Politics is the art of looking for trouble, finding it everywhere, diagnosing it incorrectly, and applying unsuitable remedies.

--Sir Ernest Benn (1875- 1954), publisher, writer and political publicist

Summary—

We must be cautious about declaring more and more aspects of life to be rights subject to government guarantees. A government takeover of healthcare will increase costs. I do not believe government has the authority to force citizens to purchase health insurance. The U.S Supreme Court should rule on that matter later this year.

Health care reform is and should remain a state issue. States can help groups of small businesses and individuals band together to purchase insurance as a group. States should not place mandates on private businesses that force them to provide less cost-effective insurance. Finally, states must pursue meaningful tort reform to limit unnecessary defensive medicine costs.
 

2012 Legislative Update—

The 2012 legislature added to the restrictions on teens going to tanning salons without parental consent. Now a parent will have to be present to give permission for each tanning session.

Joining the Healthcare Compact, a multi-state movement to assume oversight of Federal healthcare programs, generated controversy due to concerns about what it might do both to funding and costs. If the compact does accomplish something, it will change both funding and responsibility for Federally-funded healthcare programs so they are controlled by the State of Utah. Could funding be at risk? No more so than that funding is going to be at risk due to our Federal government’s heightened deficit spending binge in recent years.

We would manage it better in Utah. In implementing our Medicaid bill passed unanimously last year, our state approached the Federal Government about the possibility of increasing the co-pay for emergency room visits in certain limited instances from $3.00 to $5.00. The idea of charging a co-pay for items, even for those with limited ability to pay, was recently championed by Rev. Pamela Atkinson as something that enhances personal responsibility and judicious use of public resources. It’s a great concept. The Feds said no.

We can do better than this. I hope the compact builds up a head of steam and gets the attention of the Federal government.

The 2012 legislature also passed legislation facilitating voluntary transfer of patient records and establishing a pilot program dealing with autism spectrum disorder. This pilot program will help evaluate both costs and effectiveness of treatment options.

Finally, we restructured the Department of Alcohol Beverage Control to improve financial controls and minimize opportunities for fraud.  Policy changes will wait until 2013.
 

2011 Legislative Update—

During the 2011 session we passed Senator Liljenquist's Medicaid reform bill by a unanimous vote.  The plan is to move the program to managed care and set up incentives for participants to save money.  It requires a Federal waiver, and that process is now well underway.  If Medicaid is not reformed, it will one day crowd out the funding for other essential government services. 

During the session we also created the Office of Inspector General of Medicaid Services and established a pilot program to engage some Medicaid recipients in community service while on public assistance.  FInally, we eliminated something called negligent credentialing as a basis for malpractice cases in Utah.  This practice would have permitted patients claiming malpractice against doctors to reach through to the deeper pockets of hospitals as well on the basis of the hospital's decision to allow the doctor to use its facilities.
 

2010 Legislative Update—

The 2010 Legislature continued its leadership on state-based health care reform. As part of a ten-year process, the state is now planning to strengthen its private-insurer-based healthcare exchange and address medical malpractice tort reform through mediation. Unfortunately, with the recent passage of the Obama Health Care Plan, all bets are off. New Federal mandates will likely negate much of the good the state has been doing. Utah has joined a dozen or so states in challenging the constitutionality of the Federal health insurance takeover in court. The central issue is whether the Federal government has the authority to force us to purchase private insurance. I certainly can't find where it says that in my copy of our constitution!

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I am satisfied that it is in the public interest to increase access to health care and health care insurance at reasonable cost. There exist some legitimate ways government, including state government, can and should pursue this end. However, before reviewing what government ought to do, let's first go over what government ought not to do.

What Not to Do

Let’s begin by asking ourselves whether healthcare is a right. In his 1944 State of the Union Address, President Roosevelt proposed an economic bill of rights to go along with the rights to life and liberty guaranteed by the first ten amendments to our constitution. Our time-honored Bill of Rights preserves fundamental freedoms, among them the right of free speech, free press, free worship, trial by jury, and freedom from unreasonable searches and seizures. Roosevelt's liberal agenda was to expand the list of rights we expect our government to secure for us to things such as the right to a good job, a living wage, favorable business conditions, a decent home, medical care and good health, freedom from economic fears of old age, sickness, accident, and unemployment, and finally, a good education. More than a half century of liberal rhetoric later, unfortunately some people are beginning to accept these utopian wishes as if they really were rights—as if it were government's responsibility to enable "every farmer to raise and sell his products at a return which will give him and his family a decent living" (to use President Roosevelt's exact words).

Healthcare was another of Roosevelt's wannabe rights. As admirable as it would be if all of us made voluntary contributions to provide healthcare for needy people, it is clearly not the role of government at any level to force us to do so. Even if the majority of Americans arrive at the mistaken belief that healthcare is a right, nothing in the constitution authorizes government to intrude into areas of individual responsibility such as this.

