The Health Care Summit kicks off tomorrow and President Obama already unveiled his new health care proposal earlier this week. The Summit is meant to be bipartisan meeting between Republicans and Democrats and an opportunity to find common ground and share reform ideas.
That sounds lovely. However it will certainly be difficult to find any common ground in the President’s latest plan.
Among the proposals included in the plan is a measure to create a Health Insurance Rate Authority, a body in charge of capping premium rates insurance companies can charge.
Why is it that every government solution begins with the creation of a new bureaucratic entity?
A true solution to the growing problem of rising health insurance premiums would begin with the recognition of the underlying problem. One of the reasons private health insurance premiums continue to rise is that Medicare and Medicaid do not pay full reimbursement rates to hospitals and health care providers. The result is hospitals and providers charge private insurers higher rates in order to meet their operating costs. Those higher rates are passed on to policy holders through higher premiums.
The proposed solution to cap premium rates does not address this problem. It does not address the rising cost of health care or the increased use of medical services. It also does not address the unfunded liabilities of government programs such as Medicare and Medicaid. Since the government won’t change the rate at which providers are reimbursed by Medicare and Medicaid – because that would mean a direct and unpopular tax increase, then the only alternative outcome is insolvency and ultimately bankruptcy for private health insurance companies.
Additionally many states have already created measures to regulate private health insurance companies. Health insurers often have to request permission from the state before they increase premiums. Hence this measure would remove authority from the state and transfer it directly to the federal government, rendering an already ineffective process substantially more inefficient.
On March 1st Medicare payments to doctors are scheduled to be cut by at least 21 percent. The reasoning is that cutting provider costs will contain Medicare spending and provide a clear and veritable means to fund expensive health care reforms being proposed by President Obama and the Democratic majority. Even though these types of unpopular payment cuts have been stopped in the legislature many times before, Democrats refuse to eliminate the proposition entirely because of the fact that it is an easy alternative in a quickly shrinking pool of cost containing measures.
How will cutting payments to physicians help heal our health care system?
The answer is it won’t – and will certainly make matters much worse.
One of the biggest challenges facing the health care system is the shortage of practicing primary care physicians. With fewer doctors, patients have less access to care. A recent article cites a study conducted by the Journal of the American Medical Association which notes that there has been a substantial decline in doctors’ total number of work hours per week in the last decade, coinciding with declining pay rates. In fact, perhaps not surprisingly, the study shows that doctors who worked in cities with higher payment rates worked longer hours than those with lower rates.
Longer wait times and decreasing quality of care will be the only result of fewer physicians taking on more and more patients. One of the main targets of health reform is to improve access to care in the system. So it seems rather counterintuitive for government to create more barriers to achieving that very goal – in fact you could say it’s an attempt to solve a problem by creating an even bigger problem.
According to Alan Reynolds, senior fellow at the Cato Institute, the federal stimulus actually added about 2 percentage points to the unemployment rate. The jobs the stimulus was claimed to have created or saved can be mostly attributed to extending unemployment benefits and bolstering government programs such as Social Security and Medicaid.
Additionally the 4th quarter GDP report notes that GDP gains were attributed to private and fixed investment and not federal spending.
Yet Gov. Perdue is still calling the stimulus a success that “saved the country from a tremendous catastrophe” and continues to lobby for even more federal money to fund infrastructure and transportation projects.
All the while North Carolina’s unemployment rate continues to increase. According to the North Carolina Employment Security Commission’s latest reports unemployment increased to 11.2 percent in December – an overall 3.2 percent increase in the past year.
The model of government inefficiency? Yes, and here’s why:
The State Division of Motor Vehicles will not renew a vehicle registration if the vehicle has not been inspected first. In fact, if you try to make a payment to renew your registration it won’t be accepted. Most people in North Carolina still renew their vehicle registration by mail. According to an N&O report, one in every four renewals will be rejected, that amounts to about 22,600 car owners every month.
Instead of rejecting your payment and mailing back your check directly, the DMV goes through a multistep process whereby your check is sent to the bank, your renewal processed and rejected through a computer, and a refund check mailed back to you. The entire process can take up to a month.
