy wrote:

Your editorial offered support of state Senate Bill 217, a study that would move toward a universal health care plan by 2010. The ultimate goal would be to mandate "health insurance for citizens who now lack it, just as motorists are required to have automobile liability insurance."

However, there is a big difference between mandating health insurance and mandating automobile liability insurance. If one gets into a car accident and he is at fault, then he must pay the other driver for damages. Without car insurance, compensation may not be paid. On the other hand, when someone does not have health insurance and gets into an accident, no one other than that person is harmed.

People have limited resources and they must decide where they want those resources to go. People have different needs for health insurance, and if some rationally decide that they do not need health insurance, then they should be able to make that choice. The Senate Appropriations Committee should protect individual choice regarding health insurance and not approve Senate Bill 217.

Jeffrey McCoy, Boulder

Hsieh LTE on Mandatory Health Insurance

The April 10, 2008 Rocky Mountain News printed my LTE opposing mandatory health insurance:

Rocky off base on health care proposal

Contrary to the April 6 Rocky Mountain News editorial ("Health care reform for grown-ups"), Sen. Bob Hagedorn's proposed mandatory health insurance is the wrong prescription for Colorado. Massachusetts has already imposed a similar system of mandatory insurance for over a year, and it is failing badly. Like Hagedorn's proposal, Massachusetts requires everyone to purchase health insurance, with government subsidies for low-income residents. But rather than creating a health care utopia, the result has been the exact opposite - skyrocketing costs, worsened access, and lower quality health care.

The Massachusetts system violates the rights of individuals to spend their own health-care dollars according to their best judgment. Instead, individuals are forced to choose from plans approved by government bureaucrats. Special interest groups have loaded these plans with costly required benefits that many people might not otherwise voluntarily purchase, such as in vitro fertilization and chiropractor services. Although Colorado politicians promise not to impose similar expensive mandates, how long do we realistically expect this to remain true?

Due to the skyrocketing costs, the Boston Globe reports, the government will have to "cut payments to doctors and hospitals, reduce choices for patients, and possibly increase how much patients have to pay." Massachusetts is also asking the federal government to make up the shortfall of "hundreds of millions of dollars."

Instead of another massive government program, we should adopt free market reforms, such as eliminating insurance benefit mandates and allowing Colorado residents to purchase health insurance across state lines. These genuine reforms could reduce insurance costs between 20 percent and 50 percent for thousands of Coloradans, without compromising access or quality. The free market is the only moral and practical solution to our current health care crisis.

Paul Hsieh, M.D., is a practicing physician in the south Denver metro area and a co-founder of the Colorado group Freedom and Individual Rights in Medicine (FIRM).

Schwartz OpEd on Mandatory Insurance

The April 13, 2008 Pueblo Chieftain printed Brian Schwartz's OpEd against mandatory health insurance:

Universal health care is the wrong prescription

By BRIAN SCHWARTZ
INDEPENDENCE INSTITUTE

What good is having medical insurance if you cannot get medical care? Peddlers of "universal health care" - from Hillary, Obama, to 2nd Congressional Democratic candidate Jared Polis - don't get this.

"Universal health care" is false advertising for politically controlled medicine, with government as the "single payer" monopolistic insurer. But having coverage does not guarantee getting medical care.

Since patients prepay through taxes, medical care appears "free." Hence, they have strong incentive to over-consume and providers need not compete on price.

To contain costs, governments restrict your access to life-saving treatment. In countries with such "universal coverage," patients die waiting for treatment.

The Canadian Medical Association Journal reports that in one year, 71 Ontario patients died while waiting for coronary bypass surgery and over one hundred more became "medically unfit for surgery." The Canadian Broadcasting Corporation reports that "109 people had a heart attack or suffered heart failure while on the waiting list. Fifty of those patients died."

"Physicians across Canada are in an advanced stage of burnout due to work conditions" which "causes them to retire early . . . or simply leave," a former Canadian Medical Association president told the New York Times. He "attributed much of the problem to technological shortages and the powerlessness doctors feel when patients complain about long waits for treatment."

"Access to a waiting list is not access to health care," wrote Canadian Chief Justice McLachlin when striking down legislation banning private insurance in 2005. Last year, a New York Times headline read: "As Canada's Slow-Motion Public Health System Falters, Private Medical Care Is Surging."

And England? The BBC reports that "up to 500 heart patients die each year while they wait for potentially life-saving surgery." The Times claims that a British woman "will be denied free National Health Service treatment for breast cancer if she seeks to improve her chances by paying privately for an additional drug."

A Daily Telegraph headline reads: "Sufferers pull out teeth due to lack of dentists." Another article says that "doctors are calling for NHS treatment to be withheld from patients who are too old or who lead unhealthy lives."

Consider politically controlled health care in America: Medicaid and Medicare.

Doctors are five times more likely to refuse seeing new Medicaid patients than privately insured patients. Increasing reimbursement rates won’t help much; more than two-thirds of doctors reported being overwhelmed by Medicaid's billing requirements, paperwork, and delays in payment.

ABC News says that "Medicare rules bar cancer drugs for patients," including the privately insured.

