(Centennial Fellow) Legislators talk frequently about the Law of Unintended Consequences but rarely seem to recognize when a bill they support will, if passed, inevitably collide with that law.
Such is the case with House Bill 1021, which would require individual insurance policies to cover a normal pregnancy, childbirth, maternity care, pregnancy management and contraception.
At first glance, that sounds like a reasonable idea: women who buy their own health insurance ought to be able to purchase coverage for pregnancy.
Now stand in the shoes of another woman - one who isn't pregnant, or plans not to become pregnant, or is beyond childbearing years, or is unable even to have children: if state law requires all policies to cover pregnancy, then state law requires everyone to pay for pregnancy coverage, whether they want it or not.
Why is it necessary for the state to require women in the latter group to pay for something they don't want, won't use, or cannot afford?
This bill is sponsored by Reps. Jerry Frangas and Beth McCann, both Denver Democrats. Frangas is one of the nicest people in the legislature, and McCann has demonstrated in other cases that she clearly understands the economics of insurance, both for consumers and insurers. Their sponsorship, while undoubtedly well-intended, is nonetheless frustrating.
Two years ago, my wife and I had our first child. We are both self-employed and buy policies through the individual market. We specifically chose not to buy pregnancy coverage, although coverage for "complications of pregnancy" were standard with our Assurant Health policy.
The reason we didn't want to buy coverage for a normal pregnancy is the same reason everyone should have that choice - a normal pregnancy is not an "insurable event." An insurable event is defined as something that occurs without warning, is unlikely to occur, and is unwanted.
Consumers understand this concept well in every situation except health insurance. We buy home insurance to pay for losses due to fire, hail storms, tornadoes or theft - not to pay for repainting the family room or updating the kitchen. We buy auto insurance to pay for accidents, storm damage or vandalism - not to pay for a new set of tires or an oil change.
Over the years, health insurance has moved away from the concept of insurance and become a complicated financing scheme for everything related to health. That's why it's so expensive.
Pregnancy isn't a complete surprise, most of the time, so my wife and I had saved money to pay for it. (Yes, it's costly, but not nearly as expensive as buying a car and people manage to pay for that without "insurance.")
We visited two hospitals to ask about costs if we paid the bills ourselves. When our son was born, he decided to show his posterior first, so a C-section was necessary. We paid for everything associated with a normal delivery, plus our deductible - about $7,500 in total. Our insurance paid some $8,300 for the surgery and extended hospital stay.
Everyone understands that one way to reduce costs is by eliminating the middleman. That's what we did by paying for normal costs of pregnancy ourselves.
HB 1021 would eliminate that choice for everyone by requiring that every procedure related to pregnancy be financed through an insurance company - the very insurance companies for which so many legislators profess profound disdain.
Worse still, the bill encourages cost-shifting and irresponsible behavior by prohibiting insurers from denying coverage for pregnancy as a "pre-existing condition." Translation: a woman can wait until she learns she is pregnant, buy insurance for a few months to cover pregnancy, and then drop the insurance.
Who pays the bill for that? Everyone else who pays their premiums month after month and year after year - including those women who need affordable coverage for serious illnesses and conditions which, unlike pregnancy, are undesirable and unavoidable.
While HB 1021 will likely help the handful of pregnant, uninsured women who can buy their own coverage, it's unintended consequences are costly and destructive for everyone else.
('76 Contributor) It seems to me that in spite of the near-paralysis of government at all levels on meaningful reforms for health care, our runaway costs need someone’s attention. Fewer and fewer small businesses can now afford anything but an insurance package that has a huge deductible. So as a totally inexperienced drafter of such proposals, but with my share of business experience in the real world, I am so bold as to offer the following simple start: 1) Tort Reform (obviously a difficult area to get passed due to connection of Dems with Trial Lawyers)
a) Lost case the loser pays the opposition attorney's fees
b) the settlement for "pain and suffering" be capped at $250,000 (I believe that is the present cap in Colorado)
c) maximum for plaintiff attorney to participate in award for "pain and suffering" make it 5%. (be willing to settle for 10%)
d) 3 successful suits where malpractice has been adjudicated makes the Doctor uninsurable from any state authorized insurance company.
e) More than 5 unsuccessful suits within one year (from initial filing) bars the lawyer personally from any participation in this type of litigation for 3 years anywhere USA (purpose is to put that lawyer permanently to pasture).
f) Excess reserves accumulated by a “malpractice” insurance company (est. 2X annual Claims) shall be rebated to Doctors as a refund.
g) Standardize accounting for insurance companies so Administrative costs can be tracked and limited to 30% (Make total revenues less 30% to equal the definition of reserves for claims. If the balance accumulates to 2 X annual payout rebate back to Doctor) 2) Unrestricted marketing across state boundaries.
