Another Path to Insuring More Oregonians

Another Path to Insuring More Oregonians
By Anthony Stinton
Cascade Policy Institute

The mounting number of people without health insurance is an oft-repeated political lament in Oregon and across the country. To increase the number of people with health insurance, other states are trying a variety of policy prescriptions from forcing people to buy health insurance or pay fines, to tax breaks and subsidies. But here is a little mentioned, perhaps old-fashioned, way to get more people health insurance: Make it cheaper. Not cheaper due to a subsidy or a tax credit, just less costly.

Consumer choice is one proven cost-cutter; it creates price-lowering competition and lets consumers save money by foregoing features they do not want. On the other hand, health insurance mandates block choice and raise costs. Oregon should try a pilot project allowing health insurers to offer 20,000 health insurance policies free of all mandates. This project would be an easy and affordable way to determine if choice in health insurance can lower costs and raise the number of people with insurance.

What are mandates, and why would a policy be cheaper without them? Mandates are benefits, providers or persons that health insurers are legally required to cover in every policy. As of June 12, 2007, when the governor signed the third mandate passed by the 2007 legislative session, Oregon has 33 such mandates. Examining the basic structure of an insurance market shows why these mandates raise premiums. Insurers pool premiums to pay for unforeseen future events. Mandates increase the number of events for which insurers must pay. To meet these greater expenses, insurers need to collect higher premiums. Health economists at Duke University estimate that without mandates, health insurance premiums would decrease enough that 20-25% of the uninsured could purchase health insurance.

The U.S. Congress tried to address the problem of numerous mandates raising costs by letting individuals buy health insurance from any state, theoretically bypassing the markets of high-mandate states. Unfortunately, the 2004 CHOICE act failed. This pilot project would go farther and let Oregon study the price impacts of removing all mandates.

Higher premiums alone are not the problem with mandates. The problem is that higher premiums are a result of restricted consumer choice. In almost every other market, consumers can choose or reject options that raise or lower their costs. When shopping for cars, buyers can select and pay for the options they want. Choice leads to more affordable basic transportation and more satisfying cars. Even the highly regulated car insurance markets allow choice between degrees of collision and comprehensive coverage.

Health insurance markets eliminate almost all choice, forcing consumers to pay higher premiums even for services that by choice or biological fact they will never use. Obvious examples include non-drug abusers forced to purchase drug abuse treatment coverage, post-menopausal women forced to purchase contraceptive coverage, and people afraid of needles forced to purchase coverage for acupuncture. Forcing higher health insurance premiums is bad public policy when roughly 296,000 of the 700,000 Oregonians without health insurance at some time in the last year said high cost was the only reason they lacked coverage.

The next state legislative session should authorize a pilot program allowing insurers to sell 20,000 health insurance policies with terms set only by the buyer and seller. These policies would allow insurers more accurately to price coverage while giving consumers more freedom to tailor their coverage to their needs.

The legislature should provide funds to monitor this program and produce a report in five years showing the demand for, cost of, and consumer satisfaction with these policies. After five years, the program would end unless legislators extended or expanded it. This program and report would give the state valuable information about the cost, health, and consumer satisfaction impacts of consumer choice in insurance.

Critics often assert that free market health insurance reform would let health insurers “cherry pick” the healthiest customers, weakening the risk pools (the mix of people from which insurers pool premiums) and harming the broader health insurance market. This pilot program would not appreciably weaken Oregon’s risk pools because it is limited to 20,000 policies. Many purchasers of cheaper mandate-free coverage are likely without insurance now and not in any risk pool. Nor would mandate-free policies necessarily mean policies with very limited coverage. Some mandates, like maternity stays and emergency services coverage, are standard medical care that all insurers would cover. Mandate-free simply allows consumers to choose basic, or more elaborate, health insurance coverage better suited to their needs and budgets.

Complaints about rising health insurance costs are tiresome and troublesome. This experiment would let Oregon see if choice can cut those costs. If it succeeds, it could be expanded, providing low cost, consumer-tailored health insurance to more Oregonians. If it fails, the only cost is the limited money the state spends to monitor the program. This is a bargain that the legislature should support.

