Fix Health Care Policy

The Real Story on the Uninsured

You hear or read the number all the time. The New York Times breathlessly reports there are 46 million uninsured Americans and President Barack Obama routinely asserts the same number. The Census Bureau estimates, however, do not tell the entire story. The uninsured are a diverse and dynamic population, and the higher frequency of coverage loss is not only a function of the recession, but of the flaws inherent in the health insurance markets, namely the inability of individuals and families to secure and maintain personal and portable coverage. Data released by the Agency for Healthcare Research and Quality (AHRQ) and Centers for Disease Control and Prevention (CDC) enables taxpayers to drill deeper into the problem.

• According to AHRQ’s The Uninsured in American, 1996-2008: Estimates for the U.S. Civilian Nonstitutionalized Population under Age 65 (Statistical Brief #259) the number of non-elderly individuals for the full year in 2007 was 39.9 million.
• That 39.9 million includes 5.9 million children (see Statistical Brief #259) who are either in families wealthy enough to afford health insurance or are already eligible for Medicaid or the State Children’s Health Insurance Program (SCHIP).
• That 34 million uninsured number includes 12 million illegal aliens s who the proponents of H.R. 3200 swear up and down will not receive a single dime of taxpayer assistance through the legislation. (more…)

Tags: uninsured

Principles for Effective Health Reform

Last week we analyzed the pitfalls of the Democrats regulation-heavy approach to health insurance market reform, an agenda that is being sold as offering consumer protections.

There is a better way to frame health insurance markets. Edmund F. Haislmaier outlines a promising approach in “Health Care Reform: Design Principles for a Patient-Centered, Consumer-Based Market.” Haislmaier first identifies problems in the current health care system:

“For all the benefits that it provides in helping people to live longer and healthier lives, America’s health care system seems too costly, confusing, inefficient, and uneven in its results, and it leaves too many people without adequate access to its benefits. Fundamentally, Americans as individuals and as a society intuitively recognize that the present health system could do a much better job of delivering value.”

He then presents six principles that policymakers would do well to follow to address these problems:
1. Individuals are the key decision makers in the health care system.
2. Individuals buy and own their own health insurance coverage.
3. Individuals choose their own health insurance coverage.
4. Individuals have a wide range of coverage choices.
5. Prices are transparent.
6. Individuals have the periodic opportunity to change health coverage.

Haislmaier’s approach would lead to meaningful competition. His principles would redirect incentives towards the efficient provision of high-quality care. As Haislmaier explains:

“… a value-maximizing result can be achieved in health care only if the system is restructured to make the consumer the key decision maker. When individual consumers decide how the money is spent, either directly for medical care or indirectly through their health insurance choices, the incentives will be aligned throughout the system to generate better value in other words, to produce more for less.”

Tags: consumer based, health reform, insurance market, patient centered

Dingell Defense Deficient

On August 6th, Michigan resident Mike Sola confronted Rep. John Dingell (D-MI) at a health care townhall about H.R. 3200′s effect on his son Scott. It is unclear from the exchange if Scott, who is confined to a wheelchair and has cerebral palsy, is enrolled in Medicare or Medicaid. But Rep. Dingell did follow up Mr. Sola’s questions with a letter dated August 11th. Unfortunately the letter is non-responsive to Mr. Sola’s concerns. Here is what Dingell wrote: (more…)

Tags: Rep. John Dingell

Beware the Health Care ‘Nudge’

The White House public relations team has a problem. Where on earth did people get these ideas about government rationing health care? They ask. Why do people imagine they will lose their private health insurance coverage or doctor? After all, the President repeatedly says that will not happen. Period. Why is there such fear out there?

The White House media folks need to look no further than across the street to the Eisenhower Executive Office Building where top Presidential appointees, Peter Orzag and Cass Sunstein hang out. Both have expressed an interest in behavioral economics. Professor Sunstein is the co-author of Nudge: Improving Decisions About Health, Wealth, and Happiness, an interesting book, which emphasizes the official presentation of information in a manner that “nudges” individuals to make certain decisions. (more…)

Tags: Cass Sunstein

Rigging the System with New Regulation

As a follow-up to earlier posts on the so-called consumer protections included  in the bills backed by Congressional leadership, a state level survey by America’s Health Insurance Plans (AHIP) offers additional analysis of the effects of regulation on health insurance premiums.

