How not to reform health care

Over the past couple of months I’ve written two columns about health care reforms that actually hold down costs while improving people’s health care.

Over the past couple of months I’ve written two columns about health care reforms that actually hold down costs while improving people’s health care. One is the system used in Singapore. The second is the corporate plan used by Whole Foods. Both use the same basic principles:

• The health insurance plan is high deductible, and less costly.

• People have money deposited in a “health savings account” that can be used only for a family’s health related expenses. If they don’t use all the money in their account by year’s end, it “rolls over” to the following year and accumulates.

• People use their health accounts instead of insurance to pay for routine health care expenses, which gives them an incentive to shop for good value and helps create a health care marketplace where prices are kept reasonable by competition.

• People pay less if they watch their weight, don’t smoke and stay in shape.

The health reform bills in Congress would take America in precisely the opposite direction, with the government assuming a larger role in people’s health care decisions. Is there a working model for their plan?

Yes, in Massachusetts.

The same goals and principles of the bills in Congress were passed there in 2006. The plan was championed by its Republican Governor, Mitt Romney and the Democrat-dominated legislature, so it had bipartisan support. But politics aside, how has it worked?

The good news is that Massachusetts cut the number of uninsured people by two thirds – more than 97% of the people now have health coverage. The problem is what it took to get there. People were left with fewer choices, higher insurance costs, and higher taxes. Health care costs continue to rise.

Michael Cannon from the Detroit News reports that the costs of private health care premiums are growing about 33% higher than most other states. Why? Because Massachusetts requires everyone to buy health insurance that covers 16 different types of coverage whether you need it or not, such as pediatric care, fertility services, testicular cancer and drug abuse treatment. These mandates have spiked the cost of insurance, making it more difficult to offer affordable insurance plans. On top of that, young and healthy people have to pay higher premiums because state regulations require insurance companies to sell unhealthy people medical insurance for about the same price that healthy people pay. It’s like requiring an insurance company to sell auto coverage to both good and bad drivers for the same price.

A Massachusetts commission set up to contain costs is now recommending that the state moving to a Canadian style “single payer” system to ration medical care (As we learned two weeks ago, British Columbia is “containing costs” by putting a “hold” on thousands of people’s surgeries). The state has tried to conceal some rising costs by shifting them to the federal government, via an expanded Medicaid program. The feds won’t have that option with a national plan.

Massachusetts is one of the most liberal states in the union, but by a three to one ratio, more people think that their health reforms have reduced the quality of care rather than improved it. More people also believe that the reforms have made insurance less affordable rather than more affordable.

States are laboratories that help us see what works and what doesn’t. The closest thing we have to Obamacare is in Massachusetts and it’s floundering. Amazingly, Congress sits by and pretends not to notice. Why are we moving in the direction of a plan that doesn’t work when we have examples of plans that DO work?