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Author Credit: Anthony Stinton is a research associate at Cascade Policy Institute, Oregon’s premier free market public policy think tank. To read other publications on health care policy, visit http://www.cascadepolicy.org.

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Posted by at 06:00 | Posted in Measure 37 | 34 Comments |Email This Post Email This Post |Print This Post Print This Post
  • Jerry

    The whole notion that someone else should pay for my health care came from Dems who only want more money and more power and more control over our lives. That is it – plain and simple.
    Why is health care any different that eating food? Maybe the government should provide food for households of 4 earning only 80,000 a year. Right?
    These health care fools are driving the whole health care industry into a socialist experiment gone awry.
    It is sad and pathetic.

  • Britt Storkson

    As detailed in http://www.theprotectionracket.com The health care system in this country is designed primarily to protect and benefit the health care providers and lawyers, not patients. Our health care system is designed to escalate costs, not control them. Until we change that dynamic we will never have any success in lowering the cost or increasing the quality of heath care.
    Also how is it ever right, just or fair to take money by force from those who earn it and give it to those who didn’t earn it even if the need is life-threatening?

  • Ken

    > The whole notion that someone else should pay for my health care
    > came from Dems who only want more money and more power and more > control over our lives.

    It comes from the notion that we are a civilized society, who care about each other and believe each of us has certain basic rights, and that we are not in this like atavistic primitives fighting over every scrap. We tried that and it didn’t work.

    • Bob Mulroy

      Healthcare is not , and can not be a basic right. If you entitle some to healthcare your are enslaving doctors and nationalizing hospitals.

    • CRAWDUDE

      The first thing that would have to be done to start a national health care system would be to cap payments to doctors (price controls). The people go to school for 8-12 years to become a doctor, surgeon, specialist…. many rack up $100,000 plus in student loans. Capping what they can make would only ensure that the brightest and best would decide not to become doctors.

      The above is the reason that leaders of countries with socialized medicine come here for major surgery, because their system can’t cut it ( no pun intended;).

      Can’t agree with ya on this Ken.

  • poor farmer

    Ken,
    I know you care. I’m short on rent this month. Can you give me $100 so my family is not thrown out on the street?

  • Jerry

    Oh Ken, please. I was just wondering if your caring side could help me out with some fuel money for my Hummer? Plus, my electric bill is high, too, and I could use some help with that. After all, you would not want me to be in a jam, would you?
    And how about dinner at Ruth’s Chris? It is simply not fair that rich people can eat there and I can’t. It is not civilized.
    Do you have some extra money for me???

    • Anonymous

      Ken has a point. You’re being stupid and he’s right, there are numerous programs for the needy and if you really want to go to dinner at Ruth’s Chris, I’ll bet the democrats would form a program for you.

    • David from Eugene

      Jerry

      Gas for a Hummer… I don’t think so, but a bus token so you could get to the food stamp office is a different matter.

      Ken is correct, if we want a civilized society, we, the members of that society, need to insure that all of its members have their basic needs met. The alternative is a dog eat dog world. This may be fine if you are a big healthy dog, but if you are old and sick or share a neighborhood with a pack of wolves it is an entirely different matter.

      Please note that I am placing the responsibility of insuring that people’s basic needs are met on society as a whole and not any one component, like government. And I am also not specifying how, there are many different ways for a society or community to meet the need of its members. What I am saying is that a civilized society provides for the basic needs of its members.

      • CRAWDUDE

        Ken and apparently your definition of civilized is a far stretch from the average citizens. Something given is never appreciated as much as something earned.

        By continuing to reward irresponsbility and not encouraging self responsibility we stifle an individuals ability to live a productive life. Allowing people to succeed and/or fail is how they build their character, integrity and sense of self worth.

        Free health care, food stamps, welfare, free housing…………creates a dependent society, not a civilized one.

        • David from Eugene

          Free? Exactly where did I say that? In most cases society provides for the basic needs of an individual indirectly by providing employment opportunities with a compensation package large enough to cover or exceed his basic needs. In other cases assistance may be provided by family, friends, religious organizations and charitable organizations. And in some cases it falls on government run programs. The problem we are facing in the United States is for many people their income is not keeping up with their basic expenses. As a result, other segments of society are being left to pick up more and more of the slack.

