In 1994, the American people rejected the Clinton health care plan and others like it that would have substituted the judgment of politicians and bureaucrats for that of patients and their doctors. Yet, that victory has proved short-lived. Today, lawmakers who fought government-run health care three years ago, some of whom even rode into office on the issue, are now its biggest supporters.
So far this year, Republicans and Democrats together have drafted dozens of laws that would implement portions of the government health care takeover that President Clinton put before the 103rd Congress. As can be seen in the following table, each of these measures will write into law a piece of President Clinton’s plans for government-run health care.
Bills Introduced in the 105th Congress
To Promote Government-Run Health Care
Bill Number Features Sponsor Co-Sponsors
H.R. 586 Federal interference in managed care contracts Ganske (R-IA) 246
H.R. 52 Federal interference in medical record use; new federal health care bureaucracy Condit (D-CA) None
H.R. 135 Government-prescribed mastectomy and lymph node dissection coverage DeLauro (D-CT) 125
H.R. 164 Government-prescribed breast reconstruction coverage Eshoo (D-CA) 6
H.R. 211 Government-mandated portability coverage for workers over 55 years old Kleczka (D-WI) 22
H.R. 306 Federal interference in genetic information use Slaughter (D-NY) 85
H.R. 328 Federal interference in genetic information use Solomon (R-NY) 9
H.R. 337 Federal interference in managed care; government-prescribed childbirth and emergency services coverage Stark (D-CA) 21
H.R. 341 Federal interference in genetic information use Stearns (R-FL) 9
H.R. 444 Government-mandated portability coverage for workers over 55 years old Stark (D-CA) 19
H.R. 541 Federal interference in dental licensing McNulty (D-NY) None
H.R. 621 Government-prescribed mental health coverage Stark (D-CA) 11
H.R. 616 Government-prescribed coverage for mastectomy, lumpectomy, lymph node dissection, post-mastectomy reconstructive surgery on both breasts, and secondary consultation by specialists Molinari (R-NY) 59
H.R. 617 Government-prescribed mammography coverage Nadler (D-NY) 24
H.R. 760 Government-prescribed mammography and pap smear coverage Fox (R-PA) 5
H.R. 815 Government-prescribed emergency services coverage Cardin (D-MD) 65
H.R. 820 Federal interference in managed care, including government-prescribed emergency services, obstetrician/ gynecologist, and prescription drug coverage; grants to states for new health care bureaucracies Dingell (D-MI) 19
S. 89 Federal interference in genetic information use Snowe (R-ME) None
S. 143 Government-prescribed mastectomy and lymph node dissection coverage Daschle (D-SD) 18
S. 249 Government-prescribed coverage for mastectomy, lumpectomy, lymph node dissection, post-mastectomy reconstructive surgery on both breasts, and secondary consultation by specialists D’Amato (R-NY) 18
S. 346 Federal interference in managed care, including federal grants to states for new health care bureaucracies, government-prescribed guaranteed issue and renewability coverage Wellstone (D-MN) None
S. 353 Federal interference in managed care, including government-prescribed emergency services, obstetrician/gynecologist, and prescription drug coverage; grants to states for new health care bureaucracies Kennedy (D-MA) None
S. 356 Government-prescribed emergency medical services coverage Graham (D-FL) 6
S. 373 Federal interference in managed care, including government-prescribed emergency services, obstetrician/gynecologist, and prescription drug coverage; grants to states for new health care bureaucracies Kennedy (D-MA) 1
S. 449 Federal interference in managed care contracts Kyl (R-AZ) 3
Body part by body part, these bills will force consumers to suffer what they narrowly avoided in 1994: fewer choices, unfunded federal mandates, a one-size-fits-all standard benefits package established by Congress, and massive new government health care bureaucracies that come between patients and their doctors.