"Single payer" advocates cite international comparisons of life expectancy to support their cause. But life expectancy depends on factors unrelated to health care, such as unintentional injury and homicide. Health economist Robert Ohsfeldt found that when accounting for these two factors, life expectancy in America is comparable to that of Canada and England.

What really matters is your chance of surviving a serious illness. The American Cancer Society claims that "U.S. patients have better survival rates than European patients for most types of cancer."

So if politically controlled medicine isn’t the solution, what is? Not a Massachusetts-style "individual mandate," which forces everyone to buy insurance. This is essentially single-payer in disguise. Insurance regulations severely limit competition, so insurance companies are effectively government contractors for politically defined insurance.

The Boston Globe reports that to contain costs, Massachusetts authorities will "probably cut payments to doctors and hospitals" and "reduce choices for patients." Sound familiar?

Instead, we must recognize how government policies have crippled free markets.

Because the tax code deeply discounts employer-provided insurance, you're essentially stuck with your employer's non-portable plans. Hence, insurance companies can afford to be stingy and deny you care; they know that losing you as a customer requires that you change jobs. With government as "single payer" it's even worse: To change insurance providers you must move to a different state or country.

Our current system also encourages thoughtless over-consumption and skyrocketing costs.

The tax code punishes paying for medical care out-of-pocket and rewards buying insurance. So "insurance" has become prepaid medicine, and patients over-consume like business travelers dining on their company's expense account.

Further, legislation mandating minimum benefits makes insurance unaffordable for many. Consider: Colorado law compels widowed wives to pay higher premiums for prostate screening, maternity, and marital therapy.

Some Colorado legislators recognize this injustice. Just as businesses incorporated in other states can operate in Colorado, Coloradans should be able to buy affordable policies from insurance companies that meet less damaging regulations of another state.

While "universal health care" may provide health insurance, it doesn't guarantee health care. The uninsured are not the problem, but the symptom of the real problem - government meddling in personal choices of how we care for ourselves and our families.

Brian Schwartz, an optical engineer in Boulder, is a guest author for the Independence Institute. His free-market proposal to the Blue Ribbon Commission is at WhoOwns You.org.

Colorado Springs Gazette Opposes Mandatory Insurance

The April 13, 2008 Colorado Springs Gazette has published a good editorial taking a strong stand against mandatory health insurance. It is the second editorial on the page. (BTW, I also agree with their first editorial supporting gun rights on college campuses):

NO INSURANCE; BREAK THE LAW

It's the grand prize of politics. Fix health care and be a rock star. Unfortunately, some things can't be fixed at the Capitol. But that's a memo state politicians refuse to read.

Both parties in the Colorado General Assembly are gleefully pushing a Senate bill they've called a bipartisan blueprint for universal health insurance, setting a goal of health care for all by 2010. Shockingly, Republicans seem as overjoyed as Democrats regarding the most overreaching and frightening bill to pass through Denver in years.

The bill, a brainchild of Sen. Bob Hagedorn, D-Aurora, is patterned after the Massachusetts health care program, signed into law by former Gov. Mitt Romney, a Republican.

Most notably, the Hagedorn plan would make it a crime for anyone in Colorado to choose against purchasing health insurance. Those who don't buy insurance would be penalized on their taxes, and subjected to other nasty sanctions of the state. It's a bit like addressing the homeless problem with a mandate that every human buy a house, or else suffer financial punishment. Imagine if there were only so many houses to go around, and every living being was required to buy one. It's a supply and demand nightmare scenario, and the health care proposal isn't much different.

In an effort to make the bill sound something less than insane, legislators will direct the Department of Health Care Policy and Financing, along with the Division of Insurance, to develop a new bare-bones health insurance package that offers something less than comprehensive coverage. That's to make us believe the program won't over-burden the health care system.

Mandatory health insurance will be a disaster, just like the program in Massachusetts. The system of Romney & Co. has resulted in higher health care costs, lower quality health care, major rationing, and a looming exodus of doctors from Massachusetts. Patients sometimes wait months to see a doctor, because everyone's entitled to consume health care now. Some residents can't find doctors accepting new patients at all, even though they're forced to pay for insurance.

The problem with health care is one of supply and demand and controls that interfere. There's more demand than supply, and that's why the price goes up. Legislators, by mandating health care coverage, will only increase demand on a system that's already unable to keep up for a variety of reasons, most of them regulatory. Hagedorn knows his bill has problems, but he feels compelled to save the day.

"The alternative to this bill is to do nothing, and I don't find that acceptable," Hagedorn said, as quoted in the Denver Post.

Mr. Hagedorn, please do nothing. It's the best thing you can do. The problems with health care have resulted from too much interference from politicians, not too little. You can't fix the system, and you'll only make it worse.

Hillman on Mandatory Insurance

The April 12, 2008 Rocky Mountain News has printed the following good guest OpEd by Former Colorado State Senator Mark Hillman on the problems with SB217 and mandatory health insurance:

Latest health reform will backfire
By Mark Hillman

Samuel Johnson called second marriages "the triumph of hope over experience." The same might be said for the latest health-care reform bill at the state Capitol.

For more than 20 years, crusading politicians have promised to deliver better health care to more people for less money simply by saying "make it so." With rare exceptions, the resulting legislation exacerbates economic distortions, makes insurance impractically expensive, drives insurers out of the state, and creates worse problems than originally existed.