          Having said that, I also feel that a civilized society does expect its members to eat out of garbage cons or sleep on the street.

          To return to the main topic, allowing companies to sell sub-standard health insurance is not a solution to our health care crisis. In many cases, paying money for useless insurance would make things worse.

          • CRAWDUDE

            Unfortunately the health care recieved in countries with socialized medical programs would fall under your definition of sub standard. There is no way to cap prices and still recruit the highest quality doctors. There is no way to have socialized health care without capping health providers pay. It’s a pandoras’ box that I don’t want to see opened.

  • Ken

    Jerry, our society has plenty of programs that are designed to help the needy. I pay taxes to them so needy people can have help when they need it. If you are truly in need of help, and not just being a smart ass, you are more than welcome to apply to these programs and your neediness will be evaluated.

    • DMV

      The world would be better off without the program s. All they do is encourage laziness. When over 50% of our population is on the dole, which they are, we should be rethinking how much we help them. Most of these people could do much more for themselves, but then why should they when bleeding hearts are making sure they don’t have to, and the expense of those of us who work.

      • David from Eugene

        People do not live in cars, or eat out of garbage cans because out of laziness. They do so because of a lack of other options. But you are some what right about our needing to rethink how we help them. But not helping people in need is not acceptable.

        • Anonymous

          Yes, David, yes they do. Laziness and drugs.

  • Britt Storkson

    Ken, since you’re so benevolent why don’t we raise YOUR taxes to fund all of these good programs? Of course you won’t mind. In fact we’re sure you would welcome the opportunity to show everybody how good-hearted you are and how hard-hearted the rest of us are who would rather keep what we earned for our own families.

  • Jerry

    Ken – just help me understand some things.

    How valuable is anything if it costs nothing? So when you help someone by simply giving them whatver they want, it means nothing to them. Don’t you get it?

    People can help other people – that is GREAT – but we should not be forced to do so through countless worthless government programs that do not serve the very people they are supposed to help.

    For example, Free Geek will give anyone who wants one a “free” computer, but in order to get it, you have to work there for a minimum number of hours. Doesn’t that make sense? So, needy people can work for what they need. It is that simple. In fact, they could do some of the jobs Americans are “unwilling to do”.

    I don’t think you even understand simple economics. Since when is a 25 year old a child? Since when is a family with 80K a year in income needy? But, these are the guidelines proposed for the health care coverage. If you think they make sense, then I rest my case. If you agree they don’t, welcome to the club and thanks for putting your thinking cap on.

    By the way, you should send some money to the Oregonian…they are needy, as their circulation is tanking and their ad receipts are going down, down, down. They need your help. And, in a society like ours, you must not let them down. It would not be fair to not have a paper. Everyone needs one, don’t they? How else will they know how to think? And vote? Send it in Ken. Quick.

  • David from Eugene

    Hmmm… an interesting concept, allow the sale of less expensive health insurance policies, where after the several hundred pages of conditions, limitations and exceptions in careful legalize, are applied, provides coverage only for injuries that are the result of being hit by a meteor while walking on the east side of the street on Thursday, assuming that you are wearing the appropriate protective clothing. It just might reduce the number of people without of coverage. But I do not see how moving them from the uninsured column to the under insured column solves anything.

    • Anonymous

      Oh, come on David. Nobody said Health insurance had to be a pick and choose. But why on earth can’t there be in Oregon a basic health insurance policy that is affordable, then as people can afford to or for that matter need to add on prescription coverage, Alcahol coverage. These are things that really don’t affect the average guy. For the needy, there are still government programs if they need more or cannot afford even the basic coverage. My friend is a nurse, in visiting with her one day, she told me the reason it takes me so long to get an appointment is because the mandated coverage for those who can not or will not work takes precedence. Go any emergency room and just take a look at the resources that are being tied up because junior has the sniffles. There are many many reasons healthcare is so expensive. We have raised a society of people that don’t have any idea how to take care of themselves. Giving them more is not the answer. Remember you can give them a fish, but if you teach them to fish, they can catch their own. What a wonderful feeling to say “I did that” rather than “give me more”

      • David from Eugene

        There is a basic Oregon Health Insurance Policy. What Mr. Stinton is proposing is to do away with it. His proposal is based on the premise, that a policy that provides less then the current minimum coverage would be cheaper. He is probably right, that a substandard policy would cost the insured less then the current minimum policy. But with this “savings” come a number of problems:

        1. Buying health Insurance becomes more difficult, as price and benefit comparisons become much more complicated. Particularly as the burden of risk assessment is now on the insurance buyer.

