General Principles
Americans will benefit from having a vigorous private market place for healthcare and healthcare insurance that is based upon free market principles and individual rights. This notion is entirely consistent with American history and tradition and is in conformity with the Constitution of the United States of America. This will promote innovation, maximize quality and choice, and minimize cost for consumers.
An appropriate role of the federal government, with certain limitations, is to appropriately regulate healthcare to the extent that it represents interstate commerce (see the Interstate Commerce Clause of the Constitution (Article I, Section 8)) in order to protect the public. However, this should not be construed to mean that government should force individuals or other private entities to participate in the private healthcare market place nor should it be construed to mean that government should completely take over healthcare, displacing the private market place altogether. Such actions on the part of the federal government would represent an unconstitutional expansion of federal power that would threaten our constitutionally guaranteed individual rights as well as the rights of the states (see the Tenth Amendment to the Constitution).
The Healthcare Market Place for Those without Medical Insurance
It is essential that Americans who do not carry health insurance have equal opportunity in the healthcare market place. At this time, they do not.
Patients without insurance often pay more for comparable services than patients who have insurance. This is an indirect result of the contracts formed between the providers of healthcare (e.g. doctors and hospitals) and the third party payers (e.g. private insurance companies and government programs like Medicare). These contracts result in providers giving discounts to insured patients but charging full price for the uninsured.
Third party payers have virtual monopolies in many cases, and this allows them to have an upper hand in negotiating with providers. This is why providers begrudgingly enter into contracts that put providers, uninsured patients, and even insured patients in a position of disadvantage relative to the third party payers.
Legislation is needed that will allow providers to charge uninsured patients discounted rates without fear of recrimination by third party payers.
Many Americans have no medical insurance because they have rationally decided that the price is not worth the benefit. The decision to go without private medical insurance should be honored, and government imposed penalties for this are unconstitutional and will adversely distort the market place. For the same reasons, businesses that do not provide medical insurance should not be penalized.
We must recognize the important role that charitable healthcare has played throughout America’s history. In a society free of total government control, charitable care will always be an integral part of caring for those who are disadvantaged. For those lacking insurance because they are financially challenged but not poor enough to qualify for Medicaid, it is essential that healthcare providers, including physicians and hospitals, are able to provide charitable care as they have traditionally done. Critical for this is the ability of providers to offer discounts to the uninsured patients, as discussed above. Also critical is an environment that is economically viable for providers of healthcare, and this means addressing a host of issues, including the need for tort reform, the need to end unnecessary and expensive government mandates on healthcare providers, and the need to increase reimbursement rates in government programs such as Medicare and Medicaid that are simply too low.
The Private Medical Insurance Market Place
Private medical insurance is an important part of providing Americans with financial protection in the event of health conditions that require expensive medical care. However, the private medical insurance market place has become very problematic.
Patients, providers, and employers that purchase group plans are at a relative competitive disadvantage to the private medical insurance companies. The result is price inflation, lack of meaningful choice for consumers, excessive complexity in the market, lack of transparency, and an unhealthy linkage between employment and access to health insurance. In summary, the private insurance market place has become anti-competitive and distorted.
One of the most important aspects of correcting the problem is for consumers to use medical insurance exclusively for catastrophic coverage and to avoid using it for routine care. Using medical insurance for routine care has significantly increased the overall cost of healthcare to consumers.
Another way to lower the cost, increase the quality, and increase the choice in healthcare insurance is to allow consumers to purchase health insurance across state lines. Many individual states, including Washington State, offer too few choices to residents.
We must avoid excessive government mandates regarding levels of benefit and covered services in private health insurance plans. Such mandates eliminate the possibility of companies offering lower cost plans that more Americans could afford. Similarly, government mandates that force individuals or organizations to purchase private healthcare insurance that covers morally objectionable services or products is a violation of the First Amendment that protects our right to freedom of religion and must be avoided.
Throughout the United States of America, large, powerful private insurance companies have control over the market place that clearly resembles monopolization. Stricter application of anti-trust legislation to the insurance industry is essential. The McCarran-Ferguson Act of 1945 (15 U.S.C.A. § 1011 et seq.) effectively allowed the insurance industry to escape the full reach of the Sherman Anti-Trust Act of 1890, 15 U.S.C.A. § 1 et seq., the Clayton Act of 1914, 15 U.S.C.A. § 12 et seq., and the Federal Trade Commission Act of 1914, 15 U.S.C.A. §§ 41–51. Escape from the authority of these federal laws was predicated upon the insurance industry being appropriately regulated by state law. However, it is difficult to imagine why the insurance industry should have been afforded this selective favoritism versus other industries which to this day remain fully subject to these federal laws.
Clearly, the question of state versus federal regulation of the healthcare industry is pivotal under the Constitution, and a careful examination of the matter is required in order to appropriately define which aspects of the industry qualify as interstate (thus falling under federal authority) and which aspects do not (thus falling under state authority). Nevertheless, stricter application of existing anti-trust legislation (at the state and/or federal level) would promote a more competitive, transparent market place for healthcare. The result would be lower cost, greater choice, increased availability of coverage, and a greater measure of protection to those without medical insurance (see above). In short, the consumer would be the winner.
Removal of the linkage between employment and medical insurance is in the best interest of the public. This is properly done by removing the tax-favored status of employee-sponsored group insurance plans. This linkage is an artifact of President Franklin Delano Roosevelt interfering with the private market place by capping wages. Unable to raise wages, companies began offering fringe benefits like medical insurance to attract and retain employees. To this day, medical insurance premiums paid by employers are not counted as taxable income. This has resulted in distortion of the market place in that premiums are artificially inflated in price due to their tax-favored status. Making matters worse, workers who lose their jobs risk losing their medical insurance. Perhaps worst of all, individual purchasers of medical insurance who are not part of employer-sponsored group plans are at a relative disadvantage.
Encouraging people to save for healthcare costs is desirable. To the extent that employees are allowed the tax benefits of employer-sponsored medical insurance premium payment, individuals should similarly be allowed a tax deduction for saving for healthcare expenditures or for paying for insurance premiums outside of employment. However, as noted, the best solution is to eliminate all tax benefits related to healthcare expenditures because the ultimate result is simply inflated costs and increased complexity.
Tort reform could reduce the cost of healthcare by as much as 20%. Doctors may have a tendency to order unnecessary tests and make unnecessary referrals to specialists just to minimize their own medico-legal liability, and this can drive up cost. Excessive fear of lawsuits has also resulted in doctor shortages in certain specialties and in select geographic locations. Tort reform could be accomplished by limiting damages for non-economic, subjective factors and by requiring attorneys representing patients to allow their clients to keep a higher percentage of damages won in malpractice lawsuits and settlements.
Private Insurance companies must be protected against price-fixing by the government. Market distortions result from government attempts to inappropriately intervene, and this hurts consumers. If insurance companies charge premiums that are too high, customers will stop buying their product. It is unnecessary, even harmful, for the government to intervene by fixing or capping prices.