Senate Bill 217, which the Rocky Mountain News inexplicably endorsed on April 6 ("Health-care reform for grown-ups"), seems to be a desperate attempt to "do something" without a game plan. What it does best is to create case studies in irony, hubris and cognitive dissonance.

At times, the bill's sponsors sound frenetic in their urgency, as when they propose to declare in state law: "Colorado cannot wait to address the current problems related to the delivery of affordable health care!" (Conspicuously absent exclamation point added.) Other provisions of the bill do not convey the same urgency. For example, the governor is instructed to appoint "a panel of experts" - yes, another blue-ribbon commission - to help craft a reform plan that could lead to substantive legislation not this year, or next year, but in 2010.

Elsewhere, it appears that the bill's sponsors never recognized that many of their objectives are irreconcilable. In calling for health insurance companies to design "value benefit plans" to provide a low-cost insurance alternative, the bill says that the state "shall not specify benefits or other details" of those plans. Just two paragraphs later, however, the bill stipulates a dozen mandated benefits or other details that value benefit plans must include.

Essentially, insurers are prohibited from proposing anything that's remotely innovative. They are commanded not to "interfere with the existing small-group market" but are locked into the same rating criteria that has devastated that market for most of the last decade.

Colorado's small-group market is verging on a "death spiral" - the point at which it is so overpriced and overregulated that anyone who is healthy enough to obtain insurance elsewhere has fled, leaving a pool that is disproportionately sick, aging and expensive.

Since 1998 when 536,367 people were insured through employers of 50 or less, the small-group market has suffered a mass exodus, largely due to well-intended but economically unreasonable price-fixing schemes imposed by the legislature.

By 2005 the state's population had grown by 16 percent, but the small-group market withered by 33 percent, covering just 358,264 insured lives.

If insanity is "doing the same thing over and over but expecting different results," then legislators need to own up to their own psychosis. Lowering health-care costs isn't as simple as passing a law demanding more for less.

If it were, Colorado wouldn't have the seventh-highest insurance premiums in the nation.

Legislators should permanently loosen the rating handcuffs, forcing insurers to compete for business, and repeal the mandates that have driven costs through the roof. Absent the courage to do that, they could at least allow insurers to propose choices that are popular and less expensive in other states.

SB 217 does change the existing health-care market in one dramatic respect, by signaling to insurance companies that state government is ready to force its incorrigible citizens to buy health insurance, even if it's unaffordable.

The bill calls for "a requirement that all Coloradans obtain health insurance either individually or through their employer" and provides for enforcement "though the state tax laws."

Rather than allow insurers to offer new choices or allow consumers to obtain coverage across state lines where Colorado's draconian regulations aren't strangling the market, legislators prefer to penalize taxpayers for the audacity of refusing to buy insurance that costs too much.

Even California Democrats recently figured out that it's wrong to tell working families to buy something they cannot afford just because government says so, joining Republicans to kill a heavy-handed mandate proposed by Gov. Arnold Schwarzenegger.

Economist Thomas Sowell has said, "The first lesson of economics is scarcity: There is never enough of anything to satisfy all those who want it. The first lesson of politics is to disregard the first lesson of economics." Unfortunately, Colorado politicians seem determined to again disregard sound economics and stick consumers with the cost of their political promises.

Mark Hillman (markhillman. com) served as majority leader of the Colorado Senate.

Thank you, Senator Hillman! (His piece also appears on his website.)

Debunking the Medical Bankruptcy Myth

Linda Gorman has done a nice job debunking the commonly promulgated myth that "that half of all bankruptcies are caused by medical debt".

This dovetails nicely with testimony given by Todd Zywicki, Professor of Law at George Mason University School of Law, to the US Congress on July 17, 2007 House of Committee on the Judiciary, Subcommittee on Commercial and Administrative Law. His testimony is available here as an MS Word document.

He also concludes that, "There is No Evidence That There Has Been An Increase in the Frequency or Severity of Job Loss or Income Interruption as a Result of Health Problems".

Hsieh OpEd on Mandatory Health Insurance

The April 9, 2008 Denver Post published my guest editorial criticizing mandatory health insurance in the online edition:

Mandating health care coverage is a costly mistake

The March 28, 2008 article, "Health Coverage Gets New Push" quotes State Senator Bob Hagedorn as supporting a plan to force all Coloradans to purchase mandatory health insurance, because it would be "immoral" to "sit on our hands and do nothing."

Unfortunately, the solution proposed by Senator Hagedorn is also deeply immoral and impractical. The state of Massachusetts has already imposed a similar plan of mandatory health insurance on its residents for over a year now, and it is failing badly. Like Senator Hagedorn's proposal, the Massachusetts plan requires all residents to purchase health insurance, with state subsidies for lower income residents.

But rather than creating a utopia of high-quality affordable health care, the result has been the exact opposite — skyrocketing costs, worsened access, and lower quality health care.

Massachusetts' system of government-mandated health insurance is immoral because it violates the rights of individuals to spend their own health care dollars according to their best judgment for their own benefit. Instead, individuals are forced to choose from a limited set of plans approved by the government bureaucrats.

