Wednesday, March 12, 2008

The Future of Health Care

During the current election cycle I have been paying special attention to the debate over health care, specifically that holy grail called "universal coverage." I see many similarities to the debate over prescription drug coverage from 1999-2000. As it was then, the question has become when, not if. Universal health care is coming--it's only a matter of time.

So it was with great interest that I read Michael Tanner's column today at NRO. He points to a small, but significant, twist to the current shape of the discussion. While Hillary still clings to mandatory health insurance, ala 1993, Obama and McCain have focused largely on reducing the overall cost of health care (currently a whopping 17% of GDP).

Obama's plan: "Obama would rely much more on the heavy hand of government. Among other things, he would impose caps on insurance premiums and price controls on drug companies. He would have the government establish national practice standards for doctors. And, he would create a National Health Insurance Exchange as a sort of clearinghouse to make it easier for businesses and individuals to shop for the best insurance."

McCain's plan: "McCain, in contrast, would attempt to promote greater competition among private health insurers. He would allow people to buy insurance plans across state lines, which will help drive down rates. And he would try to shift away from our current employment-based insurance system toward a system where individuals purchase and own their own insurance plans. He would do this by replacing the current tax break for employer-provided insurance with a refundable $2,500 tax credit for individuals, and $5,000 for families. The idea is that once people start to buy their own insurance, they’ll be in a position to insist on lower prices and higher quality — just as they do with every other product they buy."

Obviously, McCain's free market approach would be far better--better, even, than the status quo, where many employees are convinced they have "free" health care courtesy of their benevolent employer. Removed from the pain of high prices, these consumers have little incentive to demand a better deal. Meanwhile, Obama's plan leads us down the same road on which all price control schemes travel--a road that ends in poor quality and scarcity (see Canada, UK, France, etc. for a more detailed picture of these effects).

The larger point is that the debate has shifted (so long as Clinton doesn't rise from the ashes) away from the absolute government health care system we fear most. This is good news for everyone.

Unfortunately, neither candidate has mentioned the single most effective policy to reduce health care costs: medical liability tort reform. Texas capped pain and suffering damages at $250,000. This improved health care almost overnight. The AMA (see link above) notes:

Internists' premiums in states with caps were 17% less than in states without caps. General surgeons' and ob-gyns' rates were 21% and 26% lower, respectively.

A $250,000 award limit in states without effective reforms could result in premium savings of $1.4 billion.

The number of physicians practicing in high-risk specialties is 4% to 7% higher in states with caps.

A 60% increase in medical liability premiums between 2000 and 2003 was linked to a $7.1 billion increase in spending on physician Medicare services.

A 10% increase in claims payments was tied to a 1.5% to 1.8% increase in utilization of diagnostic and imaging procedures.

Conservatives should be fighting hard for market solutions at every turn, but we also need to advocate tort reform. The Democrats will oppose this agenda to their last breath since trial lawyers contribute the most money to Democrat coffers. Nevertheless, this represents the best solution to the problem. Perhaps when more and more consumers have to come face to face with the true cost of health care, the public will be ready to demand real reform. I only hope that government officials have the nerve to refrain from simply enacting more policies to further shield the public from this much needed dose of reality.


Stephen said...

From a March 2007 Club for Growth publication on John McCain:

The American economy suffers from excessive litigation which increases the cost of doing business and slows economic growth. The Club for Growth supports major reforms to our tort system to restore a more just and less costly balance in tort litigation.

Senator McCain's record on tort reform is generally positive. These votes include:

- Sponsored the Class Action Fairness Act of 2005 which sought to curb lawsuits by shifting suits from state to federal courts, by requiring judges to review all coupon settlements, and by limiting attorneys' fees in non-cash settlements

- Voted for a bill that would bar lawsuits against manufacturers, distributors, dealers and importers of firearms

- Voted for a bill that would place caps on damage awards in medical malpractice suits against obstetricians and gynecologists

- Voted for a motion to proceed to a bill that would cap non-economic and punitive damages in medical malpractice suits

This generally positive record, however, is tarnished by Senator McCain's sponsoring of and outspoken support for the Patients' Bill of Rights, which encouraged an increase in the number of frivolous lawsuits filed against healthcare providers. He also voted against the Litigation Uniform Standards Act, which limited the conduct of securities class actions under state law.

Philip said...

Ah, McCain...quite the mixed bag. But I guess that's better than a whole bag filled with, er...bad policies.

Travis said...

Great post. I look forward to reading Tanner's column when I have the time.