3) Mandatory posting of prices by the doctors for ALL specific procedures - to enable consumer to shop prices and judge if premium is worth going to a "high" reputation Doctor. That does not imply that any price controls would be enacted.
4) One ought to be able to buy a “Cadillac Medical Insurance policy for an “appropriate” price without government penalty to cover the higher priced procedures. Let the market work it out.
5) Standardize “Basic” mandatory electronic medical records - Doctors and health institutions may maintain more detailed records, but those need to be electronic by 2012 and compatible so that if requested by a third party (proper permission) they can be delivered electronically without delay.
6) Medical savings accounts for all and ability to purchase health insurance with PRETAX dollars. This is probably just a start, but keep the "bill" to less than 10 pages and if it requires more, prioritize the items and only pass some with the understanding that there will be another opportunity. Focus should be on cost reduction without destroying the healthcare system.
Bismarck, Prussia's Iron Chancellor, once said, “Laws are like sausages. It's better not to see them being made.” In the case of the current government, bound and determined to take over our health care system regardless of public opposition, never have so many Americans been privy to the making of sausage—and it hasn’t been pretty. One must wonder if this much bribery and corruption are in plain view, what must be going on behind the scenes?
It seems that Liberal Democrats have a very limited number of tools in their toolbox. Their tool of choice always seems to be the one of bribery. Seek out the greatest weaknesses and deepest self-interests of your opposition, offer it to them and they'll sell out anyone or anything. Mary Landrieu, Ben Nelson and the SEIU are but the most blatant examples.
Isn’t this what Democrats have done with large swaths of voters? They give out crumbs in order to chip away at self-sufficiency, and recipients vote their greatest weaknesses and their deepest self-interests even if government dependency is not in their best interest. This is all wrapped in the most amazing paradox of all; the bludgeoning banner of “compassion” so as to claim moral superiority.
That’s quite a feat for an ideology with so few tools in its toolbox.
What’s the solution? Make self-sufficiency popular again, as a function of self-esteem and happiness. Do that, and the Democrat machine is disabled with no tools to restart its engine.
(Regis Student) In an arrogant display on Christmas Eve morning, the U.S. Senate gave the American people a big, dark piece of coal when it passed a massive healthcare package that simply does not address the primary problem with our system: skyrocketing costs.
According to the non-partisan Congressional Budget Office, premiums would rise by as much as $2,000 for a family policy. The government’s Centers for Medicare and Medicaid Services assert a 5.1 percent increase in healthcare-to-GDP spending (to 21.1 percent, currently 16 percent) with reform compared to a 4.8 percent increase by doing nothing. And for those under 30, premiums could rise by 50 or 60 percent, according to Robert Zirkelbach of America’s Health Insurance Plans.
Congress should just scrap their big-government healthcare schemes and instead adopt the “Capitalist Manifesto for Healthcare Reform,” several specific, free-market fixes for healthcare. With two previous articles in this series, I proposed several cost-cutting initiatives: increasing competition for individual consumers and permitting it across state lines, decreasing pharmeceutical regulation and permitting the importation of prescription drugs.
Now, in the final installment, we will examine lowering costs by freeing up medical malpractice, the regulatory system and Medicare and Medicaid, all critical reform components.
Reforming Medical Malpractice: If you’re a doctor, you better have malpractice insurance. Otherwise, you’re taking a huge risk. No matter what happens, even if a doctor does her job right and everything turns out well, you’re in danger of a class action lawsuit, known as “tort.”
According to Dr. Russell Turk, “[A] September survey of more than 5,000 obstetricians/gynecologists conducted by the American College of Obstetricians and Gynecologists' (ACOG) [found that] in Florida, the state with the highest premiums, ob/gyns pay an average of $195,000 annually…The ACOG survey found that 63 percent of ob/gyns report making changes to their practice due to the fear of liability claims or litigation. In addition, 8 percent said they had stopped practicing obstetrics altogether.”
Doctors across the country are in such risk of getting hit with a massive lawsuit that their costs in malpractice insurance are astronomical. I agree with Dr. Turk when he says, “I fully support the idea of doctors being penalized and disciplined when they have been negligent. But you can do everything right and still get sued for a poor outcome.” As he notes, this also affects how doctors practice medicine, like what risks they’re willing to take to save lives.
Medical malpractice concerns also encourage greater use of defensive medicine, meaning doctors conduct tests they wouldn’t otherwise do to prevent lawsuits. In fact, defensive medicine costs the system an estimated $70 billion a year. Doctors should neither be prevented from doing what is necessary to serve their patients, nor forced into doing what is unnecessary and costly, just to protect themselves.
