Wednesday, February 24, 2010

Copying failure

One of the glories of our federalist system is that the states can be "laboratories of democracy," experimenting with new ideas. Some will be good and successful and other states can copy them. And some will be abysmal failures and other states can avoid those traps. Sometimes the federal government can copy successful programs. Federal welfare reform was built on the Wisconsin model. This is a vibrant part of our governmental system.

Unfortunately, Barack Obama seems to learn nothing from studying what has gone on in the states. So he and his fellow Democrats are basically copying from New York's model on health care. And they are simply ignoring all the signs that New York's health care plans have worsened health care coverage in so very many ways. Betsy McCaughey explains this history.
New York's health-insurance disaster began in 1992, when it adopted "community rating" and "guaranteed issue" -- forcing insurers to offer everyone the same premium, regardless of health status, and to sell to all comers, no matter how sick. (Most states let insurers charge healthy people lower prices -- and then create subsidized high-risk pools to enable the sick to buy coverage.)

New York's "reforms" meant that people could literally wait until they had an accident or illness before buying a policy -- changes that more than doubled insurance costs in the state, according to the Empire State Center for New York State Policy.

Premiums shot up so far and fast that healthy customers dropped insurance altogether -- with the number of people buying individual policies plummeting from 750,000 in 1994 to 36,000 now.

To compensate for that disaster, New York lawmakers expanded Medicaid eligibility. But that forced private premiums up even higher -- because Medicaid underpays hospitals and doctors, who must raise prices for everyone else to compensate. (Hospitals, for example, get only 86 cents from Medicaid for every dollar of care, according to 2009 MedPAC data.)

These two premium-boosters -- guaranteed issue/community rating, plus expanding Medicaid -- are central parts of the president's health proposal.

So is New York's third huge mistake -- laws forcing every health plan to offer a vast array of services. Over the years, lobbyists for chiropractors, acupuncturists, mental-health professionals, wig makers and others got the Legislature to pass laws that every policy cover their services -- 51 requirements in all. Each such mandate may add just 0.5 percentage points to the price of a plan -- but that totals a 25 percent increase.

Similarly, under the president's proposal, everyone has to enroll in the "qualified plan" designed by -- you guessed it -- Washington experts. (Overseen, inevitably, by Congress -- which will surely see an increase in lobbying by chiropractors, acupuncturists . . .)

There will be no freedom to choose the coverage you want.
We should be learning from New York's mistakes rather than copying what they have done. The Democrats love ignoring federalism by centralizing more and more power in Washington, D.C. It figures that they would also ignore the strength that federalism offers us - learning from failures in the states.

As McCaughey points out, right next door in New Jersey is an example of one idea to avoid New York's mistakes.
In 2001, New Jersey saw health-plan enrollment dropping -- so the state let insurers offer pared-down plans. Sales boomed. New Jersey, with half the population of New York, now has three times as many privately insured residents, notes health-policy expert Tarren Bragdon.
The Republicans are pushing for the ability of people to buy such pared-down plans across state lines. Why shouldn't young workers be able to pay a low price for a catastrophic plan that would protect them from the costs of some unforeseen disease or accident befalling them? That is why it's called insurance - to protect us from unpredictable costs not to pay for every visit to the doctor for a check up.

New York is now facing the budgetary mess that their experimenting with health insurance reforms have brought them. Obama sees this history and thinks "Gee, wouldn't it be great if we had that sort of mess for the entire country?"

It would be a wonder if this president could remember that one of the advantages of federalism is that we can avoid, instead of copying, the mistaken policy decisions taken by some states. Alas, he just wants to copy failure and go down the same mistaken road that others have already traveled.