Texas PolicyCast: 2008 in review

This week, we are pleased to bring you a roundtable discussion featuring the policy team at the Texas Public Policy Foundation looking back at 2008 and previewing the 81st Texas Legislature.

What do you think?

To leave your opinion click on the word "COMMENT(S)" below

TPPF COMMENTARY: Improving health care without expanding government

As election season winds down and the 81st legislative session draws nearer, the focus now turns to legislative tactics and fulfilling campaign promises. Advocates of Medicaid expansion have already begun their push to extend Medicaid’s eligibility enrollment period, an effort to incrementally increase the number of people receiving subsidized health care.

In contrast, just last month, in an effort to reign in state spending on Medicaid, the federal government announced stricter guidelines on what Medicaid will cover. Texas would be well advised to follow suit and seek ways to cut Medicaid spending by reducing the public’s reliance on the program.

However, talk of extending Medicaid’s eligibility enrollment period from six months to 12 has been in the air in Austin since the legislature pulled a similar move last session that extended the Children’s Health Insurance Program (CHIP) eligibility period. That maneuver, along with other reforms, resulted in a 42 percent growth in CHIP enrollment and a dramatic increase in costs.

The growth of CHIP recipients and the growth in Medicaid recipients that would likely follow an extension of the eligibility period is the result of people remaining enrolled in government programs long after they have exceeded the income limit.

If the goal of extending eligibility periods is to increase individuals’ access to health care, then we can improve that without expanding government programs or spending taxpayer’s dollars.

The way to create more access to health care is to create a more diversified market with more points of access and more provider options.

Today, we funnel people to the highest cost provider – where either the patient pays a nominal fee and the insurance company picks up the rest, or the government pays the entirety of the bill. Why are patients getting eye exams in the hospital or paying more than $100 to be diagnosed with strep throat and prescribed medication?

What if consumers had an alternative to the highest cost provider; the “Wal-Mart” version of health care, if you will? Someone who could make the diagnosis, prescribe the medicine needed, and send you on your way for less than $50 and all in under 30 minutes.

Providers like these exist; they are nurse practitioners and physician’s assistants and many of them work in what people in the medical community call retail clinics. These clinics offer a new model of providing primary care that focuses on providing convenient patient care at low prices.

Often located in retail shopping centers and open late with no need for an appointment, they are directly responding to the demands of their consumers, many of which are the uninsured targeted by government programs.

Forty-three percent of their patients are between the ages of 18 and 24 – the population with the highest uninsured rate – and 33 percent of their patients pay out of pocket for their care, a practice unheard of at a traditional primary care provider’s office.

Unfortunately, Texas is missing out on the rapid growth of this health care option. Laws that limit the scope of practice and require strict oversight for nurse practitioners and physician’s assistants hamper the development of these clinics and limit access to care.

These clinics are a direct response to the needs of patients, but protectionist regulations aimed at ensuring job security and enforced under the guise of consumer safety are limiting Texas’ ability to adequately respond to the needs of its citizens.

These providers could also serve as way to meet the growing demand for health care providers in our state; however, additional requirements that force these providers’ to operate under the watchful eye of physicians make it difficult for these caregivers to provide services in the areas where they are most needed.

Legislators have the opportunity to give Texans the option of affordable, convenient health care by eliminating onerous state regulations. The question is, will they seize the opportunity.

Kalese Hammonds is a health care policy analyst at the Texas Public Policy Foundation, a non-profit, free-market research institute based in Austin.

What do you think?

To leave your opinion click on the word "COMMENT(S)" below

TPPF COMMENTARY: More health care requires more choices

More health care requires more choices
By Kalese Hammonds

Texas has the highest ratio of uninsured residents in the country. With nearly one in four Texans uninsured, legislators and other stakeholders tirelessly look for the silver bullet to guarantee that everyone has access to health care. Many have concluded that the answer is lies in getting as many of the uninsured covered as possible.

Strategies for reducing Texas’ five million uninsured have come from a variety of angles, but most involve additional government assistance and impose a greater burden on taxpayers. The more modest proposals expand existing programs and increase outreach to eligible citizens, while the extreme measures would require every individual to buy health insurance and force the government to subsidize those who couldn’t afford it.

Others have proposed a backdoor approach by addressing the cost of health insurance, but such attempts have been just as heavy-handed. Suggestions that the state provide reinsurance for companies that pay out expensive claims would place an unnecessary burden on the state and taxpayers, while imposing requirements that would force insurers to forego risk-adjusted premiums in favor of a community-rated pricing method would make health insurance less expensive for risky individuals but more expensive for everyone else.