Tort reform, therefore, is absolutely essential for doctors, which will in turn pass on lower costs to consumers and insurance companies. It is imperative that punitive awards for medical malpractice be capped. In addition, those things for which one can go to court to seek damages should be reexamined and limited somewhat to prevent the application of inappropriate pressure on doctors from doing what may really be necessary to serve the needs of their patients.
However, the reforms that are necessary to lower costs and doctors’ concerns cannot all be undertaken at the federal level, due to federalism. Therefore, there are actions that must be taken at the federal and state levels, and the feds should perhaps consider providing incentives to states to do their part. It is imperative that, as part of a comprehensive healthcare reform package, both levels of government begin taking steps to reform the oppressive tort laws that are strangling the nation’s medical practitioners and pushing costs up.
Don’t Hate; Deregulate: I know what you’re thinking. Deregulation…isn’t that what got us into financial crisis in the first place? In fact, as economist Walter Williams points out, “In the banking and finance industries [from which the crisis stems], regulatory spending between 1980 and 2007 almost tripled, rising from $725 million to $2.07 billion.”
Economist Jeffrey Friedman noted, “The financial crisis was caused by the complex, constantly growing web of regulations designed to constrain and redirect modern capitalism. This complexity made investors, bankers and perhaps regulators themselves ignorant of regulations previously promulgated across decades and in different ‘fields’ of regulation.”
Deregulation was not the real cause of the financial crisis; regulation was. Furthermore, the healthcare and financial sectors are entirely different in nature, and the fact of the matter is, healthcare is one of the most heavily regulated industries in the country. According to Duke University’s Chris Conover, a policy analyst at the Cato Institute, the net cost of health regulation is $169 billion a year, after subtracting beneficial regulatory costs. As with any industry, in order to pay for the dictates of the government, institutions of health are forced to raise costs, which extends to consumers in the form of higher prices—a whopping $1,500 per household in this case.
Bear in mind that the regulations I’m talking about are not your essential safety regulations, but $169 billion in excessive, burdensome regulations, like the tort system, FDA regulations like those addressed in Column #2 and regulation of health facilities.
In fact, Conover’s research has shown that while roughly 18,000 Americans die from lack of health insurance, 22,000 die due to health services regulation, and seven million uninsured owe their state to excessive regulation. Cutting back on those unnecessary and cumbersome, but targeted and non-essential requirements/restrictions at both the federal and state levels would free up the market and enable health providers to lower costs.
Fixing Medicare and Medicaid: Medicare and Medicaid are the two most prominent government-run healthcare programs currently on the books. Medicare provides medical insurance for the elderly, and Medicaid is a massive federal-state partnership affording healthcare to the poor and indigent. While both of these programs are well-intentioned, they are financially unsustainable and require updates for application in a 21st century world.
Medicaid is a drain on federal and state budgets. To help control costs, states should be given near-absolute flexibility in determining how Medicaid is to be doled out—not more money. In fact, how Medicaid funding is given to the states encourages fraud and waste. And both Medicaid and Medicare reimburse doctors at as much as 30 percent below the normal rate—meaning costs are distributed to others. Fraud, abuse, waste and inefficiency need to be identified and cut from both of these programs. Fund distribution methods must be altered, and we must reexamine who is allowed to benefit from them, particularly from Medicare.
We need to start taming the Medicare leviathan, which has $89.3 trillion in unfunded liabilities. The layman’s solution to Medicare lies in allowing qualified individuals to opt out of the program if they so choose; slapping a grandfather clause on the 2003 Medicare Part D prescription drug benefit, meaning that those who are not currently on the program will not receive expansionist Part D benefits; and making Medicare means-tested, meaning that folks like Bill Gates would be ineligible for benefits.
Whether or not a person qualifies for Medicare benefits should rely on several factors, principally income level but perhaps also including yearly expenses, savings and the number of dependents. The switch to a means-tested structure should pertain solely to those who are currently under the age of 50 or 55; that way, all who are already anticipating on entering the Medicare program soon will be able to. The program will slowly work its way down, and the increased cost burden it shifts to the private healthcare industry will shrink as a result.
By taking these three critical steps toward reforming what we've got right now and thereby expanding freedom in the marketplace, we will undoubtedly be able to pull the brakes on skyrocketing healthcare costs as our system speeds on its way to the cliff of no return.
Jimmy Sengenberger is a sophomore at Regis University, where he hosts an Internet radio show and organizes for conservative causes. This is the third in a series of columns proposing specific, free-market alternatives for healthcare. To see the previous installments, click his byline at the top.