Predictably, the government-mandated plans have been a huge magnet for special interests seeking to have their own favorite benefit included as a state requirement. These state-mandated plans therefore include numerous benefits that many individuals might not otherwise freely choose to purchase, such as in vitro fertilization, chiropractor services, prostate cancer screening, and maternity benefits. Hence, middle-aged Massachusetts women are forced to pay for prostate cancer screening, even though they have no need for that service.

Because the state-mandated health insurance is so expensive, the government must also subsidize the costs for lower income residents, which merely shifts those costs onto the taxpayers. The state has also created a huge new bureaucracy called "The Connector" to enforce these insurance requirements on individuals and businesses.

Overall, the plan is projected to cost as much as three times as originally estimated. According to the Boston Globe, the Massachusetts state government is now asking the federal government to make up the shortfall of "hundreds of millions of dollars."

Nor has the Massachusetts plan improved access or quality. The Boston Globe also reported that due to the skyrocketing costs, the state government will have to "cut payments to doctors and hospitals, reduce choices for patients, and possibly increase how much patients have to pay."

With such poor reimbursements, physicians are increasingly reluctant to take on new patients. Lee Sampson, a 47-year-old unemployed medical transcriptionist had to call 50 doctor's offices before she could find someone who would take her on as a new patient.

The Massachusetts plan has also had a "catastrophic effect" on the Cambridge Health Alliance, which serves most of the poor and uninsured in the Boston area. The high costs have forced the Alliance to fire staff and reduce services in order to stay afloat — harming the very people the plan was supposedly intended to help.

Colorado should not duplicate the failed experiment in Massachusetts. Their system of mandatory health insurance violates the rights of individuals and providers to contract freely for medical services to their mutual benefit. Instead, the government decides how people can spend their own money, and for what.

The predictable result has been skyrocketing costs, worsened access to health care, and a huge new bureaucracy, just like under any system of socialized medicine. As a practicing physician, I can't think of a more immoral "solution."

Instead, we need free market reforms, such as eliminating insurance benefit mandates and allowing Colorado residents to purchase health insurance across state lines.

These genuine reforms could reduce costs up to 20-50%, making health insurance possible to thousands of Coloradans who otherwise could not afford it, without compromising access or quality. The free market is the only moral and practical solution to our current health care crisis.

Paul Hsieh, MD, of Sedalia is a practicing physician in the south Denver metro area and also a co-founder of the Colorado group Freedom and Individual Rights in Medicine (FIRM).

2 Upcoming Events - April 15 and 17

Radio Interview
I will be interviewed on Tuesday evening, April 15, 2008, at 5:30 PM Mountain Time (7:30 Eastern Time) on a new Radio show from Boston Massachusetts, on blogtalkradio with host Stephanie Davis. She calls herself a Boston Patriot as she opposes government solutions to government created problems, such as the so-called health care crisis, and supports individual rights and a limited government as our founding fathers did.

Because this is blogtalkradio, you can listen on-line live and make calls to the show, or you can listen to the archived recording of the show after it is over. We will be talking about FIRM, how to make a difference, and about the Massachusetts failed plan.

Live Talk in Boulder
Also, I will be speaking to the Boulder County Republican Women about moral health care reform on Thursday, April 17, 2008, with lunch and talk from 11:30 am to 1:00 pm at the Spice of Life Event Center, 5706 Arapahoe Avenue, Boulder, Co.

Visitors are welcome to attend. The cost is $15.25 for lunch. Or you can just attend my talk (no charge) which will probably begin shortly after 12 noon. For either option, please contact myungkurth@comcast.net by the end of the day Monday, April 14 and let her know that you are coming, and which option you are choosing.

Schroeder on Mandatory Health Insurance

The April 8, 2008 Grand Junction Sentinel posted the following LTE by Dr. James Schroeder:

Requiring health care

Last fall, at a public hearing of the 208 Healthcare Commission, I heard a local citizen proclaim that "We learned our lessons in 1994 with HillaryCare, and we will eventually get universal healthcare by smaller incremental steps." Now state Sen. Bob Hagedorn (D-Aurora), chairman of the Health and Human Services Committee, is trying to make one of those incremental steps.

In February, Hagedorn was quoted in the Rocky Mountain News as saying there would not be any state mandates coming out of this legislative session. Now, a mere two months later, Hagedorn is co-sponsoring a bill (SB-217) that seeks to lay the groundwork for an individual insurance mandate.

I encourage you to read this bill for yourself and form your own opinion, but it basically calls for insurance companies to come up with basic benefits packages that will be utilized when the state does get around to passing an individual mandate, presumably in late 2009 or 2010. To quote the wording of the bill directly, it calls for insurance companies to "Assume that all Colorado residents would be required to purchase health insurance."

Recently, in an excellent opinion piece in the Colorado Daily March 23, Linda Gorman of the Independence Institute describes why that same approach failed in Tennessee and is failing in Massachusetts in just two short years. That article can be found at: http://www.coloradodaily.com/articles/2008/03/23/opinion/our_take/ourtake1.html

Requiring individuals to purchase insurance and then making the taxpayer subsidize that insurance for a large portion of the population is not a public/private partnership. It is coercive, plain and simple. Please let your state legislators know that you are against socialized medicine in any form by opposing SB-217.