The AHIP report shows that the states with the three highest premium averages all require community rating and guaranteed issue.  Of course, a range of other factors (such as demographics) affect the price of insurance, but these regulations do play a significant role in driving up costs.  As the report explains:

“…states with guaranteed issue and community rating rules tend to have higher than average premiums. Knowing that they could purchase coverage at any time, younger and healthier people may not do so in sufficient numbers to balance insurance pools.  When this happens, premiums reflect the higher average costs of older and less healthy people, and people with low- or moderate-incomes may not be able to afford coverage.”

In a new article in The American, Joseph Antos of the American Enterprise Institute and I argue that if Congress were to “up the regulatory ante” on private health plans by enacting such restrictive regulations nationwide it would stifle competition, leaving a new public plan with unfair advantages:
“The uniform set of federal rules outlined in the [House health care] bill raises the cost of insurance and dampens, rather than enhances, the scope of competition in the market. Worse yet, what competition is left between the public plan and private insurers would not be fair.”

We go on to write:

“By the very nature of its ‘public’ status, that plan would have serious advantages over its private competitors. Because it would be backed by the federal government, the public plan would be viewed by many consumers as safe and secure. Individuals could trust the public plan to ‘be there for them when it counts.’ The plan would benefit from billions in federal subsidies not offered to private plans. At first, there would be federal ‘seed’ money to force the public plan into established insurance markets. Later, Congress could be counted on to prop up the public plan if it faltered. The plan would be too important to fail regardless of the debt it accrued, since failure would mean millions of people losing coverage from a highly visible government program.”

The Obama administration and Democrats are selling their health reforms as “consumer protections.”  But these “protections” are actually new rules that would limit consumer choice, reduce private sector competition, and inflate insurance costs.  And, making matters worse, at the end of the day, the rules would be rigged to favor the public plan.

Tags: consumer protection, House health care bill, public plan, regulation

Imposing Costly Regulation Is Not Real Reform

President Obama and Democrats in Congress want to impose two costly health insurance regulations nationwide.

The first is community rating, which prohibits insurers from varying premiums based on an individual’s health status. The second is guaranteed issue, which forces insurers to sell policies to everyone at anytime, even individuals who wait until after they are sick to obtain insurance. Community rating and guaranteed issue are designed to raise healthy people’s premiums in order to subsidize the premiums of high-risk individuals.

It is important to work to ensure that high-risk individuals can access affordable coverage. However, community rating and guaranteed issue are such inexact, inflationary, and nontransparent efforts at achieving that goal that they can end up being counterproductive.

States currently regulate health insurance, so to see what effects these regulations could have nationwide, it’s important to look at their impact on state markets.

Dr. Bradley Herring of the Johns Hopkins Bloomberg School of Public Health and Dr. Mark Pauly of The University of Pennsylvania’s Wharton School recently conducted a study “test[ing] for differences…between states with both community rating and guaranteed issue and states with no such regulations.”

The Herring and Pauly findings should give Democratic policymakers pause:
“Overall, our results suggest that the effect of regulation is to produce a slight increase in the proportion uninsured, as increases in low risk uninsureds more than offset decreases in high risk insured.”

In other words, after the regulations were enacted, the number of high-risk individuals who purchased coverage because their premiums went down was somewhat less than the number of low-risk individuals who dropped coverage because their premiums went up.

An editorial in The Wall Street Journal elaborates on the lack of logic behind such regulatory “reforms”:
“ObamaCare would impose on all 50 states rules that have already proven to be failures in numerous states. Because these mandates would raise the cost of insurance, ObamaCare would then turn around and subsidize individuals to buy the insurance that the politicians made more expensive. Only in government could such irrationality be sold as ‘reform’.”

Tags: community rating, guaranteed issue, health insurance, health reform, markets, regulation, States