Why we’re “crazy” about health care choice

Originally published in the Aurora Daily Sentinel, January 29th, 2010.  This version has links to references.

Why we’re “crazy” about health care choice

By Brian T. Schwartz and Linda Gorman

Sentinel Editor Dave Perry dismisses the Colorado Right to Health Care Choice Initiative as “crazy” and says its supporters “clearly have lost” their minds (Opinion, January 21).

The Initiative would prohibit Colorado government from requiring you to purchase health insurance.

Mr. Perry thinks that mandatory insurance is justified because “those without health insurance are driving up the cost of health care for every American.” But these added costs are trivial compared to the amount that mandatory insurance would increase premiums and taxes.

Read the rest of the article at PatientPowerNow.org:  Why we’re “crazy” about health care choice.

More poison, not an antidote: Mandating employer health insurance

President Obama is either misinformed or lying about health care. He said the “free market has not worked perfectly.” There’s a market, but it’s not free. It’s infested with harmful political meddling. One example is government’s favoring employer-provided insurance, a poison to affordable medical care and insurance.

But unions and Congressional Democrats want to intensify the dose with a “pay or play” employer mandate. This would penalize employers for not buying medical insurance for their employees. This is not “reform;” it just entrenches flawed policies. It would violate rights, lower wages, and threaten jobs of minority single moms

Government’s favoring employer-sponsored insurance is the problem, not the solution. When your employer buys your insurance, it’s a non-taxable corporate expense. Employers save by “paying” you with insurance instead of higher wages.

This tax policy coddles insurance companies. They need only please your employer, not you. Most employers offer just one or two plans. Want more choices? If you prefer one of the many plans available at eHealthInsurance.com, you face a stiff tax penalty. Or try changing jobs. Insurers know you’re essentially stuck with your employer’s plan, so why should they please you?

Tax-discounted insurance has turned insurance into prepaid health care. If car insurance worked this way, it would cover predictable expenses like oil changes and replacement tires. You wouldn’t price compare or consider whether services were really necessary. Rather, you’d ask if “it’s covered.” Costs would soar. This has happened with medical care.

The tax bias for employer-sponsored insurance punishes those who incur medical conditions and then lose their job. A pre-existing condition can make them uninsurable.

This can create “job lock,” which stifles entrepreneurship. As Business Week describes: “fear of losing coverage keeps people at jobs .. . so many workers will keep hanging on to jobs they hate. … One single mom in New York, for example, is sticking with her graphic design job solely to retain the health coverage for herself and her son. … Her wish? To start a business doing bath and body products. ‘I feel stuck,’ she says.”

An employer mandate would further stifle entrepreneurs and destroy jobs. It would require a growing business to provide insurance when hiring its 10th or 20th employee. Since the additional employee would impose a huge cost, it might not hire anyone.

In response to an employer mandate, employers would shift this cost to employees by lowering wages. It’s worse for those with near-minimum wage jobs. These workers are “at substantial risk of unemployment if their employers were required to offer insurance,” write economists Katherine Baicker and Helen Levy. Employees “most harmed by mandated employer-paid healthcare are…more likely to be a minority, a single parent, and unmarried.” The employer mandate surely wouldn’t threaten union jobs, as unions support it.

An employer mandate would also violate our rights. Employers create jobs, and hence have the right to hire on terms mutually acceptable to both employer and employee. Politicians should not interfere with this private matter between consenting adults.

Tax-favored employer-sponsored insurance has created enough problems. Mandating it makes them worse. Politicians should not dictate whether you buy insurance directly from an insurer, through a membership group (like AAA), or through your employer. Legislators should both eliminate the tax exemption and decrease tax rates commensurately.

Second-best would be to make all medical insurance and expenses tax-exempt. This would remove tax bias toward excessive insurance coverage. Health Savings Accounts are a step in this direction, but they should be eligible to everyone, regardless of their insurance plan. Such “Large HSAs” would allow consumers to buy medical care and insurance with tax-free earnings.

Removing the tax code’s bias for employer-sponsored insurance can alleviate problems with job lock and pre-existing conditions. While some employers would offer insurance to attract employees, more people would buy policies directly from insurers when still healthy. Customers could choose — as many already do — a guaranteed-renewable policy, so the insurer cannot terminate coverage or raise premiums because you get sick.

The rigorous competition of a free insurance market could yield innovative products that protect against pre-existing conditions. For example, “health-status insurance” would pay for increases in your insurance premiums should your health status change, and you’d retain the freedom to buy a policy from insurers competing for your business. To learn more, look up “‘Health Status Insurance’ Provides Real Alternative to Universal Care.”