JAMES K. SCHROEDER, MD
Grand Junction

Schwartz on the SCHIP and Medicaid

The April 6, 2008 Rocky Mountain News posted the following online Speakout by Brian Schwartz:

The budget: An "immoral document"

A "moral document." This is what Colorado House Democrats called their budget ("State budget clears House,: March 27), which expands government-run children's health insurance. This moral grandstanding is typical of the anointed, who support expanding Medicaid and the State Children's Health Insurance Program (SCHIP) — and it’s nonsense. There's no compassion or virtue in spending other people's money taken by force.

If a thug forces you to donate to charity, does that make either you or the thug virtuous or compassionate? What if this charity unfairly competes with voluntary charities, fosters dependency of recipients, encourages people to stop buying private insurance, and is run by a government that makes insurance expensive in the first place? All of these apply to Medicaid and SCHIP, which are government-run charities.

Advocating for government-run charities doesn't make one compassionate, as there's no compassion in forcing others to comply with another's notion of virtue. Unlike voluntary charities, not "donating" to a government charity through taxes lands you in prison.

Compulsory donations to government charities are unfair to voluntary charities. Every dollar the state extorts from taxpayers for SCHIP or Medicaid is one less dollar for a voluntary charity.

Forced giving is also disrespectful and intolerant. By forcing us to fund causes others think are important, it thwarts our freedom of expression and ability to support causes we judge to be worthwhile.

Unlike government charities, voluntary charities have strong incentives to be effective. Since they compete with other charities for donations, they must convince potential donors that their cause is worthwhile. Government charities need not persuade.

We know the cost of not "donating": prison.

If each Colorado adult funded Medicaid and SCHIP equally, we’d each pay almost $1000 per year. If you had $1000 to donate to a medical charity, which would you choose? Would you choose SCHIP, or a voluntary charity like Rocky Mountain Youth Clinics, which provides primary care to infants, kids, and teens?

Might SCHIP or Medicaid deserve your donations? Downloading Cato Institute studies "Sinking SCHIP" and "Medicaid's Unseen Costs" could provide guidance. SCHIP covers non-needy families: more than half of eligible children already have private insurance. The National Bureau of Economic Research reports that "For every 100 children who are enrolled in public insurance, 60 children lose private insurance."

Both Medicaid and SCHIP ensnare recipients in a low-wage trap: aversion to seeking higher-paying jobs for fear of losing "benefits." This keeps people on their backs and dependent on government, instead of being independent and self-sufficient. As "entitlement" programs, they send adults the message that they are entitled to have children — even if they cannot afford to raise them.

Too bad you have no choice; it's your hard-earned income after all. But government could provide such choice — by allowing its programs to compete more fairly with voluntary charities. One method is a dollar-for-dollar tax credit for donations to non-government charities that assist families with the medical and insurance expenses.

Taxpayers who prefer Medicaid and SCHIP to non-government charities can continue to fund them. The threat of lost tax revenue would give Medicaid and SCHIP strong incentive to effectively and efficiently assist families in need and foster their independence.

Empowering taxpayers to choose allows for true compassion, which is absent when we are forced to give. Taxpayers could compare non-profits with tools like Charity Navigator and GuideStar.org. GuideStar envisions "an increasingly efficient nonprofit marketplace where donors seek out and compare charities, monitor their performances, and give with greater confidence; nonprofit organizations pursue more effective operating practices, embrace greater accountability, and enjoy lower fund-raising costs; and society benefits from a more efficient, generous and well-targeted allocation of resources to the nonprofit sector."

So drop the "you're a bad person for opposing government charity" rhetoric and rise to this challenge: If Medicaid and SCHIP are so good, why not let them compete fairly with other charities, and let individual taxpayers decide for themselves?

Brian T. Schwartz, Ph.D., submitted the free-market proposal to the Blue Ribbon Commission on Healthcare Reform.

(A version with additional references and hyperlinks can be found on Brian's website.)

Coverage But No Care In Massachusetts

The April 5, 2008 New York Times reports that despite (or because of) state-mandated "universal health care", patients are having a harder time than ever seeing a doctor for their primary care needs. One problem is that the reimbursement rates set by the government are so low, that doctors are losing money on each patient.

According to family practice physician, Dr. Katherine Atkinson:

"I calculated that every time I have a Medicare patient it’s like handing them a $20 bill when they leave,” she said. “I never went into medicine to get rich, but I never expected to feel as disrespected as I feel. Where is the incentive for a practice like ours?”

Some patients have had to call as many as 50 doctor's offices before they could find someone who would see them. Yet the state program is running a huge deficit, due to the skyrocketing expenses. The state-run system violates the individual's right to spend his own health care dollar according to his own judgment for his own benefit. Instead, government bureaucrats dictate what sorts of insurance coverage people must be forced to purchase, with only a thin veneer of a market on top of an essentially socialized system. It's no wonder that the Massachusetts system is failing.

There's a huge difference between "coverage" and care. Government-run health care can make endless paper promises of "coverage" but this is not the same thing as actual health care. Patients in Hawaii already know the painful difference. Patients in Massachusetts are starting to learn the same lesson.

Schwartz LTE in Denver Post

The April 2, 2008 Denver Post printed the following LTE by Brian Schwartz:

Repeal laws raising cost of health insurance

Re: "Health coverage gets new push," March 28 news story.