Government's misguided efforts to interfere with our healthcare industry will only increase costs, not reduce them. For example, the national health care bill would stop insurance companies from denying coverage of pre-existing conditions. We might all agree that it would be beneficial to eliminate exclusions for pre-existing conditions, but we must be cognizant of the fact that requiring insurers to take all comers will increase the cost of health insurance.

If insurers have no control over the actuarial risks they are required to assume, they'll have to increase costs for everyone. Think of it this way: suppose life insurance companies were required to give a policy to everyone at the same cost regardless of health. We would all sign up at the moment we were diagnosed with a terminal disorder. We’d only have to pay insurance for the brief interim between diagnosis and death. Or maybe we would even try to sign up after a loved one had died. The death might well be thought of as a pre-existing condition, so the insurance company would not be able to deny a policy. Given such realities, of course life insurance rates would skyrocket. Likewise, if we take away health insurer’s ability to exclude pre-existing conditions for a defined period, health insurance rates will also go through the roof.

Another troublesome part of the federal healthcare travesty would be forcing everyone to purchase health insurance. Mandating that the uninsured purchase insurance is a bit like requiring the unemployed to get a job. Or the hungry to eat. Or the homeless to rent an apartment.

Some argue that we must require everyone to purchase coverage because otherwise everyone pays. By that same logic, we could conclude that we must force everyone to graduate from college or get a master’s degree, because when a student drops out of college, society is worse off; we all suffer due to his or her typically lessened ability to pay taxes together with a likely increase in this individual’s need for publicly-funded social services.

Of course we would never require everyone to achieve a certain level of education, yet we go down the very same rhetorical path when we argue in favor of mandatory health insurance. The college degree illustration illuminates the logical fallacy inherent in the argument that the presence of a public burden to care for those with less foresight or good fortune justifies stripping those same short-sighted or under-privileged private individuals of their freedom of choice.

So What Can and Should Government Do?

First of all, any government action related to healthcare reform belongs at the state level. The federal government should stay out of it. One of the most important things any state can do is work with private insurers to give small businesses and individuals the same advantages large companies have in purchasing health plans. Policies are priced based on the breadth and diversity of the risk pool, so if the state can help groups of small businesses and individuals purchase insurance as part of a larger group, competitively priced health insurance policies will be more affordable.

Another thing states ought to do is to avoid mandating what kind of coverage businesses must provide for their employees. For example, Utah not too long ago mandated that all companies holding state contracts must ensure that each of its employees (including spouse and dependents) has at a minimum a CHIP-equivalent insurance policy. Based on our company’s research, the way this new rule is written, potentially cost-saving health insurance options are no longer available to us if we want to do business with the state. So with this new mandate, Utah has put outstanding solutions such as Bush's Health Savings Accounts and other free-market approaches like some parts of Senator Bennett's recent healthcare proposals off limits to many.

Health Savings Accounts and similar approaches make consumers aware of the real costs of healthcare. With such plans, we are more aware we are spending our own money, not imagining it's someone else's. Since anything we don't spend remains in our account, we're more likely to shop around and avoid unnecessary treatments.

But the biggest thing we can do to help keep healthcare costs in line is to reform our legal system in order to reduce the exorbitant costs of malpractice insurance and defensive medicine. One fundamental change to the way liability lawsuit damages are awarded would eliminate much of the incentive for frivolous lawsuits. That would be to set a reasonable limit on damages that could be awarded to plaintiffs and their lawyers. Perhaps the limit (comprising actual and compensatory damages) could be three or four times actual damages. Any punitive damages would be payable to the court, to be used for public purposes (and lessen the burden on taxpayers). They would not be paid to plaintiffs nor to their attorneys. However, they would still function as an effective deterrent against future misconduct (which is what punitive damages are supposed to be for). Utah has already joined just a few others in taking steps in this direction. Here, for instance, any punitive damages beyond $50,000 are split 50-50 between the State and the plaintiff. Utah has also imposed limitations on non-economic (i.e., pain and suffering) damages, which, like punitive damages, are also often a source of abusive awards. These policies are a good start, but we still have a ways to go.

Without the incentive of a big payout from their share of punitive damages, attorneys will be less willing to take a questionable case on contingency. Plaintiffs that have to come up with a greater portion of the cost of prosecuting a lawsuit will evaluate more carefully whether it makes sense to pursue a questionable case.

Unfortunately, it appears Obama is working to outlaw the best opportunities we have to get healthcare spending under control; instead he is focusing on cosmetic price controls that will only make things worse. Truly, the first focus of government action must be to reduce real healthcare costs, which is something we can work on right here in Utah. Efforts at price control only (which seem to make up so much of federal lawmakers' priorities), will inevitably lead to scarcity and rationing.

In summary, real healthcare reform will depend on public policy initiatives like those discussed above, which depend on:

• Assisting groups of small businesses and individuals purchase insurance as part of a larger group in order to give them the same advantages large companies have in purchasing health plans,
• Unleashing consumer-oriented market forces through Health Savings Accounts or the like, and
• Meaningful tort reform.

Each of these approaches will eliminate inefficiencies and drive real costs down.