Mandating employer-sponsored insurance is wrong. It’s not a cure, but more of the disease: government’s bias for employer-provided insurance. This just benefits unions and politicians at our expense.

This was published in the Boulder Daily Camera on June 28 2009.

HB 1273: Politicians cannot “guarantee” health care

Politicians cannot guarantee healthcare, but by trying they can create an unaccountable and toxic insurance monopoly. So beware of Colorado House Bill 1273, which will be heard by the House Business Affairs and Labor Committee on March 18.  The Rocky Mountain News described this so-called “Colorado Guaranteed Healthcare Act” as a “Canadian-style, single-payer” bill.  A recent <a href="http://www.healthcareforallcolorado.org/candidates_2008/answers.php”>survey finds that nearly one in four state House members advocate single-payer healthcare.  Their support of such politically-controlled medicine is appalling.

Vote No on Ballot Issue 1B, donate your own money

The Longmont Times-Call published the following article of mine in the print edition last Friday.

Voters should oppose Ballot Issue 1B, the “Worthy Cause” tax –no matter how worthy the causes are.  The sales tax for Boulder County non-profits is wrong and should end. It’s wrong for the taxpayers forced to “donate.” It’s wrong for a community that benefits from a marketplace of accountable and effective charities. And it’s wrong for the very people these organizations are supposed to help.

Ballot Issue 1B: “Worthy Cause” Tax, It’s Not Your Penny to Give

The Daily Camera published my article on the 2008 Boulder County Ballot Issue 1B today. (print version)

Update: The so-called “Citizens for a Worthy Cause” that support this are really the very organizations that receive the tax revenue.  See here.

Ballot Issue 1B: It’s not Your Penny to Give
by Brian T. Schwartz

Would you call the police on someone who didn’t donate to a charity that you consider to be a “worthy cause”?  If not, then you should oppose County Issue 1B in this November’s election, which would extend the so-called “Worthy Cause” sales tax.  This tax is immoral — regardless of how worthy the causes are. It is compulsory charity, or charity at gun-point. It is intolerant to people’s values and unfair to charities that must earn our donations. It undermines both the responsibility of donors and the accountability of non-profits that receive forced donations.

No compassion in forced giving

The Rocky Mountain News published a commentary of mine about the inherent immorality of government-run charities and a proposal to challenge such charities to compete with voluntarily-funded charities.

“Universal” Health Care Kills

(Thanks to Amy at the Independence Institute, versions of the following article were published in the Colorado Daily, Hawaii Reporter, and the Salida Mountain Mail.

What good is having medical insurance if you cannot get medical care? Peddlers of “universal health care” — from Hillary, Obama, to Colorado congressional candidate Jared Polis — don’t get this.

“Universal health care” is false advertising for politically-controlled medicine, with government as the “single-payer” monopolistic insurer. But having coverage does not guarantee getting medical care.

Since patients prepay through taxes, medical care appears “free.” Hence, they have strong incentive to over-consume and providers need not compete on price. To contain costs, governments restrict your access to life-saving treatment. In countries with such “universal coverage,” patients die waiting for treatment.

Jared Polis implies he’d represent the worst of us

Update: The Rocky Mountain News published a more polished version of this as a Speakout (web only) on Feb. 27.

Jared Polis is a Democrat running for U.S. Congress representing Colorado’s 2nd District. In a Speakout in Wednesday’s Rocky Mountain News, he writes:

First, let us not delude ourselves into thinking that we have anything close to a “free market” in health care. A free market would allow the uninsured to die on the hospital doorstep rather than provide them treatment they cannot pay for. Having made a moral decision not to allow people in our great country to die in this fashion, let us discuss how to more efficiently provide for sensible universal health care.

Well, at least Polis recognizes that we do not have a free market in health care. Why he chooses to use scare quotes is beyond me, and makes me wonder what he really means. The government interference in the free market he’s addressing is EMTALA, the Emergency Medical Treatment and Active Labor Act. As its Wikipedia entry (linked above) summarizes, this law forbids hospital emergency departments from denying care to anyone with an emergency medical condition.

Government-run auto repair? Yes!

Today The Daily Camera published the following as a Guest Opinion (good choice of headline!) Here is one-line version, & here’s a scan of the print version.

Modeled in health-care debacle, some could clean up

By Brian Schwartz

Sunday, February 11, 2007

“Government-run health care, that’s the model for how to monopolize the auto repair industry.” The men in fedoras looked doubtful. “Continue,” said the driver through cigar smoke. I had no choice, but, now safely in hiding, I divulge this diabolical plan.