        2. Offers of Semi-Fraudulent Health Insurance, the summary sounds good, but the details in the legal fine print make the policy effectively worthless. Something most buyers will not find out till after their claim is denied.
        3. Once there is a need you can no longer get coverage for it. Remember insurance is a bet, the reason preexisting conditions are not included in health insurance is the same as why you can’t place a bet on last years Super Bowl.

        4. The Community is still on the hook for health care that is not covered.

        Health Insurance Companies are not in the business of providing health care, they are in the business of not providing it. That is where the profit is. Let them not cover common or expensive procedures and they will. The reason behind the minimum standards (Mr. Stinton’s “mandates”) is that health insurance carries were not covering things that a majority of the State Legislature, on the advice of the medical community, felt they should be.

        Regarding prescription drug coverage, drugs are a part of medical treatment. The dividing line between prescription drugs and other types of treatment is a completely artificial one created by health insurers to limit their costs. This is one of the more interesting aspects of the American view of what is or in not Health Care. The same people who would be aghast at a policy that would cover surgery but not anesthetics think nothing of policies that cover the doctor visit for an infection but not the drugs to treat it.

        You are absolutely right that there are many reasons why health care is so expensive. One of the largest is the growing number of uninsured and under-insured individuals. Creating more under-insured individuals, as Mr. Stinton is proposing is not going to help.

  • Ken

    Britt Storkson wrote:
    > Ken, since you’re so benevolent why don’t we raise YOUR taxes to fund > all of these good programs?

    I am quite willing to have my taxes raised in order to provide universal health care, yes.

    You will be too, seeing as how health care inflation is running at 2-3 times the regular rate of inflation, and as how most employers are cutting back on benefits more and more in order to compete with companies in countries that do have universal health care. More and more people are losing their insurance every year, and their benefits reduced. It’s just a matter of time.

  • Captain_Anon

    my concern is that by removing mandates, the insurers would make insurance more affordable for people, but would leave out the most needed procedures and medicines. perscription drugs are one of the biggest cost of health care, but i’m sure insurance companies would drop much of their coverage, or have higher copays. my parents spend nearly 800 a month on thier medications because they dont’ have insurance. they live VERY frugally. but should anything other than a papercut happen, there is no way they could pay for the treatment. they routinely go without doctors visits because they can’t afford it. so, if mandates were dropped, then they could afford it. however, what would that buy? the insurance companies wouldn’t cover the majority of what they would need. they would become as one person already said, underinsured.

    Insurance companies ROUTINELY collude with each other to fix prices and jack the customer. it’s a complete racket. without mandates and oversight, it would be worse. as it is, they deny legitimate claims all the time knowing people can’t afford the lawyers to go after them.

    • CRAWDUDE

      Great points!

  • Ken

    Captain Anon: Your parent’s situation is exactly why universal health care is so needed in America. Imagine if they could get the care they really needed. And it would be a lot cheaper, too — all countries that have universal health care spend far less than does the US on health care costs, and get significantly better results.