Democrats like state Sen. Bob Hagedorn, and state Rep. Anne McGihon want to force us all to buy medical insurance - as they define it. But government-mandated insurance does not guarantee actual care. Consider Canada, England and Massachusetts.

The Canadian Broadcasting Corporation reports that "109 people had a heart attack or suffered heart failure while on the waiting list. Fifty of those patients died." The BBC reports that "up to 500 heart patients die each year while they wait for potentially life-saving surgery." The Boston Globe reports that in response to soaring costs, Massachusetts "policymakers could face difficult choices: spend more state money or cut back the two programs by reducing enrollment, cutting subsidies, or eliminating benefits."

Sen. Hagedorn says it's "immoral for us to sit on our hands and do nothing." Hence, instead of passing more laws that kill, politicians should do something that is moral and actually works: repeal laws that make insurance prohibitively expensive.

For example, Colorado House Bill 1327 would allow us to buy insurance plans that meet less damaging regulations of other states. This would make quality, affordable insurance available to thousands of Coloradans.

Brian T. Schwartz, Boulder

More on the Bogus Survey

Greg Scandlen points out the following about the survey purportedly showing that physicians suppport government-mandated universal care:

Let’s look instead at the “study” itself. This is not as easy as it sounds. Yes, it was published in the Annals of Internal Medicine, but the content is available only to paid subscribers. Fortunately a friendly internist was able to send it to me. I opened up the file on my computer and was surprised to learn that it wasn’t a “study” at all. It was a one-page letter to the editor. Now a letter has the distinct advantage of avoiding the peer review process that applies to published articles. It is also able to avoid including any embarrassing information about methodology.

The letter was written by Aaron Carroll, MD and Ronald Ackerman, MD, both of the Indiana University School of Medicine. I don’t know about Dr. Ackerman, but Dr. Carroll is a member of the board of directors of Physicians for a National Health Program (PNHP), so is hardly an unbiased researcher. Interestingly, the Annals requires the disclosure of financial conflicts of interest, but not political conflicts or biases.

The survey itself, though only summarized in the letter, apparently asks only two questions -- 1. In principle, do you support or oppose government legislation to establish national health insurance? And 2. Do you support achieving universal coverage through more incremental reforms? They sent this out to 5,000 physicians and got back 2,193 responses. So the sample was entirely self-selected. And who knows what their cover letter might have said? Coming from a leader of PNHP, it might have been calculated to infuriate physicians who believe in freedom, resulting in these doctors discarding the survey.

So, there was absolutely nothing scientific about this. It was pure propaganda. But the idiotic reporters take it at face value, much as they did a few years ago when the Commonwealth Fund published a startling survey finding that the vast majority of employers supported an employer mandate. Few reporters questioned the unlikely finding, so I dug deep into the survey and discovered that Commonwealth gave these employers only two choices – an employer mandate or a single-payer. Pick your poison. And you wonder why we enact such horrible policies in this country.

Do Most Doctors Really Favor Socialized Medicine?

There's been a lot of news buzz lately about this recent Reuters news story claiming that, "Doctors support universal health care". But how can this be, given that the majority of physicians I know hold the opposite opinion?

Fortunately, David Catron explains the problems with the survey methodology:

The lead author of this "survey" is Aaron E. Carroll, a single-payer zealot on the Board of the activist group "Physicians for a National Health Program."

This guy routinely produces "studies" and "surveys" that somehow always show that Americans in general and the medical community in particular want government-run health care.

Catron also notes that the PNHP website itself states:

About 500 questionnaires were undeliverable, 197 were returned by physicians no longer in practice, and 2,193 were completed (51% response rate) and returned to Drs. Carroll and Ackermann.

Catron concludes:

Anyone with a basic understanding of statistical samples will see a red flag here. Surveys of this type are worthless if the sample isn't random, and this one doesn't pass that test. The 2,193 respondents obviously constitute a self-selected group and, as such, are not representative of the larger population of physicians.

Dr. Carroll knows this, of course, yet he disingenuously foists this fraud on the public.

Have you Fallen for the Five Myths of Health Care?

Sally Pipes does a good job debunking the 5 most common health care myths:

(1) Forty-seven million Americans do not have health insurance.

(2) Universal health-care coverage can be achieved via "individual mandate."

(3) Expensive prescription drugs are a big reason health-care costs increase.

(4) Drug importation will save patients a fortune.

(5) The state-run health-care systems in Canada and Europe are better and cheaper than America's.

Read the whole thing.

Hsieh LTE in Rocky Mountain News

The March 31, 2008 Rocky Mountain News printed my LTE responding favorably to their 3/9/2008 editorial on free market health care form:

Free-market options finally being aired

Thanks to the Rocky Mountain News for highlighting some positive free-market alternatives in the health-care debate ("The coming debate over health care," March 9). Measures such as House Bill 1327 (which allow the purchase of insurance across state lines) are good because they allow consumers the choice between the best offerings of all 50 states.

At a more fundamental level, such free-market reforms are good because they respect an individual's right to spend his own health-care dollar according to his judgment, for his own benefit. In contrast, false "reforms" (such as expanding Medicaid or imposing insurance mandates), merely raise costs, decrease access and force more people to become government dependents, as has happened in Tennessee and is happening in Massachusetts.