The federal and state governments are intent on monopolizing health care. Emulate their path. First, pass legislation to satiate voting blocks dissatisfied with their auto-repair costs and service. Since such disruptions of free trade inevitably exacerbate existing problems and create new ones, they provide a rationale to push more legislation marketed to “fix” them. Repeating this cycle will insidiously cripple a once-competitive market; voters will demand a complete government take-over, even though government created the crisis in the first place. Here`s the scheme:

Make employer-paid auto insurance premiums tax-deductible — just like health insurance. Consider an employee paying an annual $1,000 premium. His federal, state, and local income taxes exceed 45 percent. With employer-paid premiums, he gets the same coverage — while saving $450 on taxes. Such a discount will be popular, and drivers will start demanding legislation to fix problems arising from changing jobs. For you, boss, that means more jobs for your cronies.

Today, auto-insurance premiums are low, while claims are large but rare. Not for long. Why pay car-related expenses out-of-pocket when they can save 45 percent if their insurance covers it? Drivers will demand low-deductible, high-premium policies covering everything from scheduled inspections, oil changes and tire rotations. Insulated from true costs, they will splurge on seemingly “free” services, which will make repair and insurance costs skyrocket.

Consider health care, Godfather. The National Center for Policy Analysis reports that patients pay only 14 percent of costs out-of-pocket. Paraphrasing economist Arnold Kling, this is cost-insulation, not insurance. Between 1992 and 2005, medical-service prices increased by 77 percent while the Consumer Price Index rose only 39 percent. The cost of cosmetic surgery, an uninsured medical procedure, increased only 22 percent despite booming demand. And yet, the RAND Health Insurance Experiment concluded that low deductibles increases consumers` spending, but not their health.

Increased costs will leave many drivers unable to afford automobile insurance. To “alleviate” this crisis, introduce two new government products: Autocare for older car owners and Autocaid for low-income drivers. This will also draw more customers.

Consider medicine. The USA Today reports that “many workers choose Medicaid over insurance offered by their employers because it is less expensive.” Why wouldn’t they? The National Bureau for Economic Research found that Medicaid increases prescription-drug prices for non-customers by 13 percent. Autocare and Autocaid will surely advance government`s hijacking of the auto-repair industry.

On the state level, be sure to have your boys mandate that all insurance policies cover routine maintenance and that all cars are as safe as a Lexus. Sure, costs will explode and thousands will lack transportation, but it satisfies special interest groups, gets votes and jobs for your gang, and allows you to demonize the opposition as “anti-safety.”

Also remember the wonderful combination of “guaranteed issue” and community rating. The first guarantees that a teen driving a muscle car can buy insurance — from the scene of his accident! Community rating ensures that he`ll pay the same premium as a soccer mom for her minivan. This will come at a price of course — no more “futile” repairs for those selfish sentimental drivers who want to keep their grandparents` old car alive.

To see the potential of this, again consider health care. The Council for Affordable Health Insurance estimates that “mandated benefits currently increase the cost of basic health coverage from a little less than 20 percent to more than 50 percent.” Chris Conover of Duke University estimates that health-care industry mandates costs each household $1,500 — with dubious benefits — and is responsible for one-sixth of the daily uninsured. More customers for the government!

Now that government is paying the piper, you can force “car doctors” to play your tune. Red tape will strangle their exercise of car-healing wisdom and expertise; draining joy from their careers and driving them to other professions. Look at Canada`s allegedly ideal system. According to Dr. Sunil V. Patel, former president of the Canadian Medical Association, “physicians across Canada are in an advanced stage of burnout due to work conditions” which “causes them to retire early or pull away from certain kinds of work or simply leave.” The New York Times reported that Patel “attributed much of the problem to technological shortages and the powerlessness doctors feel when patients complain about long waits for treatment.” Long waits indeed.

The Fraser Institute found that Canadians wait over 17 weeks for treatment after a general practitioner’s referral. Brian Day, CMA’s current president, says that “dogs can get a hip replacement in under a week,” while “humans can wait two to three years.” Aim high, boss. Aim high.

That’s it, fellas. Tax exceptions, compulsory charities, and crippling rules — new ones pitched as solutions to problems caused by previous ones. Each increases government’s market share at the expense of individual freedom.

Standing on the sidewalk, I saw the unmarked car speed toward the Capitol building.

Brian Schwartz is an optical engineer in Boulder, where he also studies free-market economics and enjoys improv comedy and softball.

© 2006 Daily Camera and Boulder Publishing, LLC.