  • alice

    Just wait until INI#104 gets passed! You think the Oregon tax-payer is getting fleeced NOW?
    Kevin Mannix IS setting sail on a brand new “PLAN” to REPEAL the OMMA (oregon medical marijuana act) and CHARGE US! You see, he “thinks” he will reduce crime by taking away current rights that OMMP (oregon medical marijuana program). Registrants currently have to produce their own medicines at their own expense. INI#104 will force the sick and poor in this state to switch to INEFFECTIVE commercially produced synthetic Marinol and Cesamet at the tax-payer’s expense. The Feds currently have Cannabis at a Sched 1 drug (most dangerous drug, even more dangerous than meth) but did isolate THC from the cannabis plant, RE-scheduled THC to a Fed Sched 3 drug to allow BigPharma to commercially produce synthetic medicines (THC) for profit. I cannot follow the logic because THC IS the active ingredient in cannabis that has everyone up in arms. For the purpose of BigPharmaCo profits THC is now considered WITH medical value? The rest of the plant, without the psychoactive compounds does not? BUT WAIT! Here is the best part; Kevin Mannix’s Initiative#104, will shift the expense from the individual OMMP participant (a registrant paid/self funding program) to US! Those above mentioned synthetic pharmaceutical replacement “medicines” can cost up to $1000.00 per month per patient (yes, one thousand dollars per month). There are currently about 15,000 patients in the OMMP. He will ask you to further burden the Oregon tax payer to fund this folly. He has hidden the repeal of this vital Health Care Program in his “anti-crime” INI. Now he claims this vital health care program is criminal(?) because of abuses which he has failed to demonstrate exists or that is rampant, or even running at a rate above the “accepted norm” for all business, Gov’t agencies, religious, corporate (like the oil industry, Enron), BigPharmaCo’s, politicians etc. Why did he choose to single out, most likely, the only program in Oregon connected to health care, which is SELF-FUNDING? Believe it or not, the OMMP DOES save the tax-payers money. Why? Patients produce their own medicines at their own expense. Cannabis is medically efficacious thus resulting in fewer doctor visits from complications/side effects associated with tax paid/subsidized pharma drugs, but it can also actually IMPROVE ones health and well being too, making other social services LESS burdened like home health care and other social assistance programs.
    Why does Kevin Mannix single out the OMMP participants on the charge of abuse and does nothing about the rest of corporate/program/Gov’t abuse? How did this ONE health care program get targeted for criminal abuses?
    Why and how does Kevin Mannix believe Oregonian’s will be safer by eliminating cannabis medicines? Why does Kevin Mannix believe Oregon’s most vulnerable and sick citizens are criminals for using this controversial herbal therapy to treat their ills?
    I guess I would ask Kevin Mannix, “under what circumstances do you believe the sick and dying should be denied access to effective medicines, arrested, tried and incarcerated for using a medicine they have determined, ALONG with their Doctor to be the best treatment for their well being and health?” Cannabis has more than 400 compounds in the plant, synergistically working together as a “whole” medicine. When you “plasticize” it after isolating only one of the compounds it makes it prohibitively expensive AND ineffective. Very few patients have reported benefit from Marinol and Cesamet.
    I have no explanation for this discriminatory Initiative. Do you? Who will benefit from Initiative #104? It seems the BigPharmaCo’s are the only benefactor’s here.
    Still worried about addressing the actual crime otherwise addressed in INI#104? See petition/INI #125.

  • Sybella

    Does anybody see the problem here. For those of you who are for socialized medicine, go to Canada or one of the other countries that have it. Try it for a while, then if you feel the same about universal healthcare, fine. But please, please don’t cram it down my throat, i don’t want it.

    You guys talk about things costing too much and people not having a living wage. I dare any one of you on or about December first to watch the cost of living increase in anticipation of i’m guessing a mandated 30 cent increase in minimum wage. This will continue on through January or February. Look at past years.

    Many of you say you don’t mind paying more so the low income among us can make more, don’t have a clue. Of course you don’t mind paying more, but have the low income gained when they pay more. No they haven’t. Most of them i know wish it would go away. I can guarantee you when they pay for their cost of living nobody gives them a discount because they are minimum wage.

    Maybe it is unfair that those of us who make mre money can afford health care. I don’t understand why though. Oregon already has health care plans in place for low income people and those who can’t qualify for regular health insurance. You have a long way to go to convince me they need more. That said, I hear a lot about tobacco causing health care costs to increase, that’s true. Do you have any clue how much meth, and other illegal drugs increase these costs.

    Do you have any idea how many 200# plus customers i have who are on public programs and spend their money stuffing themselves with supersize pop and candy and chips and beer. Doesn’t it occur to you that they add to cost and will be the first to cry and whine that there aren’t any jobs and everything is unfair, “oh by the way I’ll take a case of beer”

    I am insured under the Oregon Risk pool because I can’t get insurance because of some health issues. Ok, fine, I pay a lot higher rate because of the risk. I have a $1500 deductible. to be able to afford it. I accept that. Part of my higher premium is from mandates. Mandated prescription coverage. Whoopie. My medicine under my health insurance is running at over $1200 per year. That is out of pocket and after the discounts the pharmacy gives me because I have coverage. I pulled all my insurance information, for prescription purposes, Guess what, now my $1200.00 annual cost just dropped to $120.00 per year.

