Sensible Health-Care Reform (Part 12): Components of True and Viable Health-Care Reform (Part II)

This is the twelfth of a series of commentaries, written from a free market, individual-centered perspective, examining the serious deficiencies of our current health-care system, the underlying root causes of those problems, the looming government fiscal catastrophe secondary to health-care entitlement spending, the failure of the recently passed health-care “reform” to address the grave problems facing our nation related to health-care delivery, the harm the recently passed health-care “reform” will cause to our seriously ill economy; and a proposal for a framework to truly, effectively, and sustainably reform our health-care delivery system. This report continues outlining a framework for true and viable health-care reform.

Components for True Health-Care Reform: – Tort Reform

Successful reform must also incorporate tort reform including capping of non-economic reform. The previously referred to 2009 CBO Tort Reform Report estimated Federal health-care expenditure would decrease by $54 billion over 10 years enacting tort reform that included:
A cap of $250,000 on non-economic damages e.g. pain and suffering, punitive damages, etc.
A cap on rewards for punitive damages of $500,000 or twice the award of economic damages, whichever is greater.
Modification of the “collateral source” rule to allow evidence of income from such sources as health and life insurance, workers’ compensation, and automobile insurance to be introduced at trials or require that such income to be subtracted from the jury award.
A statute of limitations – one year for adults and 3 years for children – from the date of discovery of an injury.
Replacement of joint-and-several liability with a fair-share rule, under which a defendant in a lawsuit would be liable only for the percentage of the final award that was equal to his or her share of responsibility for the injury.

Tort reform would not only decrease private and governmental health-care expenditure but would, as seen in the Texas experience decrease medical malpractice insurance premium cost and improve access to physicians, particularly specialists.

Components for True Health-Care Reform: – Health-Care Insurance Regulation Reform

Legislative components of such insurance reform should include decreasing the number of mandated covered services thus making more affordable basic policies available. Successful reform must also increase competition among insurance companies. By simplifying insurance regulation and thereby decreasing the cost and complexity of selling health-care insurance, more companies would enter the market. Insurance sales should be allowed and encouraged across state lines. More companies competing can only lead to increased customer service and decreased premium pricing. Additional legislation allowing individuals and groups to pool together and negotiate premium price would further stimulate higher customer service and lower rates.

On the other side of the insurance market, insurance companies should be allowed to fairly price risk of utilization of health-care services into their premiums. For the healthy and young, true risk assessment would directly lower premiums. Lifestyle choices and predispositions such as smoking, obesity, sedentary habits, unhealthy eating, drug and alcohol abuse, etc lead to a disproportionate amount of health-care expenditure and should be reflected in the price of the premium. Such premium setting not only fairly treats healthy people and people that have made healthy life style choices, but incentivizes others who have not made those choices to consider them. “Fair” pricing would afford many more young families and individuals the ability to obtain health-care insurance.

It is correctly argued that without “guaranteed issue” or “community rating”, insurance would be prohibitively expensive for those with pre-existing medical conditions or conditions e.g. older age, etc., likely to require medical services. Yet, allowing premiums to be fairly priced for all risk pools would encourage more insurance providers to enter that market, encourage competition, and result in the best pricing for premiums for all risk pools. Still for some or even many in the higher risk pools, insurance may be prohibitively expensive; but allowing pricing to reflect actual risk brings more transparency to that problem. Rather than burying those costs in a “community rating” pool, establishment of state-based or national high risk pools with a government subsidy program for those in need would fairly and compassionately address the issue of those with pre-existing medical conditions. Clearly, such focused government assistance is much preferable to massive takeover and bureaucratic expansion of our health-care system. (The passed bill does create a state-based health-insurance exchange for persons with pre-existing conditions. It is to be funded with $5 billion of Federal money to fund the program until 2014. As it turn out, the chief actuary for the Centers for Medicare and Medicaid Services recently reported that money will run out next year or in 2012. So states that join the program would get financially saddled with yet another unfunded Federal program.)

Components for True Health-Care Reform: – Federal Tax Treatment of Health-Care Premiums

Correcting the tax bias that preferentially promotes employer-provided health-care insurance over individual-purchased (owned) insurance would likely be the simplest reform to enact and yet have a most profound effect. As mentioned earlier, the CBO estimated up to 25% of absent health-care insurance is secondary to change in employment. Without the present tax bias and with the ability to form group association health plans, most individuals and families would undoubtedly buy their own insurance policy on the open market. Not only would the policy be portable and no longer tied to employment but they would choose a policy that best fits their needs and pocketbooks. This reform would have an additional huge beneficial consequence. With individuals obtaining their own health-care coverage, businesses would no longer have all the associated costs direct and indirect, e.g. administrative costs, of providing employee health insurance benefit. That decreased cost structure would make them more competitive in their local, national, or world market. Further, without the huge expense of the health-care benefit, employee take-home wages would significantly rise.

Call to Action: Though passed by an appalling political process and with complete disregard of our Constitution, though containing ineffective and even harmful policy, though disregarding the inalienable rights given to us by our Creator, the passed health-care reform bill is not the end of the debate but rather a new beginning. It is an opportunity to contrast irresponsible policy with prudent policy, to contrast misconceived policy with thoughtful policy, and to contrast policy that places government in the center with policy that places the individual in the center. Get in the fight and stay in the fight. We have learned, the hard way, the consequences of leaving it up to the career politicians. Contact your legislators and demand they exercise the privilege the voters gave them to represent us to effectively address health-care delivery and the other problems facing our states and nation. Learn about the issues and talk to others about the issues. We must join and financially support conservative think tanks that promote traditional American economic principles, personal freedoms, and values; and that shine the light of accountability on irresponsible or faulty government action and policy. Those organizations include The Heritage FoundationThe State Policy NetworkThe Commonwealth Foundation and your state’s conservative think tank (see SPN for your state’s organization). We must join and support our local grass roots organizations like theYork 9-12 PatriotsYork County ActionYork Campaign for Liberty, and others, so we can take back the political process that has become corrupt and ineffective. We must work to bring up, from the grass root level, candidates – principled persons (Republicans, Democrats, and Independents) who will actually solve problems, who will respect the Constitution of the United States, and who will honor the “consent of the governed” entrusted to them by the citizens of our counties, states, and country.

God Bless and God Bless America!

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