The result is car owners often have to send in two or more renewals until their registration can be processed (and often before they receive refund checks), valuable personnel hours are wasted on unnecessary tasks, and revenue collection is delayed. Once again, it is clear that excess government regulation does nothing more than waste valuable time and resources – and the DMV never fails us as the quintessential example.
Federal health care legislation may be stunted, but states are not taking any chances. More and more states are proposing legislation set to counter any government imposed health insurance mandate on individuals or businesses. Less than a month ago 25 states had drafted some form of counter health care legislation. North Carolina’s version: the Health Care Protection Act (HCPA).
Today the Associated Press reports over two-thirds of the states have drafted some form of legislation to protect their citizens from federally imposed mandates.
It remains uncertain whether state legislation would have the force to trump federal law. More importantly, however, is the fact more and more states are taking action against the attack on individual and states’ rights – and realizing reform doesn’t have to come at the expense of liberty.
North Carolina’s Medicaid system is in a deep financial hole, a story that is gaining wide coverage (see recent article in Business Week). The state is over budget on Medicaid by more than $250 million, putting legislators in a serious bind, as the program was budgeted to cut more than $500 million in services this year.
One of the biggest problems facing the $10 billion program, which is both federally and state funded, is the inability of the system to provide for proper oversight and ensure services are going to those most in need. In the first 6 months of the fiscal year the state had already overspent by $188 million, even after substantial cuts to program providers.
The state is under pressure to continue making cuts before the year is up which could leave thousands of patients needing in home care without necessary services. Providers continue losing money on every patient, while the state sinks deeper into the Medicaid hole.
It seems impossible and rather unbelievable that the centerpiece of federal health reform legislation is to continue cutting Medicaid reimbursement to states, while rapidly expanding the system to cover more than 20% of the U.S. population.
N&O reports the state’s annual Debt Affordability Study released today finds that North Carolina can only borrow $9 million dollars a year and remain within guidelines that maintain debt at 4 percent of the state’s budget.
To put this into perspective $9 million dollars amounts to less than 1 percent of the $1.7 billion in debt the state has accrued solely as a result of high unemployment this year alone (ranking 6th in the nation).
How does this fit in to the extensive transportation and capital city building project plans – not mention the tremendous cost of proposed health care and environmental legislation?
The Heartland Institute reports that a penalty included in both the House and Senate health care bills could result in premium increases to low and middle income married couples of up to $2,000.
Those couples whose combined income exceeds 400 percent of the federal poverty level will receive limited subsidies and have no caps on their insurance premiums – the same penalty will not apply to individuals. The penalty would affect those who would purchase insurance through new exchanges created in the bills, an estimated 17 million people, and possibly millions more as more businesses shift to government exchanges to reduce costs. No penalty applies to unmarried couples living together.
These types of discriminatory penalties, although deeply hidden in dense health care legislation, could have long-term adverse effects on the future of marriage, family, and society.
The Mercatus Center and George Mason University Professor Russ Roberts along with filmmaker John Papola have created a rap video about the economic crisis – Fear the Boom and Bust. How does one convey the importance of the battle of ideas that have steered economic policy for decades? More importantly, how do we make it relevant to the next generation? Not with books or charts, instead, one rap song at a time. Hayek and Keynes as you’ve never seen them before.
Under the Dome reports, North Carolina House Minority Leader Rep. Paul Stam and Senate Republican Leader Phil Berger announced plans to develop state legislation entitled the “Health Care Protection Act” that would counter the Federal government’s move to force individuals to purchase health insurance. They argue people should be free to choose their own insurance plans and have the option to pay out of pocket for their medical expenses.
Do states have the power to opt out of a federal law? It is arguable they do if the federal law is unconstitutional. Imposing individual mandates can easily be construed as a direct attack on our basic freedoms, as stated in the 10th amendments to the U.S. Constitution, “The powers not delegated to the United States by the Constitution, nor prohibited by it to the states, are reserved to the states respectively, or to the people.” And to many, this action by the Federal government to impose costly mandates on individuals in a dire economic time is doubly offensive.
One thing is clear; this radical erosion of our liberties has not only shifted the issue of individual rights to the center of the health care debate, but has also brought what seems the long forgotten issue of states’ rights back to the forefront of political discourse.