In April the Denver Post published a letter by Gina Liggett against Senate Bill 217, which ties Colorado citizens to the tracks of the compulsory insurance locomotive. Gina contacted Senator Moe Keller (Senate District 20) concerning this issue. The Senator’s response is below, and my comments follow.
Thank you for your email. How do we keep people in the private sector? What do we do with the costs of the uninsured, those who choose to be without health care insurance and those who are priced out?
In my mind, the immorality is the CEO who makes millions of dollars in personal salary by denying health care claims.
Sincerely, Sen. Keller
I’ll address her questions one at a time.
“How do we keep people in the private sector?”
1. Stop making insurance so expensive! Mandated benefits laws prohibit the sale of affordable insurance in the small group market. For example, a widowed wife must by insurance that includes marital therapy and prostate screening.
The Congressional Budget Office reports that such mandated benefits increase premiums by at least six percent [p. 16, 20], and possibly more than ten. It also reports that community rating laws increase premiums by nine percent [p. 16]. Colorado’s Chief Medical Officer told the Washington Post that 2,500 Coloradans lose insurance for every one percent increase in premiums.
State Representative Cory Gardner recognizes the harms of mandated benefits, and proposed House Bill 08-1327 to remedy at the state level. Unfortunately, it’s “postponed indefinitely” in the House Committee on Business Affairs and Labor. Senator Keller, can you do something about this?
2. Eliminate government-run charities such as Medicaid and CHP+. Do you know that the National Bureau of Economic Research reports that “For every 100 children who are enrolled in public insurance, 60 children lose private insurance”? That is, government insurance crowds out private insurance. Some parents stop buying their children insurance when they can get it for “free”, that is, at taxpayer expense.
These programs are also ineffective and immoral, as I have noted here. But why expect them to be effective? Unlike a voluntary charities, whose donors can stop giving money if they don’t think the charity is worthwhile, donors to government social programs face prison for trying to invest their charitable donations wisely. And such compulsory giving is immoral.
“What do we do with the costs of the uninsured, those who choose to be without health care insurance and those who are priced out?”
Regarding “those who choose to be without health care insurance,” I suppose you are referring to the so-called cost-shift from the uninsured. Just as the solution to people skipping out on restaurant bills is not forcing everyone to prepay for dining out, forcing everyone to buy insurance is an unjust solution to uninsured cost-shift issue. And anyway, the amount of the cost-shift is less than the tax increase proposed to “solve” it. For more on this, see this post.
And “those who are priced out?”
As I noted above (#1), repeal laws that make insurance so expensive! On the federal level, legislators should remove the tax exemption for employer-provided insurance and lower taxes so it’s revenue neutral. (Or more, I don’t mind.) This would make insurance companies compete for customers more, as we’d no longer be stuck with our employer’s insurance plans.
The tax exemption also discounts insurance so people buy more insurance than the otherwise would, which contributes to most policies not being true insurnace, but prepaid health care. Consumers spend like business travelers on their company’s expense account: with little notice of how much things cost, since someone else (an insurance company) is paying for it.
If eliminating the tax distortion is politically unfeasible, then make all insurance and medical spending tax-deductible, as discussed here.
“In my mind, the immorality is the CEO who makes millions of dollars in personal salary by denying health care claims.”
How much should a CEO make? How would you determine that? Or for that matter, how much money should Oprah Winfrey make? Or super-star basketball and baseball players?
If political controls didn’t force consumers to buy more insurance than they need, and coddle insurance companies so they need not compete (via the employer-based system), would insurance companies make more or less profit? Would CEOs make more or less?
Here’s something I’ve been wondering about How often do insurance companies deny claims, and how does this compare with health care systems in other countries? In countries with “universal care,” patients die while waiting for treatment, or become medically unfit for treatment. I write about that here.