Certainly, there are problems in the health insurance market. The reason consumers are unable to afford the quality health coverage they demand is that quality health insurance has become too expensive. Government largely has created this problem. Whenever the federal government imposes requirements on consumers and health coverage providers, it drives up the cost of coverage. Millions of Americans are already unable to buy health insurance because of government interference that increases its cost.1 Each of the above bills will further jeopardize the health of consumers by causing the price of health insurance to skyrocket. Employers will drop coverage and many more consumers will lose their insurance.
However wise and well meaning a government regulation or government bureaucracy, it cannot improve on the wisdom of the market. Unlike a bureaucracy, the market harnesses the knowledge of every consumer to provide the best possible health coverage for all. No bureaucracy can possibly absorb the information necessary to find the best way to deliver health coverage to a market of hundreds of millions of consumers.
The United Kingdom provides a chilling example of the devastation that government-run health care can cause. In Great Britain, where government has been entrusted with providing health care, “more than one million patients are waiting for hospital treatment … for everything from tonsillectomies to heart bypasses to exploratory surgery for cancer.” Cancer patients with as little as two months to live are put on month-long waiting lists for acute pain relief. In a nine-month period, health care authorities cancelled over 52,000 operations, such as hysterectomies and hip replacements, because politicians and bureaucrats are unable to understand — and therefore cannot meet — the needs of patients.2
Americans can expect similar consequences as government takes more and more health care choices away from consumers. Only when individuals are empowered to make their own health care decisions, acting in their own best interest and in cooperation with others, can technological and cost-saving innovations bring quality health coverage to the maximum number of consumers. If Congress decides to “solve” our health care problems with more government interference, more people will go uninsured, more consumers will be forced to settle for sub-standard coverage, and America will be brought one step closer to government-run health care.
Mandated Health Coverage
One of the premier threats to consumer choice in health coverage are mandated health benefits, where government forces consumers to buy certain types of coverage, whether they need it or not. Mandated health benefits (such as those included in H.R. 616, S. 249 and others) will force consumers to buy additional coverage, increase the cost of insurance, make even more consumers unable to afford coverage, interfere in doctor-patient relationships, and cause more consumers to go without the mandated coverage than before.
Numerous studies have shown both that mandated benefits cause health insurance premiums to increase, and that the added cost of mandated benefits causes businesses and individual consumers to drop coverage, adding to the millions of Americans who already lack health insurance.3 An econometric study conducted by the National Center for Policy Analysis (NCPA) in 1988 estimated that 14 percent to 25.2 percent of the uninsured population are unable to buy insurance as a direct result of the cost of state-mandated benefits.4 Coverage mandated by the federal government affects consumer populations unaffected by state mandates, and will likely cause even greater uninsurance.
Mandated health benefits also increase health care costs by changing the way patients approach health care decisions. Last year, Congress mandated that all consumers must buy maternity benefits that include a 48-hour hospital stay for mother and child after delivery. Doctor Janet M. Roberto, a Texas physician, has observed how the 104th Congress’ maternity stay mandate has eliminated new mothers’ incentives to be wise health care consumers:
[T]he prevalent attitude of the new mothers I have been seeing in the hospital is that they might as well stay another day since their insurance covers it now. Many of these ladies would actually be fine going home a little earlier, especially if the delivery was uncomplicated, with the usual home health services that worked well under the 24 hour situation in the recent past.
When a patient knows of a benefit that is mandated or in their terms “automatically covered,” they immediately utilize that service as a need, whether it is or is not personally in their best interest.
The attitude of the patient quickly changes to adapt to the mandated covered benefit with no actual thoughts now to other choices.
There should be an incentive for those who choose to be wise health care consumers.5
Mandated health benefits force patients to buy coverage for care they may or may not need. Yet because this care is effectively free, the mandate gives patients an incentive to drive up health care costs by demanding unnecessary treatments.
A government-prescribed standard benefits package. With each mandated health benefit, Congress adds another feature to a standard benefits package for all consumers. Different consumers require different types and levels of coverage. Mandated health benefits, however, do not respect these differences. Instead, Congress has begun to use mandated coverage to require all consumers to purchase a standard benefits package — one of the principal reasons the public rejected the Clinton health care plan.
