Health Care

Health Care Freedom in Jeopardy

December 5, 2008

Greg Scandlen

Those of us who are concerned about health care have a lot to worry about.

Sen. Ted Kennedy has been rushing to put together a comprehensive reform package as his final legacy. At a bare minimum it will involve:

• A mandate on all Americans to buy health insurance;
• A mandate on nearly all businesses to help pay for it;
• Creation of a national health insurance exchange as the sole or the primary source of purchasing coverage;
• Strict regulation of the private insurers who may offer coverage through the exchange, including minimum loss ratios, minimum benefit requirements, prior approval of premiums, guaranteed issue, and modified community rating;
• Mandatory use of health information technology, pay-for-performance reimbursement, case management, and quality assurances; and
• A federal “reinsurance” program that will absorb expenses in excess of a certain level in exchange for a premium paid for by health plans and self-insured employers.

All of this is simply creating the infrastructure for a new system. Congress may stop there and catch its breath, or it may begin adding new subsidies and taxes, depending on fiscal conditions at the time.

Mr. Kennedy will try to preempt any Obama health proposal by having his package ready to go and introduced as legislation before President Obama even has his cabinet in place. It will sail through the House, and Democrats in the Senate will be able to attract enough Republican support to break a filibuster.

Mr. Kennedy may or may not survive long enough to see the bill enacted, but in either case there will be a strong emotional component to the effort as a way to fulfill the lifelong dream of “the Lion of the Senate.” It will be enacted by June 2009.

That’s the easy part. The hard part—in fact, the impossibly difficult part—will be in implementation. As we have seen in Massachusetts, setting up such a system is a nightmare. And Massachusetts had the distinct advantages of dealing with a much smaller problem and using tons of federal money to soften the blow. Imposing such a system on the entire United States will be far more daunting than sending a man to the moon. The entire enterprise may very well collapse at this point.

The stakes are enormous:

• There will be no place for brokers and agents in this system. They will be replaced by federal bureaucrats.
• Physicians and hospitals will bear the entire brunt of “cost containment.” They will be closely monitored to ensure they perform only those “evidence-based” services that have been approved by federal bureaucrats.
• Employers will be expected to pay the costs of covering their employees, without having any control over what benefits they get or how much it will cost.
• Health plans will be strictly controlled as to what benefits they may offer, how much they may charge, and what administrative services they may provide.
• Consumers will have a limited choice of health plans and no ability whatsoever to affect their spending. You will not be allowed to use your money in some other, more important way to benefit your own family.

If you liked Fannie Mae, you will love this system.

Now, some of us will get cagey and try to play the odds: “If I can get a seat at the table, maybe I can tweak this a little so I will come out ahead.” Reports are that some health plans are already thinking that way. They see mandatory coverage as bringing in billions of new revenue and reduced administrative costs by not having to pay broker commissions anymore. Maybe so, but they will be handcuffed in what they can and cannot do. They will no longer be free to innovate or develop new markets. They will be confined to providing cookie cutter policies approved by the federal government. They may have a secure source of revenue, but at the price of sacrificing their freedom to think, to act, to create, to innovate, to contract, and ultimately to profit beyond what a federal bureaucrat thinks is appropriate.

That is a prisoner’s bargain: I will live in a cage in exchange for a cot and three squares a day.

That is the trade-off we all will face. Are we willing to sacrifice our freedoms for some crumbs from the federal government?

The days of tiddly winks are over, folks. This is the big time. Get actively involved right now or suffer the consequences.

Greg Scandlen is the founder of Consumers for Health Care Choices. One of the nation’s leading experts on health care, he has worked for several Washington-based think tanks and testifies frequently before Congress.