Skip to content
Menu

Freer Markets, Not More Government, to Reform Health Care

In thinking about the health care reform debate, I recalled my days as a Congressional staff member during the Carter administration. Here’s a look at what President Jimmy Carter told Congress and the American people in his State of the union Address on January 25, 1979:


A responsible budget is not our only weapon to control inflation. We must act now to protect all Americans from health care costs that are rising $1 million per hour, 24 hours a day, doubling every 5 years. We must take control of the largest contributor to that inflation: skyrocketing hospital costs…We must begin to scrutinize the overall effect of regulation in our economy. Through deregulation of the airline industry we’ve increased profits, cut prices for all Americans, and begun–for one of the few times in the history of our Nation–to actually dismantle a major Federal bureaucracy. This year, we must begin the effort to reform our regulatory processes for the railroad, bus, and the trucking industries.


America has the greatest economic system in the world. Let’s reduce government interference and give it a chance to work.


Thirty years later, we are fortunate that inflation is under control, though the budget deficit is far worse now than ever before in history. We’re not dismantling the bureaucracy, we’re adding to it (something that occurred during George W. Bush’s administration and is unabated during the Obama administration). The latest Congressional Budget Office (CBO) analysis finds the Obama proposal before Congress will increase, not cut, the cost of health care. But rather than reducing government interference and giving the greatest economic system in the world a chance to work, Congress is debating a government-run health system.


It is instructive to examine who the uninsured are. Writing in the New York Times, former Treasury Secretary Paul O’Neill said it would “help them [members of Congress] to understand the problem if we assembled the data, by House district, on hospital-acquired infections, medication errors and other waste indicators. They are more likely to push for the right sort of change when they realize that people they know and represent are being hurt or killed by practices we know how to stop.”


Columnist George Will tried to quantify the uninsured on a recent television program. “Fourteen million of them are already eligible for other government programs and haven’t signed up. Ten million are in households with household incomes of $75,000 a year and could afford it if they wanted to. Furthermore, an enormous number in that 47 million are not American citizens. Sixty percent of the uninsured in San Francisco are not citizens.” He notes, “1,300 entities offering healthcare plans in this country”.


What will the addition of one more – a government plan – change?


Take a look at what has happened to the property and casualty (P&C) insurance business in Florida when Governor Charlie Crist (R) put a government-run insurance program in place. It drove private carriers out of business and increased premiums. Crist created the Citizens Property Insurance Corp, a state-run non-profit Florida P&C company. Premiums are going up 10 percent this year. Since 2007, the number of private insurance companies writing new policies in Florida has declined from 42 to 36.


Whether it is a government-run program, or a non-profit co-op, it is unfair government competition with the private sector. And it will have an adverse impact on Virginia. Consider these findings from an analysis of H.R. 3200, the health care reform bill currently before the U.S. House of Representatives, conducted for the Heritage Foundation by the Lewin Group, a health care policy and management consulting firm:
– 55 percent of privately insured Virginia residents would transition out of private insurance.
– 60 percent of Virginia residents with employer-based coverage would lose their current insurance.
– 84 percent of Virginia residents in a health insurance exchange would end up in the public plan.
– 29 percent of the uninsured in Virginia would still lack coverage.
– Physicians in Virginia could see their net annual income decline by $350.2 million, an average loss in income of $14,537 per physician.
– Hospitals in Virginia could have their net annual income fall by about $2 billion, with hospital total margins dropping to -3.5 percent.

There are private alternatives to government run or sponsored health care that should be implemented first. If these market-based approaches (Jimmy Carter’s “Let’s reduce government interference and give it a chance to work”) don’t solve the problem, Congress can come back in a few years and make improvements.


First, car insurance and life insurance are offered on a national basis. Does one really believe health care is not interstate commerce? While Federal regulation is usually less desirable than state regulation, there is little market or Constitutional justification for 50 states independently regulating health insurance. The current system prevents simple, yet profound solutions, such as association health plans. Say you are a small, independent retail store owner. Today, it is illegal for you to band together with other retailers from across the Nation, say through your national trade association, to create a national pool to purchase health insurance for your employees, using the buying power of a large group. This reform proposal has been blocked in Congress for years and was recently rejected by the Senate Health, Education, Labor and Pensions (HELP) Committee.


Second, tax incentives for individuals to create health savings accounts (HSAs) should be expanded.


Finally, whereas health insurance is a tax deductible business expense to corporations, that benefit is not available to individuals under the current IRS Code. That should be changed to empower individuals to purchase their own insurance in the market.


Health care is 1/6 of the U.S. economy. Haven’t we had enough Federal buy-out and take-over of significant industries and sectors of our economy? While an individual making more than $250,000 per year may be among the wealthiest in America, what about small business owners whose enterprises are Subchapter S corporations and whose personal taxes include their company’s income – should they really have a tax hike to pay for health care?  That seems counter-productive.


Perhaps it is time for a little of Jimmy Carter’s down home common sense about reducing government interference and giving the market a chance to work.

Join Our Email List

Name(Required)
Address
Sign me up for:
This field is for validation purposes and should be left unchanged.