Government “solutions” vs. medical innovations. Moreover, as medicine advances, certain coverage mandates will become obsolete and unnecessary. Had Congress passed a maternity stay mandate twenty years ago, the standard of care would have required a stay of five days. Mandated health benefits cannot keep pace with medical technology and will unnecessarily force patients to shoulder the costs of outmoded coverage.
Corrupting the doctor-patient relationship. Similar to the Clinton health care plan, mandated health benefits intrude on the relationship between patients and their doctors. Dr. Roberto explains:
Ultimately what occurs is a strain on the patient/physician relationship in that the physician is not easily able to convince the patient a particular benefit is not necessary. A cycle begins such that the government mandates … translate to the patient telling the physician what they expect since their insurance already covers that service. The physician is forced into a defensive posture in an effort to respond to the patient’s wants and not their needs.
“Mandates” can, in effect, take away the physician judgement as to what is best for the patient.6
Each mandated health benefit will allow the government to intrude further and further into the patient-doctor relationship, taking over decisions that should be made privately, not by government.
The futility of mandated health coverage. Simply because a type of coverage is mandated does not guarantee that more consumers will have that coverage. In fact, the opposite may be true. As costs go up due to the added coverage, many consumers will no longer be able to afford coverage and will drop out of the market. However, insurers can often protect their customers from the cost of the mandate by dropping the regulated coverage altogether, rather than provide the level specified by Congress. Thus, even fewer people may enjoy the mandated coverage than before Congress decided to “expand” its availability.
In the case of the mental health parity mandate enacted last year (P.L. 104-204), “any plan sponsor or health insurer could ‘carve out’ mental health benefits … and avoid being subject to the parity requirement on annual limits.”7 Much of the mandated coverage legislation introduced in this Congress would pose the same problem. For example, as a result of the mammography screening coverage provisions in H.R. 617, many insurers would drop mammography coverage altogether to avoid the requirements of the mandate, thereby leaving many consumers without the mammography screening coverage they once enjoyed.
New government health care bureaucracies. As new mandated health benefits and other regulations are enacted, Congress will have to create new federal health care bureaucracies to implement and monitor compliance with these regulations. These new bureaucracies will require additional appropriations and play an ever-increasing and intrusive role in consumers’ health care decisions.
Understanding the Cost of Mandated Health Coverage
Before Congress mandates any additional health coverage, it should understand the full costs of such command-and-control legislation. To bring home these costs, it would be instructive if Congress were to apply any new mandated health benefits to Medicare and Medicaid. The Congressional Budget Office (CBO) must score any changes in the rules of these two programs, and mandated coverage would make costs soar. Once lawmakers see how mandated coverage would bust the Medicare and Medicaid budgets, they may be less willing to bust small business and family budgets with mandates on the private sector.
Additionally, Congress should subject any new health coverage mandates to the procedural requirements of the Mandates Information Act of 1997 (S. 389). The CBO already calculates the cost to the private sector of any health coverage mandates. Under S. 389, if the CBO determines the mandate would cost consumers, workers or small businesses $100 million or more, any senator or representative could hold up that bill with a point of order. This would force Congress to consider the costs of mandated health coverage, and might prevent Congress from doing further harm to consumers.
Consumer-Oriented Health Care Reform
Expand medical savings accounts (MSAs). Rather than create new regulations and new bureaucracies that will make health coverage more expensive, Congress should act to make health care more affordable and accessible. First, Congress should expand the MSA pilot program established by the Health Insurance Portability and Accountability Act of 1996.
With MSAs, consumers (or their employers) contribute to an MSA every month, and pay a small monthly premium for a high-deductible health insurance policy. The money in the MSA may be spent on whatever medical expenses the consumer deems necessary. At the end of the year, he may either keep the balance of his MSA where it is or withdraw it to put it to other uses. If a consumer’s medical expenses exceed the deductible, the additional costs of treatment are paid entirely by the insurance policy.
