by Pearl Hahn
In his recent Honolulu Advertiser op-ed, Maui Democratic Party chairman Lance Holter deemed President Obama’s health care reform an essential and patriotic plan. His rationale can be summed up as such: The American health care system is a mess because of too little government intervention, thus the solution is more government intervention.
When beginning with a flawed premise, one can only reach a flawed conclusion. Health care in America currently operates under something other than a free-market system. Last year, Medicare and Medicaid accounted for 56 percent of all care provided by hospitals.
Clearly, government funds the majority of health care in the country. It’s worth looking at how well government manages it. The Congressional Budget Office (CBO) testified that Medicare and Medicaid’s current fiscal path is unsustainable. CBO Director Douglas Elmendorf said, “Spending on the federal government’s major health care programs, Medicare and Medicaid, has been growing faster than the economy… from roughly 5 percent of GDP today to almost 10 percent by 2035 and to more than 17 percent by 2080.”
The CBO debunks the assumption that private insurance companies are responsible for skyrocketing costs. Any insurance company which squanders a trillion dollars in a year would go bankrupt. While Medicare and Medicaid have driven the nation into record budget deficits (the largest since WWII), they still fail to cover millions of uninsured citizens. Yet Obamacare supporters proclaim Washington can cover 46 million uninsured Americans and cut costs at the same time. They are probably also wondering when they will start earning millions promised by Internet pop-up ads or lose pounds on the Hollywood Cookie Diet.
Though Holter accuses Obamacare opponents of living in a fact-free zone, the only facts he offers are the salaries of Hawaii Medical Service Association (HMSA)’s executives. Ironically, Holter is unaware that HMSA’s dominance is the result of government interference.
In a true free market (the supposedly inefficient system that provides the poor with cell phones and PCs), Hawaii could have fifty insurance companies competing for customers by offering better services at lower prices. But thanks to Hawaii’s Department of Labor and Industrial Relations directive that all plans must provide equal or better benefits offered by the largest plan in the state, there are only six companies licensed to sell insurance, with HMSA dominating 70 percent of the market. For PPOs, HMSA’s share increases to 85 percent. Thanks to — you guessed it — the state government offering a tax exemption, HMSA evaded paying over $560 million in taxes over the past decade and compensated its executives millions in salaries and bonuses. Meanwhile, doctors in HMSA’s network are underpaid and members are charged more in premiums each year.
What sort of benefits are HMSA’s 700,000-plus members paying for? Try obesity management, in-vitro fertilization, and marriage counseling- all expensive services that a typical person would never voluntarily insure, but must. Yet preventive services like cervical cancer or osteoporosis screening are not mandatedv. (That would be like mandating chrome painting and stereo systems in car insurance while leaving out airbags).
Is it surprising that, in spite of growth in entitlement programs, Hawaii’s uninsured rate doubled from 5 percent in the 80s to nearly 10 percent today? Our lawmakers are more interested in currying favors with drug abuse counselors and infertility specialists than caring for young professionals who only want to insure against the possibility that they’ll get hurt in a freak accident or fall sick. Thus, you’ll be in financial trouble if you come down with cancer, but at least alcohol addiction counseling will be covered.
Hawaii exemplifies the destructive effects of government intrusion in the insurance market. A crisis of a partial monopoly can’t be solved by a total monopoly. If a free market existed, customers would abandon insurance plans with poor business practices in a heartbeat. This is impossible in Hawaii and several other states in which insurance monopolies are protected by the government. Holter, like everyone else, wants to protect consumers, and this would best be done by increasing consumer power. We need power to select benefits from an array of plans. We need the power to say a plan is too expensive, restrictive, or just right — but to have that power, we need choice.