Early results from these reforms have been less than stellar. In Massachusetts, the individual mandate and state subsidies have led to massive cost overruns. The newly insured have flooded doctors’ offices, creating a shortage of providers and forcing doctors to either turn down patients or put them on a waiting list.

What Massachusetts has found – and what advocates for the uninsured fail to recognize – is that health insurance does not necessarily mean access to health care. In fact, health insurance is partially responsible for the continuing decay of our health care system. Its desensitization of consumers from the cost of health care has created an environment that encourages overutilization.

As the demand for health care services has risen, so have their prices; proof that the economic principles of supply and demand do, in fact, apply to health care.

For those who question the viability of free markets and competition in health care, they need only look at the field of Lasik eye surgery. Because consumers pay the full cost of their procedures, competition has led to lower prices and an abundance of providers.

Experience teaches us that the best way to lower prices is to pump more products into the market, allowing consumers to decide which of the options gives them the most bang for their buck.

Primary health care services would benefit from a similarly competitive environment where a broader range of providers would afford consumers more choices at varying price levels. Nurse practitioners and retail clinics offer basic health care at lower prices and during more convenient times, giving consumers alternatives to expensive doctor visits and crowded waiting rooms that are only open during work hours.

Unfortunately, Texas laws restrict these alternatives by tying the number of nurse practitioners to the number of physicians, and limiting the services they can provide. Other Texas laws that ban the practice of corporate medicine and place unnecessary regulations on health care facilities make it difficult for Texans to have a wide range of choices for health care. The majority of health care consumers are trapped in a system that gives them few options and even less information about the price they are paying for services.

Just like getting health insurance for everyone will not cure our health care system, providing less expensive alternatives to current health care is not the silver bullet either. But it is a solution that would not place additional burdens on taxpayers, require expansion of government programs, or increase insurance premiums for people who already have it.

Giving consumers more choices would improve access to health care by providing individuals with more choices that would be affordable, regardless of insurance status.

Kalese Hammonds is a health care policy analyst at the Texas Public Policy Foundation, a non-profit, free-market research institute based in Austin.

What do you think?

To leave your opinion click on the word "COMMENT(S)" below

TPPF COMMENTARY: Dependency Mindset Limits Health Care Choices

There is no doubt that America’s health care system warrants immediate attention and various culprits have been blamed for the system’s slow disintegration. Much of the anger consumers feel with today’s health care system is directed at rising costs and out-of-pocket expenses.

Surprisingly, their discontent does not lie with the restrictive policies and protectionist-minded policymakers that have created the inflated prices, and their frustration has not been with the exorbitant amount of their tax dollars spent paying for other people’s health care. The overwhelming cry is that the government has not done enough.

A study that revealed stagnant and declining life expectancy rates for various populations in the United States has ignited a firestorm of charges that the government has failed to encourage the public to make healthier lifestyle choices.

A look at recent government campaigns reveals another story. In New York City, a federal judge has approved a city ordinance that would require chain restaurants to post calorie information on menus. Proposed legislation in Mississippi would prohibit restaurants from serving people with a Body Mass Index greater than 30.

Intrusive tactics like these represent a growing trend in government over-reach, while the overwhelming reception of bureaucratic involvement reveals a sense of government reliance never before seen in the United States. There is no greater testament to our society’s embrace of dependency than the battle cry to expand government health programs and extend coverage to higher-income families.

The federal government already spends more than $700 billion a year on health services to millions of low-income households. This money comes straight from the pockets of fellow taxpayers, redistributing the hard-earned money of those earning more and giving it to those earning less.

A number of studies have concluded that as much as 60 percent of the children newly eligible for the State Children’s Health Insurance Program already have private health insurance. Under this new dependency mentality, people are dropping their private coverage for subsidized government programs at an alarming rate. One study found that in several SCHIP programs, at least 28 percent of children enrolled in SCHIP had been enrolled in private coverage during the last six months.

The National Bureau of Economic Research has estimated that between 50 percent and 75 percent of previous increases in Medicaid coverage are associated with a reduction in private insurance coverage. Congressional Budget Office testimony supports this data with reports that states are seeing reductions in the number of privately insured by as much as 50 percent.

The majority of health care proposals – expanding public programs, extending government subsidies, requiring employers to contribute to health care benefits – appeal to this new dependency mentality. These strategies build on the fundamental structure of our already broken system, forcing a select group of individuals to subsidize health care for a growing portion of our population, increasing government dependency and further insulating the majority of consumers from the cost of health care.

