Health reform should promote choice, not coerce consumers

In Capitol Review, Notes by Mark Hillman

If you’re unhappy with health care, you’re obviously not alone.  For most people, the problem isn’t availability.  The problem is cost – cost of treatment, cost of prescriptions, cost of insurance, or cost of paying for the uninsured.

For more than 60 years, government has tinkered with the way we pay for health care.  Unfortunately, when government "solutions" fail, lawmakers rarely admit their mistakes and go back to square one.  Instead, they layer more dubious solutions on top of those that failed until the problem becomes so intractable that far more people suffer from the solution than from the original problem.

Last year, the state legislature created the Blue Ribbon Commission (BRC) on Health Care Reform and charged it with divining a proposal to expand coverage, reduce the number of uninsured and decrease costs.  (After that, curing cancer should be a snap.)

A final recommendation is due this November, but the BRC now appears headed toward a nightmare "solution" consisting of higher taxes, lower wages and fewer choices.

The commission chairman says the state may have to resort to a tax increase.  Meanwhile, three of the four proposals still under final consideration include mandates to require all Colorado residents to purchase health insurance or all employers to buy insurance for their employees.

While the BRC could do many things to modestly improve Colorado’s health care climate, coercing everyone to purchase a government-approved health plan isn’t one of them.  Such a mandate takes away from consumers the power to select the coverage that best fits their unique needs and budget.

Employers don’t mind helping their employees pay for insurance, but they don’t want to pick their policy for them.  You wouldn’t want your employer to buy groceries for everyone at work from a one-size-fits-all shopping list — and deduct the cost from your paycheck.  So why do we accept the notion that employers should pick our health insurance coverage using that very model?

The only reason employers provide health insurance, rather than simply giving you the money to buy it yourself, is the federal tax code.  Purchasing health insurance is tax deductible for employers; for employees, it’s not.  If your employer simply reimbursed your for your premiums, the IRS would tax the reimbursement.

Although state lawmakers cannot change the federal tax code, they can certainly tell our congressional delegation that equal tax treatment of health insurance premiums is imperative.

Another practical reason to resist an employer-purchase mandate is job creation and competition.

Most employers recognize that providing health insurance is crucial to attracting and retaining qualified workers.  However, every job has a value based on the goods and services that a worker produces.  If a worker’s production is worth $10 an hour and the job currently pays $9.00 an hour, even a bare bones health insurance plan will drive up the cost of employment by at least $1 an hour.

When low-skill, low-wage jobs no longer pay their own way, businesses have no choice but to consider eliminating, automating or relocating them out-of-state or overseas.

On the other hand, a mandate requiring all individuals to purchase health insurance initially sounds like a reasonable step toward personal responsibility.  

However, such a mandate takes the power to shape the marketplace away from Colorado families and gives it instead to politicians and bureaucrats.  Rather than tailor policies to please customers, insurance companies and special interests will lobby lawmakers to force you to buy the products they prefer.

Moreover, government notoriously underestimates the cost when you and I are paying the bill.  In Massachusetts, officials predicted that mandatory coverage could be purchased for $200 a month; now, it’s closer to $400.  Worse still, many residents who were already covered by insurance now must buy a more expensive policy to satisfy the state’s expensive standard.

Colorado’s health care climate didn’t get into this mess overnight.  Lawmakers and the Blue Ribbon Commission should view reform as a long-term commitment, set modest expectations, and proceed carefully.

If, instead, they are bound and determined to hold a press conference to declare the problem solved, the rest of us will be paying the bill until the next commission comes along.