The Palmetto Insider

The blog of the South Carolina Policy Council

Senators Back Free Market Health Reforms – Or Do They?

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Senators Lindsey Graham (R-S.C.) and John McCain (R-Ariz.) held a town hall meeting at The Citadel in Charleston on Monday. The issues discussed ranged from global “warming” to the war in Afghanistan, but most questions centered on health care.  John McCainSen. Lindsey Graham

Sen. Graham made the accurate comment that Americans are great shoppers. We go to the grocery store for deals, we shop around for the right car – so why shouldn’t that be the case with health care?

“We need to create better deals by having more businesses that can compete for your money,” he commented.

In particular, Sen. Graham proposed allowing doctors to bypass insurance companies by offering prepaid care plans directly to patients. “Why should you have to pay someone in a different city when the doctor is sitting right there in front of you?”

This is a great point, and one often overlooked. Put more responsibility in the hands of the individual, particularly for planned health care expenditures, like a physical. More individual responsibility is better for everyone.

Six other main points from the town hall:

1)      Sen. Graham brought up Oct. 15 as an important date. This is the deadline for the Senate to push through a health care bill under the budget reconciliation rules that require only 51 votes for passage. In other words, if compromise legislation is not passed before then, the Senate – filibuster or not – will ram through a (partial) bill by this date. Doing so, of course, would create a bad precedent in Congress. You may recall the “Gang of 14” that Graham and McCain were members of a few years ago. They pushed Republicans not to change the rules of Congress just to facilitate the passage of partisan legislation.

2)      Sen. McCain repeatedly said, “Medicare is a great system, but it’s going broke.” Neither senator clarified what is so great about Medicare or how to reform it. I don’t see how something can be called bankrupt and great in the same sentence. Seems a bit contradictory. But as I wrote previously, if Medicare is broken, fix it now. Don’t wait.

3)      On several occasions Sen. Graham said, “The public option is dead as far as I’m concerned.” This is good news, if true, but does not mean that free market reform is suddenly on the table. There are several other ways that proposed government health care reform will be bad for South Carolinians.

4)      One person asked a question about whether it is a conflict of interest for health care providers (doctors, hospitals and insurance) to be for-profit. This argument has been used frequently, painting profit as a negative thing. But profit is not a harmful vice – profit is what drives economic growth and individual prosperity. It is because of profit that the farmer grows his fruits and vegetables. It is profit that allows grocery stores to stock that produce for individuals to purchase. Adam Smith said it best: “It is not from the benevolence of the butcher, the brewer, or the baker that we expect our dinner, but from their regard to their own interest.” There is no reason health care can, or should be, treated any differently.

5)      Yet Sen. Graham offered his support for mandatory coverage, regardless of preexisting conditions. Massachusetts is currently the only state that requires mandatory coverage. Read here for how well that is working out. In several other states (but not South Carolina) mandatory coverage comes in the form of the community rating system. Under such a system, anyone who voluntarily chooses to purchase health insurance must be provided with the same policy – at the same price – as anyone else. The alternative is risk rating, which forces people to take responsibility for their own health care and lifestyle choices. Community rating has several negative effects. Also, once insurance companies cannot charge higher rates for sicker individuals, the system becomes drained. Combine that with a massive fleeing of the market by young, healthy individuals, and you get a bankrupt health care system. Of course, mandatory coverage (such as now being proposed at the federal level) will not permit the young to flee the system – so, in effect, it forces the young and healthy to subsidize the lifestyles of the infirm and unhealthy.

Sen. Graham says he supports free market reform in health care. But the reality is that neither mandatory coverage or a community rating system is compatible with a free market.

6)      Sen. McCain offered the following breakdown of the infamous “47 million uninsured”:

  • 5 million college students
  • 9 million individuals that can afford to purchase private insurance
  • 10 million illegal aliens
  • 11 million currently eligible for Medicaid/Medicare, but not enrolled
  • 12-15 million that fit the supposed “uninsured” category that gets dropped

This on the heels of President Obama’s about face last week, where he quietly – and without detailed explanation – changed the figure he’d been quoting from 47 million to 30 million uninsured.

Despite the explanation provided by OMB Director Peter Orszag, the numbers still don’t add up. Megan McArdle offers an attempted breakdown:

I can’t get this math to work.  The actual number of the uninsured, according to the census, is 46.3 million.  Of those, 36.8 million were natives of the US or naturalized citizens.  There is no “alternate figure” for the number of American citizens that includes legal residents.  Legally resident immigrants are fine people.  But they are, definitionally, not American citizens.

Now when I click through to the Kaiser link that Orszag provides, I find that it says that “a quarter of the uninsured (11 million) are eligible for public programs but not enrolled.”  36.8mm – 11mm is 25.8 million, not more than 30 million.  But of course, that 11 million figure is from 2007 and will have grown, because that’s what population statistics do–there’s no evidence that we’ve gotten better at enrolling people in Medicaid since 2007.  I mean, the Medicare rolls have gone up.  But the number of poor people went up in tandem.   Demographics being what they are, the number of seniors on Medicaid for nursing home care went up as well.

The president, it seems, is subtracting illegal aliens from his estimate, but once again overlooking all of those individuals who are already eligible for public insurance, or can afford some form of insurance but simply choose not to buy any.

Perhaps the most interesting take away I got from this town hall is the clear disconnect between elected representatives and citizens. Most questions were met with generic rhetoric that prompted shouting from the crowd with phrases like, “answer the question.” Wherever you fall on the health care issue, I think it’s getting safe to say that nobody feels adequately represented in Washington.

In fact, the senators routinely spoke of “democrats and republicans,” insinuating that you have to be one or the other in this country.

The loudest ovation followed a question by an individual who identified herself with neither party – but simply with liberty. Attendees were routinely disappointed with the senators’ responses – in fact on some occasions the senators seemingly waited for applause but received little, if any.

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Written by Geoff Pallay

September 15, 2009 at 12:37 pm

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