As these charitable programs grow, encouraging more government dependency and further isolating consumers from the actuary cost of health care, they eliminate the financial consequences of poor lifestyle choices and open the door to over-reaching government policies. The expansion of public programs creates financial incentives for the government to implement policies that define individual lifestyle choices and manipulate the market place in an effort to constrain health care spending.

Continuing this pattern will inevitably foster the development of regulatory guidelines that dictate our behavior. An effective transformation of American health care will require dismantling the current structure and rebuilding a consumer driven market crafted around personal responsibility and competition.

Allowing the health care system to harnesses market forces would entail limiting government control of health insurance and health care providers. A consumer driven health care market would allow individuals to take control of their health care, driving down costs by encouraging competition and letting individuals decide which health care services are most valuable to them.

By restraining government’s regulatory reach and limiting government health care subsidies, this new approach to health care would lead to lower taxes and encourage individuals to make decisions that are both financially responsible and healthy. A return to competition and personal responsibility will cure America’s health care crisis...if we let it.

Kalese Hammonds is a health care policy analyst at the Texas Public Policy Foundation, a non-profit, free-market research institute based in Austin.

What do you think?

To leave your opinion click on the word "COMMENT(S)" below

TPPF COMMENTARY: Mandating Expensive Health Insurance in Texas

Lawmakers across the country apparently believe their idea of necessary health care benefits supersedes that of their constituents. Rather than allowing individuals to make their own decisions, elected officials have dictated the structure and benefits of health insurance policies through legislative “mandates.”

There are many motivations for health insurance mandates; among them, guaranteeing a payment source for providers offering certain treatments and securing coverage for individuals trying to cope with a particular disease or condition.

Unfortunately, these same mandates arbitrarily inflate the cost of health insurance, making even a basic plan too expensive for many consumers and forcing them to rely on the government to provide these benefits or forego coverage altogether.

Of course, a single mandate does not have a crushing impact on the cost of health insurance. However, researchers have found that the combined effect of the mandates drive up the cost of a basic health plan by nearly 50%.

With 55 mandates, Texas ranks among the five most heavily regulated health insurance markets in the country. Recent studies show that one-fourth of uninsured individuals go without coverage because of the increased costs from health insurance mandates. Curtailing such mandates presents an immediate opportunity for lawmakers to lower the cost of insurance plans and help reduce the number of uninsured.

Texas mandates require coverage for services such as in vitro fertilization, marriage and occupational therapists, and drug and alcohol rehabilitation. The latest addition is the “mental health parity” mandate, which alone has been estimated to increase premiums by as much as 10%.

This approach of limiting health insurance to heavily mandated plans that require coverage of “bells and whistles” services is like telling someone in the market for a new car that they can buy the fully-loaded, top-of-the-line Cadillac off the show room floor…or nothing at all.

In today’s health insurance market, people are forced to choose between the Cadillac-style plans, relying on the government to provide insurance through Medicaid and CHIP, or going without coverage at all.

Instead of having legislators determine what services consumers need, insurance products should respond to consumer demands and consumer judgments on value and price.

In today’s customer service driven environment, consumers can engineer a computer built to their specifications, customize their cell phone plans, and even design their own shoes. It only makes sense that an item as personal and critical as health insurance would be adaptable to the specific needs and financial resources of individual consumers.

Eliminating government-enforced mandates so that customizable plans are more accessible would allow consumers to craft inexpensive plans that not only meet their basic requirements but also allow personalization according to an individual’s specific needs.

Fortunately, Texas lawmakers interested in expanding coverage can put health insurance within reach for more Texans by resisting the temptation to regulate the marketplace and by providing consumers with more options.

Several state legislatures have already designed legislation that would allow people in their states to purchase health insurance plans that have been approved for sale in other states. Lifting the barrier to interstate purchase would give individuals the opportunity to buy a more affordable health insurance policy from a state with fewer mandates, while simultaneously encouraging heavily regulated states to deregulate. This competition would curb the impulse of lawmakers to expand the number of mandates each session, and provide an incentive for protecting “mandate lite” health insurance policies the legislature has already approved for sale to certain people.

Minimizing regulations and allowing consumers to choose a health plan tailored to their specific health needs and personal financial capabilities is the first step to making health insurance a real possibility for everyone.

Kalese Hammonds is a health care policy analyst for the Texas Public Policy Foundation, a non-profit, free-market research institute based in Austin.

What do you think?

To leave your opinion click on the word "COMMENT(S)" below