Tag Archives: tort reform

Community Conservatism: Healthcare Under Fire

The "A"CA - Good for Elites, Bad for the Middle Class

The “A”CA – Good for Elites, Bad for the Middle Class

Contain the Cost of Healthcare and Preserve Options for the Middle Class

This is an issue that requires a bit of an introduction. We believe it is very important to recognize that our healthcare system is both incredible in its productivity and humanity…and very much broken. The middle and lower class see healthcare is a pressing concern because the cost to maintain insurance is getting high enough that it is forcing some serious and uncomfortable decisions onto struggling families who have to balance their budgets. The CBO estimates that, by the year 2045, the average American family will spend nearly 20% of its take-home pay on health insurance (about what they currently spend on their mortgage!). At the same time, unfunded liabilities to cover the cost of government-backed health programs like Medicare and Medicaid will soon account for 100% of all estimated tax revenue taken by the government. This is obviously an enormous problem. One that threatens to destroy our economy, cripple our access to quality care, and generally make us miserable in the not so distant future.

There are many theories for how we might go about solving this problem, but few of them have been fleshed out enough to back with the force of legislation. Prior to the bastardized half-breed of state-driven insurance mandates and taxes that is now commonly known as the Affordable Care Act, there were two competing visions for the future of healthcare in American. On the left, you had advocates for a single-payer state-run healthcare system as is common throughout the European Union and in Canada, among other places. On the right, you had advocates for transparency in healthcare service charges, tort reform, and interstate insurance commerce. The left’s concept would immediately be recognized by the American public as a massive tax hike. The right’s concept is a series of piecemeal, small-scale ideas that don’t sound like they can really fix the problem of out-of-control healthcare costs on their own.
The healthcare system has costs far beyond the basic ones associated with providing care directly. There are costs associated with:

• Medical Research and Development (and government regulation thereof)
o The research has basic costs
o The government heavily regulates how this research must proceed to get drugs and equipment to market
o The government research institutions try to assist in a wide variety of areas and this unfocused mandate yields inefficiencies
• Malpractice Insurance
o Private practice doctors report that something like half of their profits go straight to malpractice coverage because malpractice lawsuits now routinely go for huge payouts and the insurer must cover the cost
• Hospital Administration
o Here again, there are basic administration costs for running any healthcare business
o And then there are bloated government regulations that require record-keeping that rarely makes sense and is exceedingly expensive, while forcing administrators to retain fleets of expensive lawyers
• The Actual Medical Care
o Even here, there are basic costs…and then there are costs associated with doctors padding their bills to bilk the insurance companies (or at least to force them to pay out as much as they possibly can)
o And further, there is the cost of unpaid medical care given to people who are not insured and cannot pay
o And, ironically, there is the added cost of the government’s drive to get us to see our doctors more regularly (preventive care), which has yet to show any evidence of reducing expensive and undesirable health outcomes
• Insurance Company Administration
o And then we have the insurers – who are, themselves, heavily regulated by the government, and are also guilty of padding their bottom lines, and perhaps of paying out more than they should when doctors are overbilling
• American Status as Cost Sponge
o What I mean here – the US is doing most of the work to lead the way on new medical breakthroughs because countries running on single-payer systems or depending on US financial assistance to function cannot afford to do high end medical research – the result is that all of the world comes here to advance medical science (at great cost to our government research institutions), but we in the U.S. pay higher prices for all of the beneficial new drugs and technology they produce, because other places around the world can’t pay enough for big pharma and big med-tech to break even without us being charged far more

The ACA does, to its credit, recognize many of the places where profiteering, waste and excessive spending are occurring, but the liberal answer to each spending sore spot is the heavy hand of more regulation. Rather than just propose a series of bills the way we’ve done elsewhere in this series, we will explain what the ACA does about each sore spot and the risks that method poses vs. what the conservative counter should be. We’ll use the same bullets from above to organize our plan.

A) Medical R&D Costs

The ACA doesn’t specifically address medical research in a major way, other than to levy a medical device tax and make matters worse for research, but the common answer on the left is to move the cost out of the private sector and into increased government spending on the issue. This way, private sector companies can charge less for the drugs and technology they produce and the actual cost of the work can be spread among the taxpayers less obviously. The conservative approach would include carefully relaxing certain regulations on big pharma and big med-tech regarding the cumbersome and lengthy process to get from experimental drug to approved market-ready drug or experimental medical device to sales and reduce the scope and cost of the FDA. It would also include a restructuring of the NIH, CDC and other government health researchers to significantly narrow their focuses and cut the sugar out of their research diets. And finally, the GOP approach should include a repeal of the medical device tax in the ACA.

B) Medical Malpractice

The ACA doesn’t even tackle the cost of malpractice insurance for private practitioners or legal counsel for hospitals – one of its most disappointing failures, but one that is understandable, considering that the Federal Legislature can’t really regulate state civil courts). The left has, traditionally, completely ignored the increasing need for tort reform. Unfortunately, so has the right. Every once in a while, you’ll hear a Republican talk about the need for it, but they tend to be economists, rather than politicians with any clout. The GOP must act now to enact stiff limits on settlement amounts in medical malpractice cases in the states. We recognize that medical mistakes are always extremely damaging and life-altering (or ending) for their victims. We also recognize that the legal system shouldn’t be a lotto-draw for someone looking to get even with a doctor or make a quick killing after a mistake. The GOP should also enact “loser pays” laws for all civil matters, including medical malpractice. Unfortunately, these are generally matters reserved for the states, and the GOP must spearhead the effort at the state level to address them.

C) Hospital Administration and Record-Keeping

The ACA likely made these costs much worse, I’m afraid, by changing medical billing codes to a ludicrous, byzantine array of unrecognizable codes and further regulating how this information is to be collected. The GOP should move to vastly simplify medical insurance/incident/billing codes, and take a more holistic approach to auditing hospital financial and medical records.

