RMN: Liberty is best prescription for health care

As published in the Rocky Mountain News:

At the recent Colorado Health Care Summit, Barack Obama’s Cabinet pick Tom Daschle said his boss’s “commitment to changing the health-care system remains strong and focused.”  But in the wrong direction.

Obama has stated that “capitalism is great for consumers” when they have “many alternatives,” when customers, “not government bureaucrats … are the judges of what best serves their needs.” Obama’s health insurance proposals fail these standards and would fail patients.

Obama would further empower government bureaucrats to judge what insurance is best for you. By increasing private premium costs, new controls would drive patients to Obama’s proposed “new public plan.” This would make way for what Obama would want if he could “start from scratch“: A “single-payer” government monopoly on health insurance. This is the opposite of the “many alternatives” that Obama says are “great for consumers.”

Before Medicare, retirees bought voluntary insurance in increasing numbers. Medicare killed this trend and soon monopolized the market. Obama’s proposal to expand eligibility for Medicaid and the State Children’s Health Insurance Program would coercively increase government’s dominance in low-income and children’s insurance markets.

Politicians capture these markets by making private premiums more expensive with burdensome regulations, and then offering tax-funded government-run insurance to many who cannot afford these premiums. Obama’s insurance controls would continue this strategy.

Obama would subject all insurance to new national mandates, letting government bureaucrats decide what insurance is good for you. The result? Look at Massachusetts, where the average family plan costs almost $17,000, compared to $5400 in Colorado and $3,000 in Wisconsin, according to America’s Health Insurance Plans. The Boston Globe reports that “mandates are helping to drive up costs, making coverage unaffordable.” Residents with policies that don’t meet “minimum standards set by state regulators could face a hefty tax penalty.”

One mandate would force insurers to sell policies to all applicants, while another would forbid charging different premiums based on the customer’s health. These controls have dire consequences: “a rise in insurance premiums, a reduction of individual insurance enrollment, and an exodus of health insurers” from the market, concluded The Milliman actuarial firm.

Having driven out competition, politicians would use tax dollars to expand Medicaid and SCHIP for the poor. For every ten children enrolled in SCHIP, six dropped private insurance to do so, reports the National Bureau of Economic Research. Like Medicaid, SCHIP is a “low-wage trap” that punishes parents for increasing their income – which makes them ineligible for government insurance.

Insurance for retirees, the poor, and kids – government insurance has squashed competitors in these markets. Why has Obama proposed a new tax-funded “public plan”? “So people can opt out of private insurance,” says New York Times columnist Paul Krugman — and hence monopolize all health insurance. And the insured will opt out. Insurance companies cannot compete with government-run insurance, which can keep premiums low by forcing taxpayers to subsidize them.

Obama says his plan “strengthens employer-based coverage.” But government’s favoring this has been disastrous. The tax exemption for employer-provided insurance has turned insurance into prepaid health care, so people consume medical care like business travelers on the company expense account.

It also coddles insurance companies, who know that for you to buy a competitor’s product; you must either change jobs or pay a stiff tax penalty plus the full premium. As Obama’s own economic advisor Jason Furman says, this tax exemption “reduces competition and choice for enrollees that could otherwise lead to better-designed insurance plans.”

Government-favored employer-based insurance is bad enough. The single-payer insurance monopoly endorsed by Obama and others is worse. If you don’t like single-payer, you cannot escape by changing jobs. You must leave the country.

President-elect Obama should remember that “customers—not government bureaucrats … are the judges of what best serves their needs.” He should eliminate damaging laws that lead to a government insurance monopoly. This would advance real change that is truly “great for consumers”: economic liberty.

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