“The real problem in health care is the way the tax code and third-party payment system distort incentives.” —The Wall Street Journal Editors

I have often asserted that Mitt Romney’s plan for universal health insurance coverage in Massachusetts was exactly the wrong way to go about reforming health care. I have noted that costs have turned out to be dramatically higher than projected. Now the Wall Street Journal reports that over “the coming decade, the expected overruns float in as much as $4 billion over budget.” Yes, that’s billion with a “B.”

“One lesson here,” write the WSJ Editors “is that while pledging "universal" coverage is easy, the harder problem is paying for it.” This is something that we should pay attention to as we debate government involvement in health care in Utah (and nationally as well).

Achieving universal coverage is a wonderful feel-good issue. It violates our sense of fairness to think that some might be excluded from what many have come to consider to be a basic human right. But the Massachusetts plan has proven not to achieve universal coverage. And instead of controlling costs, as was promised, costs have soared at many times the national rate of increase.

How do MA lawmakers plan to deal with these cost overruns? Schemes include “reductions in state payments to doctors and hospitals, enlarged business penalties, an increase in the state tobacco tax, and more restrictions on drug companies and insurers.” Cutting payments to health care providers and creating new restrictions will result in shortages, reduced quality, and (ironically) still higher costs.

Tobacco use increases some health care costs, but some studies show that tobacco use actually lowers lifetime medical costs due to reduced lifespan. Using increased tobacco taxes to fund health care necessarily means making health care reliant on people smoking. If fewer people smoke — which would be a good thing — health care funding decreases. Besides, states with high tobacco taxes have spawned a black market tobacco industry that avoids paying those taxes, meaning that revenues are never as high as projected.

“Mr. Romney's fundamental mistake,” claim the WSJ Editors “was focusing on making health insurance "universal" without first reforming the private insurance market.” The entire third-party payment system needs to be examined. While many hail it as a way of making costly procedures affordable, it has resulted in significantly higher costs overall and treatments that don’t meet patients’ needs.

High quality, cost effective health care does not require heavy government involvement or massive third-party payment structures. Indeed, these represent the antithesis of such goals. Instead, government and third parties need to quit distorting system incentives.

The Utah Association of Health Underwriters recommends moving to health care consumerism one procedure at a time. There will, of course, be a handful of procedures that are not conducive to consumerism. But for the most part, patients and providers will be far better off under consumerism. They will spend less and will get much better quality. Patients will get treatment better suited to their needs. Check out all of the links on the UAHU website under the heading “Consumerism: Market Based Reform” for more information.

The WSJ Editors say that the Bay State has at least provided a public service to the rest of the nation: “showing everyone how not to reform health care.” So, as we debate reforming health care in Utah and at the national level, let’s make sure we don’t pull a Massachusetts.
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