Thursday, August 7, 2008

Minority Report: Socialize the Cost, Privatize the Delivery System 

By Jack McHugh

Prepare the expulsion hearings: I'm very friendly to Charles Murray’s plan to essentially socialize most of the cost of health care, but leave it’s provision in private hands. Before the vote to expel, let me explain:

The proposal is contained in Murray’s “In Our Hands: A Plan to End the Welfare State,” which recommends replacing all welfare, Medicare, Social Security, etc. with a single annual stipend of around $10,000 paid to every adult, phasing out above a $50,000 income. Around $3,500 of this would be an annual health insurance voucher, which everyone gets regardless of income.

Murray’s research suggests that with several basic reforms this would provide a lifetime, high-deductable, catastrophic care policy for every person. Among those reforms are ending the “licensure/scope-of-practice Raj,” and making negotiated liability waivers enforceable. The $3,500 voucher wouldn’t cover extraordinary end-of-life expenses, but individuals could use their own money to buy such coverage. Or not, and just surrender gracefully when that time comes.

Certain things that don’t make sense in the current system do when everyone gets a voucher. One is universal community rating – if everyone has insurance then there’s no “free rider” problem, and thus no justification for punishing individuals with higher rates for suffering the “cosmic injustice” of being chronically unhealthy. The issue of “individual mandates” becomes moot – everyone gets the voucher.

Here's why I find this proposal appealing: Limited government purists insist that Medicaid creates the same perverse moral hazard incentives as other forms of welfare, but I don’t believe it's possible to address that with the same eliminate-the-entitlement model that worked for welfare reform. The fact is, Americans just will not step over the bodies of ailing-but-curable indigents and say, “Sorry pal – you made bad choices.” We will pay to treat them, and all our movement's (correct) assertions that "health care is not a right" won't square that circle. This is part of why Murray calls health care sui generis – a reality not encompassed within any wider concept.

In the 19^th century Americans chose to not allow any child to not be educated. We made a huge mistake then, socializing not just the cost of schooling but also its provision. The school choice movement is all about reversing that error. Today, Americans are coming around to an analogous decision regarding health care. I believe that’s inevitable. In consequence, the limited government movement's greatest contribution may be to ensure that even if we socialize most of the financing, the provision of health care will remain within the private sector.

• posted by Jack McHugh
• 9:13 am
• 1 comment

Wednesday, August 6, 2008

Single-Payer "Camel's Nose" Short-Circuits in Michigan 

By Jack McHugh

Categories:  Single-Payer Follies

Beginning last year, what appeared to be a well-funded coalition of unions, health care provider cartels and government-takeover advocacy groups began organizing a socialist camel’s-nose-under-the-tent ballot-drive campaign called the "Health Care for Michigan" initiative. Many of its backers clearly favor a complete government takeover of the state’s health care system along the lines proposed by House Bill 4022, which would establish a "single payer" system.

Here’s the language the "Health Care for Michigan" initiative would have inserted into the Michigan Constitution if had made the ballot and been adopted:

"The State legislature shall pass laws to make sure that every Michigan resident has affordable and comprehensive health care coverage through a fair and cost-effective financing system. The Legislature is required to pass a plan that, through public or private measures, controls health care costs and provides for medically necessary preventive, primary, acute and chronic health care needs."

As the MichiganVotes.org description of the identical version of the initiative introduced in the Legislature (House Joint Resolution WW) explains, "the measure does not define the terms 'affordable,' 'comprehensive,' 'fair,' 'cost-effective' or 'medically necessary'." And "controls health care costs" is clearly code for "price controls."

In other words, this appeared to be a sneaky way to get something warm-and-fuzzy — really fuzzy — into the Constitution, and then spend the next few years fighting in court about what mandates it actually imposes. If the backers got a sympathetic Supreme Court at some point, voilà, a government takeover of the health care system would ensue, and Michigan’s health care choices would no longer be in the hands of individuals and families, but in those of politicians and bureaucrats.

Well, a funny thing happened on the way to single-payer Gomorrah: The backers didn’t come close to getting the required number of signatures, and in June called off the ballot drive. Maybe the initiative’s funders figured that Obama would be prez, Dems would control Congress, and single-payer could be imposed nationwide rather than piecemeal. Maybe they’re right.

• posted by Jack McHugh
• 9:43 am
• 0 comment

Monday, August 4, 2008

Gold Medal Rent Seeker 

By Jack McHugh

Categories:  Insurance Regulation, Michigan

Blue Cross Blue Shield of Michigan may be world’s greatest health-related rent seeker. It’s certainly one of the most effective at that game, controlling some 70 percent of the Michigan health insurance market –reportedly far more than any other state. The non-profit has made campaign contributions to every single legislator currently in office. And the latest item on their rent-seeker’s shopping list is a doozy. Here’s the scoop:

There are two ways states provide subsidies that allow chronically unhealthy individuals to buy health coverage at expensive but not astronomical rates. Michigan currently uses the “insurer of last resort” approach, granting BCBS some $100 million in annual tax exemptions to carry the load. More states use “high risk insured pool” method, where all health insurance companies kick in to provide the subsidies (which are ultimately paid by their customers, of course).

With perhaps the worst legislature in Michigan’s history currently in office, this year BCBSM decided to go for broke. At their behest a bill was introduced that would create an absurd system in which Michigan would have both an insurer of last resort and a risk pool, with all the for-profit insurers paying assessments to tax-exempt BCBSM! The bill passed the House one week after it was introduced (and with 37 out of 52 GOP votes). It’s currently stalled in GOP-controlled Senate, but sly BCBSM advocates in that body are working assiduously behind the scenes, and I wouldn’t bet against them.

Incidentally, BCBSM has succesfully met a challenge that faces all non-profit rent-seekers – how to distribute the loot. Its president was paid $1.6 million last year – light years beyond the $518,574 that was the average for all health plan executives both nonprofit and commercial, according to a survey reported in the Detroit Free Press. Many of its other execs also enjoy high six-figure compensation. Since 2004 salary and benefits packages for the insurer’s top officers have increased by more than 42%.

• posted by Jack McHugh
• 8:09 pm
• 0 comment

Monday, August 4, 2008

SPNers Rock ALEC Health Task Force! 

By Jack McHugh

OK, “rock” is a bit of an exaggeration, but members of free market think tanks have had a positive impact on recent meetings of the American Legislative Exchange Council’s health care task force. In case you’re not familiar with ALEC, it’s the “Jeffersonian limited government” alternative to the National Council of State(ist) Legislatures, which is a huge and venerable organization whose purpose is to ensure that every statist, government-growing idea introduced in any legislature is quickly reproduced in all of them.

I’ve had the opportunity to participate in two meetings of the human services and health policy task force, and can say that, to the extent ALEC matters – and it does somewhat, depending on the current makeup of a given legislature – having free market idealists involved appears to have made a difference.

Serving with me on the health care group are John Graham from PRI in California, Joe Coletti from John Locke in North Carolina and Kalese Hammonds of the Texas Public Policy Foundation. Thanks to our active and vocal opposition, at the last two meetings efforts were torpedoed to put the ALEC seal of approval on a rent-seeking licensure proposal (for home health care aide management companies) and a highly intrusive “government solve the obesity ‘crisis’” package.

On the constructive side, we introduced the concept of negotiable liability as a potential solution to lawsuit abuse, with the first steps taken to craft a model bill. I may have more to say about that idea in a future post.

• posted by Jack McHugh
• 8:01 am
• 2 comments