Bureaucrats then decide how people's health-care dollars may be spent, not the individual patients and doctors.

I'm encouraged that Colorado is finally discussing some genuine free-market health-care reforms!

Dr. Paul Hsieh
Sedalia, CO

Free Standing ERs

Physician-blogger Scalpel has an fascinating post on free-standing ER's:

The Wave of the Future

The wave of the future is the free-standing Emergency Department.

By requiring insurance coverage or full payment at time of presentation, these facilities are able to offer reduced waiting times, concierge-style amenities, and a full array of emergency diagnostic and therapeutic services. And if they refuse to accept Medicare or Medicaid, then they are not forced to follow the restrictive rules of EMTALA.

EMTALA applies only to "participating hospitals" -- i.e., to hospitals which have entered into "provider agreements" under which they will accept payment from the Department of Health and Human Services, Centers for Medicare and Medicaid Services (CMS) under the Medicare program for services provided to beneficiaries of that program.

So these "free-market" emergency facilities can not only refuse treatment of patients who are unwilling or unable to pay, but they can also transfer patients at will without negotiating with a receiving hospital or jumping through a lot of regulatory hoops. Realistically, however, hospitals love receiving transfers from these types of facilities because they know they are getting fully-paying patients. Do you think that a hospital might accept an otherwise healthy well-insured young woman with a gallstone attack in transfer, perhaps causing the cirrhotic Medicaid patient to wait a few more hours in their own ER? I think they just might. The bottom line is a powerful incentive.

As this business model becomes more widespread, hospital-based emergency departments will be faced with an increasingly problematic payer mix, because the higher-paying patients will be siphoned off the top, leaving only the most undesirable trauma and Medicare/Medicaid populations to fill their overcrowded waiting rooms. And when emergency physicians have a broader selection of practice environments to choose from, I suspect the hospital-based ERs will soon have some difficulty filling their schedules as well, thereby compounding their problems even further.

Guess what?

Healthcare isn't a right after all.

(Via David Catron.)

Massachusetts Costs Continue to Soar

Massachusetts legislators are now stuck between a rock and a hard place with respect to the soaring costs of their "universal" health care. On one hand, they want to continue to pretend that they have solved the problem of the universal coverage. On the other hand, it's costing far more than the state can afford. So now they have to either find someone else to pay the bill (i.e., the federal government), reduce services, or stop making it "universal".

Here are some excerpts from this article in the March 26, 2008 Boston Globe:

Healthcare cost increases dominate Mass. budget debate
Controlling them said key to keeping universal coverage

When Massachusetts launched its landmark universal health insurance initiative nearly two years ago, the state put off addressing rising costs so it could expand coverage immediately. Now those costs are dominating the discussion as the state faces a recession and pivotal funding decisions that could make or break health reform.

...A larger issue will also come to a head by July 1: the need to secure a new three-year commitment from the federal government to pay for half the soaring cost of insurance subsidies. Massachusetts is seeking up to $1.5 billion, but the Bush administration has been cutting back federal payments to the states.

..."If we don't grapple seriously with the cost of healthcare, the support for reform will erode and the perception will become broader that it is unaffordable," said Jon Kingsdale, executive director of the Commonwealth Health Insurance Connector, which oversees much of the reform effort.

At root, the system cannot control costs because it explicitly rejects the market mechanisms that can do that in favor of state mandates that tell an individual how he may spend his own health care dollars and for what.

It's always easy for a state to promise "coverage". What they can't do is provide actual quality, affordable care -- only the free market can do that.

Reincarnating Failed Policies

The March 23, 2008 Colorado Daily has published the following OpEd by Linda Gorman of the Independence Institute:

Colorado Health Care Reform: Reincarnating Failed Policies

The Massachusetts plan requires everyone to buy health insurance. The reform plans from Colorado's Blue Ribbon Commission on Health Care Reform and Club 20 copy key elements of it. If everyone is insured, advocates say, safety-net providers will need far less support. Needless to say, Colorado hospitals and health plans eager to get paid have no qualms about lobbying lawmakers to make their fellow citizens pay for coverage designed by a government committee and legislators are happy to believe that less safety-net care translates into reduced state payments.

Massachusetts reformers were so sure this would be the case they eliminated the state's uncompensated care plan in 2007, replacing it with the Health Safety Net Trust Fund. According to Cambridge Health Alliance, the major result of the change was that reimbursement for providing care to the uninsured dropped from full cost coverage to only 60 to 70 percent of cost.

Stiffing providers after passing new programs with glowing promises of free health care, tax money for non-profit advocacy groups, and higher payments to providers is a health care policy tactic traditionally deployed by reformers seeking to reincarnate utopian plans from the wreckage of real world trials.

The Massachusetts plan reincarnates significant elements of TennCare. A 1994 coverage-for-all experiment featuring guaranteed issue, premium subsidies, and a choice of state selected managed care plans, TennCare lasted less than a decade.

By 2000, TennCare benefits were more generous than those of the most expensive private plans. Financial controls were so poor that thousands of enrollees were either dead or living out of state, and TennCare was a major source of prescription drugs for sale in local black markets.