D) Medical Fees and Insurance Models

As we know, the ACA attempts to decrease the number of people who are uninsured and thus to lower the liabilities for hospitals who must treat all patients, whether or not they are insured, by requiring that everyone get health insurance and taxing you if you do not. On top of this, the ACA requires all businesses of a certain size (more than 50 full time employees) to offer health insurance or pay massive fees. The ACA requires that children under the age of 26 be allowed to remain covered by their parents. And it requires that insurance companies never reject someone who has a pre-existing condition. And finally, the ACA requires that those plans cover a huge range of medical services in an attempt to capture all of the potential costs. The theory was that young, healthy people were going uninsured to avoid paying for it when they felt invincible at rates high enough to balance out all of the people who’d been rejected for preexisting conditions. The mandate-driven approach has proved to be a spectacular failure. Many are choosing to pay the tax – especially the healthy – many more are finding that their plans are far too expensive and have huge deductibles as insurance companies look for ways to shield themselves from the increased cost of covering high risk people. And, of course, if the government is forcing the insurers to cover everyone, many insurers will drop out of the marketplace, and that is exactly what is happening.

Having said all of that, we do not think that every idea in the ACA is bad and we do not think it is necessarily the best approach to wholesale repeal it at this point. We believe that there should be a national program to provide everyone with catastrophic insurance (to protect hospitals for huge unpaid bills, and patients from bills that ruin them financially). We also believe “guaranteed issue” and the clause extending coverage to children under the age of 26 are popular because they are necessary. We even believe the idea of a national health insurance marketplace is a very good one (we wouldn’t have the government running it, we’d set up a cooperation between the various health insurance providers and let a private company maintain the marketplace). Here is what a conservative plan would look like:

• Repeal the individual and employer mandates
• Require all Americans to buy catastrophic coverage plans the same way we require them to buy at least minimal collision insurance if they drive
• Nationalize the healthcare market (no more state insurance networks; this is not simply “selling across state lines”, this is true nationalization) and allow insurers to offer a la carte supplemental coverage – if you need coverage for prenatal care, you buy it; if you need coverage for prescription drugs, you buy it, etc.
• Require healthcare providers (private doctors and hospitals and clinics) to publicly announce their price points on a government-managed website for all of their procedures to allow consumers to price compare instead of being blind to the cost – market awareness frequently leads to market efficiency
• Require insurers to similarly announce what they’ll pay out for given procedures (in an attempt to prevent the sort of “doctor charges way too much to max out what the insurer will pay out” games we previously mentioned)
• Give tax credits to people who buy preventive care packages and repeal the Cadillac tax
• Enact the Ryan/Wyden plan for Medicare

E) Insurance Company Administration

The ACA includes a bunch of downright frightening top-down controls in an attempt to reign in insurance payouts for Medicare (because retired people are expensive, health wise, and paid for on the government dime), including but not limited to yet another in a long line of ill-advised price-fixing schemes promulgated by the left. They keep trying to fix the market to their liking and it keeps going spectacularly wrong and cause misery every time. This time, I’m referring to the Independent Payment Advisory Board. While I would stop short of calling it a ‘death panel’, there is excellent reason to fear this entity and its impact on the end of life process. IPAB will basically regulate insurance company payouts to Medicare by fiat, which will cause doctors and hospitals to begin to refuse to perform certain procedures, leading to a downward spiral in the quality of care for the elderly. We saw a glimpse of this with the VA – where aging WWII and Korean War veterans were being denied access to treatments and redirected to hospice care in some cases. The left sees the IPAB as a way to end insurance company inefficiency and doesn’t understand why this process should lead inexorably to premature death in some cases, but we have many examples – starting with the British National Health Service. The conservative answer to insurance company bloat and overpayment is, as noted above, to improve price transparency and let the customers straighten out the market. We would also add that government could play a role here with some far less heavy-handed regulations on payouts based on the going market rate for the service, once the service itself is priced publicly. Data is power – market data leads to a powerful market. Either way, the IPAB must be dismantled as soon as possible.

We’ve laid out many proposals here that attempt to make healthcare decisions less costly and stressful for the middle class, but rest assured, we’ve barely scratched the surface. We are hoping that this will start a dialogue among conservatives as to what sort of healthcare platform GOP Congressmen should build heading into 2016.

So Why Are Car Insurance Rates High In Louisiana? A TLPer Has Some Answers….

article-2451531-18A3E39F00000578-644_634x392I wrote a blog post for the R Street Institute based in Washington D.C. that tried to explain why Louisiana consistently has some of the highest car insurance rates in the country. The reason is simple actually, because of Louisiana’s bad decisions.

As a Louisiana resident, I paraphrase Jimmy McMillan when I say “car insurance in Louisiana is too damn high.” While Louisiana only has the seventh most expensive car insurance in this year’s Insure.com survey of the states, the state is a frequent contender for the top spot. In the Southeast, only Georgia has higher average car insurance rates. But given that Louisiana is the second poorest state in the country, car insurance costs probably have more of an impact on Louisiana drivers than Georgia drivers.

Car insurance rates in Louisiana are so expensive compared to the rest of the country partly because of policy decisions that have been made by Louisiana lawmakers. Thus, just as Louisiana policy-makers have made numerous terrible decisions that have contributed to these high rates, they also can take the necessary steps to fix the situation and truly lower rates for all Louisianans.

Read the rest of the article here:

I’m one of the original co-founders of The Liberty Papers all the way back in 2005. Since then, I wound up doing this blogging thing professionally. Now I’m running the site now. You can find my other work at The Hayride.com and Rare. You can also find me over at the R Street Institute.