Medical savings accounts put consumers in charge of their health care decisions — rather than government or health insurance bureaucrats — and encourage health care savings. However, MSA contributions are not tax deductible, as most health insurance premiums are under federal law. The Health Insurance Portability and Accountability Act allows a limited number of consumers (750,000) to deduct contributions to their MSAs from their federal income taxes. However, the IRS hits participants with a hefty tax penalty if they withdraw the unused balance in their MSAs at the end of the year. Thus, there is no real incentive to make smart health care decisions. Excessive regulatory requirements also diminish the effectiveness of MSAs.
Congress should eliminate both the cap on participants in the MSA pilot program and the penalty on health care savings. Fortunately, some in Congress have already taken up this fight. H.R. 1068, sponsored by Rep. William Lipinski (D-IL), will remove the unfair and unwise caps on MSAs. By enacting this legislation, Congress will allow consumers to choose their own doctors, give consumers greater control over their health care decisions, and encourage health care savings.
Repeal laws that make health coverage unaffordable. Congress must also repeal laws that make health insurance too expensive for employers to provide and consumers to buy. This includes laws such as mandated health benefits that require consumers to buy coverage and other options preferred by politicians.
Cut taxes. Americans’ ever-growing tax burden leaves consumers with less money to spend on health coverage. The Tax Foundation reports the average household pays more in taxes than it spends on food, clothing and shelter combined.8 Reducing the overall tax burden will enable more consumers to afford quality health coverage.
Tax reform. Finally, Congress must eliminate the tax penalty that forces consumers who purchase their own coverage to pay more than employers who buy coverage for their workers. The federal tax code allows businesses to pay for health coverage with pre-tax dollars, but forces consumers to pay for health coverage with after-tax dollars. This tax penalty makes health coverage extremely expensive for farmers, construction workers, the self-employed, and anyone who does not receive health insurance on the job. Allowing all taxpayers to deduct the full cost of health coverage will go a long way toward eliminating this penalty. However, full equity and fairness will not be possible without fundamental tax reform, such as the adoption of a flat tax.
Government-run health care is as bad an idea today as it was four years ago. Government already creates most of the problems in our health care system, and these problems will be made far worse with additional government involvement. Rather than take choices away from consumers, Congress should look for ways to return to consumers the choices that government has already taken away.
1 See Michael F. Cannon, “By Mandating Health Benefits, Congress Will Make Even More Americans Lose Their Health Insurance,” Citizens for a Sound Economy Foundation, Issue Analysis, Number 45, January 29, 1997.
2 Sarah Lyall, “For British Health System, Bleak Prognosis,” The New York Times, January 30, 1997.
3 Michael F. Cannon, January 29, 1997.
4 John C. Goodman and Gerald L. Musgrave, Freedom of Choice in Health Insurance, National Center for Policy Analysis, Policy Report, No. 134, November 1988. This estimate does not account for additional mandates enacted since the study’s publication. In 1988, state-mandated benefits numbered 524. Since then, states have mandated 339 additional benefits (Susan Laudicina et al., State Legislative Health Care and Insurance Issues: 1996 Survey of Plans, BlueCross BlueShield Association, December 1996.).
5 Statement of Janet M. Roberto, M.D., “Briefing on Health Care Mandates,” sponsored by Citizens for a Sound Economy and the National Center for Policy Analysis, February 21, 1997.
6 Statement of Janet M. Roberto, M.D., February 21, 1997.
7 Paul Fronstin, “Issues in Mental Health Care Benefits: The Costs of Mental Health Parity,” Employee Benefit Research Institute, Issue Brief, Number 182, February 1997, p. 12.
8 “Contrary to Media Reports, Total Tax Bill Still Larger Than Food, Clothing and Housing Bill,” Tax Foundation, News Release, October 8, 1996.