To make ends meet, the state cut provider reimbursement. A 1999 audit estimated that general hospital revenues from Medicaid in 1993 were 100 percent of cost a year before TennCare started. After that, general hospital payments decreased steadily, hitting a low of 60 percent of cost in 1996 and reached 61 percent by 1997. Safety-net hospitals went from being reimbursed at 106 percent of costs in 1993, to 57 percent of costs in 1995, and 71 percent of costs in 1997. State authorized managed care providers failed, leaving physicians and hospitals with millions of dollars in unpaid bills. People in TennCare had insurance and a difficult time finding adequate care.

Judging from the Tennessee experience, the Massachusetts Commonwealth Connector Authority, the agency that administers the Massachusetts plan, is proposing reimbursement cuts right on schedule. Already over budget and looking to cut expenditures, its head proposed physician reimbursement cuts of 3 to 5 percent. In the Massachusetts legislature, State Senate President Therese Murray is proposing draconian controls, including hearings for any insurer announcing a premium price increase of more than 7 percent or any premium that is 7 percent more than the market average. She considers neither inflation nor the possibility that consumers might prefer to pay more for more expensive benefits.

So much for the Massachusetts promise that making people buy insurance leads to less uncompensated care and better reimbursement rates.

The Massachusetts plan is all the rage in the Colorado health reform circles. Reformers blame the uninsured for uncompensated care, willfully ignoring the fact that the majority of uncompensated care is generated by the government run Medicaid and Medicare programs. In Colorado, data from the Blue Ribbon Commission on Health Care Reform suggest that the uninsured pay for 45 percent of the care they receive. The Veterans Administration and Workers Compensation pay another 9 percent. The rest, about $647 million, comes from charitable sources. It amounts to 2 to 3 percent of total statewide health care spending.

As Cambridge Health Alliance and various Tennessee hospitals have seen, public program expansion that encourages people to stop paying for their own health care and health insurance may worsen provider financial stress. When providers do not get paid, they reduce the amount of care they provide.

With so many promising reforms on the horizon there is no excuse for reincarnating failed policies. Reforms that work save up to 20 percent by limiting people's ability to spend other people's money. Reforms that work encourage people to use their own money for small expenses, reserving health insurance for large ones. Reforms that work would save an estimated 10 percent annually by freeing private medicine from unnecessary government regulation. Reforms that work reduce the role of government in health care.

Battered, Not Broken

The March 24, 2008 Colorado Springs Gazette has printed a good editorial on the current health care "crisis":

Battered, not broken
Health system doesn't need more government

As was expected after Sen. John McCain locked up the Republican presidential nomination, media attention has shifted to the Democrats. Recent coverage has focused on whether Florida and Michigan would have new Democratic primaries, Sen. Barack Obama's troubles with his racist minister and the release of Sen. Hillary Clinton's White House papers. It's difficult to remember back to the days of the debates, when commentators would spend hours examining every little difference in the candidates' health care plans. Those plans might not be the lead story in the paper every day, but it's important voters don't forget they're out there.

Both Democratic candidates insist our health care system is broken and a little tinkering around the edges isn't going to bring about the necessary changes. Not surprising, each has a plan to revamp major portions of the U.S. system in an effort ensure every American has health care.

Neither candidate is proposing a National Health Service similar to what England has. That's good, because that system might make health care available to all in theory, but the reality is much different. All Britons are covered by the system, but getting in to see the doctor can mean waiting in line - for weeks. And rationing care is common, according to a Cato Institute policy analysis.

Those with serious conditions and those with diseases that are costly to treat are often shunted aside because of a lack of resources. The Cato analysis cites a London Observer report that said many colon cancer patients (almost 20 percent) who were considered treatable when diagnosed were forced to wait so long for treatment that by the time it was available, their cancer had progressed to the point it was incurable. Efficient, popular hospitals are forced by the government to institute mandatory waits of up to four months so they are not swamped with patients and run out of resources too soon. Democratic candidates aren't pushing such a plan, but activists such as Michael Moore like to trumpet the British program.

What the candidates are proposing, however, is more government intrusion and control of our health care system than what we have now.

The Cato report examined health care systems around the world that have more government involvement than ours, many of which are held up as examples of what our system could be. Cato found that in nearly all cases, after many years of government mandates and control, nations are loosening the reins and allowing more types of market-based policies to address the shortfalls of their health delivery systems.

This, of course, is lost on those in this country who wish to use government to force medical providers to care for everyone. Supporters of such action often cite World Health Organization statistics that rank the United States' health system far down the list of nations. They then use these statistics to argue for more government involvement in health care because, they say, the free market has failed to provide care for everyone. A Cato briefing paper says that's not surprising.

"To use the existing WHO rankings to justify more government involvement in health care is to engage in circular reasoning because the rankings are designed in a manner that favors greater government involvement," it said in the February paper. WHO rankings include variables outside the purview of a nation's health system, so the rankings can't be taken at face value.

When high-ranking officials in foreign governments need serious medical attention, they come to the United States. Doctors from around the world come here to have access to the best medical equipment available. That's because, in spite of the problems our system does have, it's still one of the best available. Pushing it toward more government involvement won't improve the situation. What we need is less government, not more.

I'm glad the Colorado Springs Gazette is injecting some common sense into the health care debate!