In response to this editorial in the Chronicle, I sent the following letter:

re:  "Throwing more dollars at a broken health care system"

In describing the work Congress is doing to "reform" the US health care system, Dr. Ho makes a good diagnosis:  the current health care system is "broken" -- riddled with inefficiencies, and rapidly rising in cost.  Unfortunately, her prescription is based on an incorrect starting premise.

Rather than depending on policymakers "create a health care system" that would "take the politically unpopular action of telling the public" which medical processes to which they should have access -- putting medical decisions in the hands of politicians and bureaucrats, and paid for by taxpayers -- a better approach would be to put medical decisions in the hands of patients who have a financial stake in acquiring all the information and making an informed decision.

Because a third party (either the insurance company or, in nearly half of all cases now, the government) ends up paying for medical services, individual patients have no incentive not to " want access to every treatment prescribed by their physician".  A person eating dinner on an expense account rarely worries about frugality.

Rather than creating a complex government-imposed health care system, a better approach would be to empower individuals and remove barriers to a free, competitive market, in which consumers have a direct incentive to be better stewards of health care expenditures (while maintaining insurance coverage that fits their respective needs) and insurance companies have a direct incentive to offer better, more innovative options at better prices.

Let's return the power to consumers, not politicians, bureaucrats, and corporations.

Sincerely,
Dave Smith
Houston, TX

When he signed the $787 billion "stimulus package" in February (officially:  the "American Recovery and Reinvestment Act"), President Barack Obama claimed the bill would be "putting Americans to work doing the work that America needs done in critical areas that have been neglected for too long –- work that will bring real and lasting change for generations to come.” 

Creating jobs never tasted so bad, because as the unemployment rate has soared to 9.5% since the passage of the stimulus bill (from around 8%), the government has succeeded in spending millions on ham and cheese.  According to  Agriculture Secretary Tom Vilsack, the US government has used "stimulus" dollars to purchase 760 thousand pounds of ham ($1.19 million) and nearly 840 thousand pounds of mozzarella cheese ($1.56 million).  The government also bought an unknown amount of "canned pork" for $16.8 million.  Hmm.... "canned pork"?  Let's hope this doesn't mean the government has been confiscating our paychecks to buy Spam -- I'd rather not think about what kind of "real and lasting change" that might bring to "generations to come".  At least it will the Monty Python song going strong.

Your money at work.

The debate over Obama's government-centric health care "reform" plan continues in earnest.  In "Where to Begin? Part 1", I detailed how the 40 million-plus number is overblown; Deroy Murdock reached a similar conclusion writing for National Review Online, actually whittling down the number of uninsured even further through unused (but eligible) access to current programs like S-CHIP and Medicaid.  But the real central issue in the debate for most people isn't about access to health insurance, it's about costs and worries about the overall system.

Central to the debate is what form "reform" should take.  Unfortunately, the plan being formulated by Democrats in Congress moves markedly towards a nationalized system, and in direct contradiction to terms and promises laid out by then-candidate Obama.  For example, in studying the 1000-plus page bill under consideration in the House of Representatives, Investors Business Daily uncovered a silver bullet: a prohibition on private medical insurance plans.  Yes, that's right:  an outright prohibition on new private plans, or changes to current plans.  Like your current health care coverage?  You'd better, because if "Obamacare" passes, you're stuck with it, or a government plan.

The House plan mandates that individuals purchase health care insurance, with mandated minimum levels of coverage -- regardless of what the individual actually wants or needs.  Of course, nowhere in the Constitution is government given the authority to mandate purchase of health insurance, nor to outlaw private coverage.  This massive intrusion on individual liberties is chilling in its brazenness and its scope.  But liberty considerations aside, the House plan simply isn't even good public policy.  Rather than increasing competition and giving individuals more choice and control over health care for themselves and their families, rather than getting rid of the World War II relic of health insurance being tied to an employer, it takes the exact opposite approach.  The plan creates new bureaucracies, by some counts as many as 29 new boards and commissions.  Don't like having to deal with the bureaucracy of your HMO?  Imagine replacing that with government bureaucrats.

The House plan, as mentioned above, keeps health coverage tied to employers, with businesses being forced either to provide health insurance to its employees, or else paying a payroll tax to subsidize the so-called "public option" -- the government plan that will "compete" with private plans.  Unemployment is already up to 9.5%; how many employers are going to be hiring workers, knowing that they face either new requirements for health care coverage for those employees, or face a new tax?  In the face of high unemployment, is it really an intelligent idea to make employment more expensive?

A better way to expand coverage and reduce costs is to remove government obstacles on the market rather than erecting more of them.  Several simple changes could increase competition among insurance companies for the consumers' dollars.  These changes would empower individuals and families rather than government legislators and bureaucrats, and rather than corporations enjoying the current market that has high hurdles to access.

The first step is to empower the individual to choose his own coverage.  Institute a simple tax credit for purchase of an insurance plan; one amount for an individual, a larger amount for a family plan.  You could make the credit refundable, with the extra amount going to a Medical Savings Account; the account could accrue interest, providing an incentive to shop around for a less expensive insurance plan that meets the needs of the individual or family, as well as an incentive to shop around for medical care itself.  It would also create a market similar to that for car insurance, where companies compete on price as well as offering innovative new plans to attract new customers. 

Currently, as mentioned above, most people get their insurance through their employer; but a company doesn't have the time nor the incentive to look through the myriad of available programs to find the one that meets the needs of each individual employee, so employers try to find a good deal on coverage most employees will find acceptable.  Setting new customers out on the market will not only work to keep prices down and spur innovative new coverage options, but it could spur new companies getting into the mix, further spurring competition.  Perhaps, say, GEICO would decide to bring the gecko and the cavemen into a new market.  That might be bad for commercials, but ultimately good for the consumer.  And, of course, this wouldn't preclude businesses from helping provide health insurance for its employees; the deduction would still be there, with the employee having the choice of how to exercise the deduction.

Secondly, government should remove obstacles to buying health insurance across state lines.  This step is mentioned in the Deroy Murdock piece referenced above, and has been advocated by free market reformers for years.  Living in Texas, I can only buy health insurance from companies certified in Texas.  But what if I want a plan from a company certified in, say, my home state of Tennessee?   Perhaps I would like being in the same plan as my parents, or my sister and her family.  Why shouldn't that be an option?  Opening up the market would lessen the power of insurance corporations to influence state regulatory boards through campaign contributions and other means.  It would, of course, also lessen the power of those regulatory boards, in favor of the consumer.

Thirdly, the government should remove obstacles to group plans.  For example:  many architects are self-employed, and therefore it is difficult for them to obtain health insurance.  Suppose the American Institute of Architects wanted to create a national pool of its members and use that strength of numbers to negotiate for health insurance plans.  Wouldn't this be a huge boon to the uninsured?  Advocacy groups as varied as the Chamber of Commerce or the NAACP or the American Bar Association might decide to provide members with coverage.  The result would be a more coverage for more people at less cost, and wouldn't cost the taxpayers a dime.  The reason it doesn't happen now?  Government prohibition.

Implementing these three simple steps would help to cut costs and increase coverage, while giving individuals and families more freedom to seek the types of care that they want and need.  Of course, giving individuals more freedom means giving the government and corporations less power.  Herein lies the opposition to these proposals.