    You bet i wish I had a choice, other than what I had to do. But what does this tell you about insurance mandates.

    • Anonymous

      Excellent points. I’d like to see health insurance surcharges based on weight. While we’re at it, let’s stop letting people pay for junk food and microwave meals with the Oregon Trail Card (welfare).

  • Ken

    > Does anybody see the problem here. For those of you who are for
    > socialized medicine, go to Canada or one of the other countries that
    > have it.

    You’ll find that they give better care, according to numerous WHO studies, at a cost significantly below US medical costs. First-person reports attest to the quality of care in these countries — especially when compared to the US, where tens of millions of people have no access to care at all — none whatsoever, unless they’re willing to declare bankruptcy. Millions of people are not insurable at any cost.

    • Anonymous

      In, Oregon they already are. What do you think the Oregon risk pool is?

    • CRAWDUDE

      Incorrect Ken, Canada buses it’s senior patients to the US because they do not have the facilities and equipment to take care of the perticular ailments and conditions that seniors traditionally suffer from.

      It’s easy to have a socialized health care system if the country next to you has a quality health care system that you can ship your patients to.

      Unfortunately it’s impossible to have a quality socialized health care system. The OREGON plans is in shambles and sucking needed money away from other projects, most doctors now refuse to accept patients under the plan since it’s pay schedule for procedures and office visits aren’t high enough.

    • Ted Kennedy’s Liver

      Billsh*t.

      I lived in Canada for twenty years and have family still there. The system is awful. All the worst horror stories you hear about people dying in line for procedures and incompetent doctors with degrees from third world medical schools are true.

      It’s a great system if you’re healthy, but if you’re sick, you’d better make a will.

      I defy you to find 10 middle aged Canadians with both children and parents in the system who don’t HATE it.

      As others have, I challenge supporters of socialized medicine to go to Canada or Cuba or the UK and actually experience it.

      Propounding the benefits of socialized medicine, while never actually having experienced it, is ignorance exceeded only by those who give credence to such statements.

  • Jerry

    I think food is certainly more important than health care. Where can I get free food for the rest of my life, as a right, even I make 80K, for my little 25 year old child?
    These people are nuts!

  • Ted Kennedy’s Liver

    Mandates, for the most part, are added to health insurance to subsidize the cost of certain procedures by requiring those who will probably never use them to aid those who disproportionately consume them.

    I, as a single, middle aged male, am not likely to require prenatal services or obstetric care. Las time I checked, however, I could not buy insurance without this coverage.

    Where the state could actually be helpful would be in eliminating the weasel clauses found in most insurance policies and establishing plain english descriptions of minimum coverage.

    As an example, I once had a policy that I thought covered all but $10 of a variety of procedures. What it actually covered was all but $10 of the “prevailing rate” (I think that’s the term they used) of the procedure. In other words, if they determined that the “prevailing rate” for a procedure that every doctor in my area charged $100 for was $25 (this actually happened) I would be stuck for $85. This is, apparently, a fairly common scam. The kicker was that when I asked for a list of the “prevailing rates” they told me it was company confidential information that they would not release.

    I would like a health care policy that read something like “we will cover all procedures performed or proscribed by a medical doctor and you will only be responsible for a $XX co pay. If you have to go to the hospital, you will pay $XX per day and we will cover the rest.” Simple and easy to understand – no weasel clauses. Perhaps I could simply be given a long list of procedures and could choose which coverage I did not want (prenatal and obstetrics for example) and only pay for what I used under the same simple terms outlined above.

    Let’s face it – insurance companies are slimy bastards who will screw you over any way they can. The state ought not be concerned about making sure that someone else’s pap smear is cheap by forcing me to pay for it, but in making sure that consumers can purchase the insurance they want and receive the coverage they thought they had from private insurers.

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