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Another attempt to lead us down a blind alley from PRI

Pacific Research Institute (PRI) last Friday launched another in a series of briefing papers that advance the interests of its business sponsors.  Need a study that shows expanding health insurance coverage for children is actually bad?  Look no farther than PRI.

The latest pen-to-paper embarrassment from this flack shop is the just-released U.S. Index of Health Ownership by John R. Graham. While it purports to promote health care ownership, its clear purpose is to roll back government. Although it bills itself as non-partisan, PRI’s bias against single payer systems is blatant:  “PRI also demonstrates why a single-payer, Canadian model would be detrimental to the health care of all Americans.” 

Within a section full of self-praise for its index, PRI quotes Newt Gingrich:  “How free are we to control our own health care?  That’s the question the Pacific Research Institute boldly answers in this state by state ranking of health freedom.  While others advocate ‘universal health care’ through greater government control, PRI stands up for ‘universal choice’ where the patient and the doctor are back in control.”

The theme of the paper is that “over regulation” by the government exacts a huge cost. Its claim is that “today, almost half of the country’s health-care spending is in the hands of the government, instead of patients themselves.  The other half is governed by a bewildering morass of regulations on doctors, insurance companies, and us as patients that nobody can hope to understand.  The result: as much as one third-of our health-care spending is wasted.”   

But the regulatory costs that bedevil Graham and PRI are not the administrative costs that those who support a government-operated single payer system believe we could save.  Instead, the regulatory costs that Graham targets entail those related to: 1) government provision of health care coverage; 2) government rules requiring fair coverage by private health insurance; 3) the tort system (their costs are based on the costs for so-called “defensive medicine”); and 4) government oversight of health care providers. 

Their bad accounting is clearly a diversionary tactic.  They fail to acknowledge, as most scholars do, that government operated health care programs such as Medicare, Medicaid and State Children’s Health Insurance Program (SCHIP) operate with far less administrative expense that the so-called “market-based” private insurance programs.  In fact, private health insurers and HMOs now consume 13.6 percent of premiums for overhead, while both the Medicare program and Canadian NHI have overhead costs below 3.2 percent. 

There is huge waste in administrative costs that could be reduced by moving to a government operated single payer health care system. Authors Himmelstein, Woolhandler and Wolfe estimated in a study in 2004 that streamlining administrative overhead to achieve Canadian levels would save approximately $286.0 billion in 2003, $6,940 for each of the 41.2 million Americans who were uninsured as of 2001.  This savings would be enough to cover all of the uninsured and to provide full prescription drug coverage for everyone in the United States.

To accomplish its diversion, PRI has cooked up an index of “health ownership.”  The index grades states on the extent that they “regulate” health care.  In PRI’s inverted reality, states that have the least regulation (read: least protection) score the highest and those who have the most score the lowest.

The paper provides no discussion of the possible benefits from government participation in health care.  The four examples below show the author’s twisted vision and illustrate the study’s overall disdain for those with basic health care needs:

  • “Capturing” too many children for SCHIP:  The State Children’s Health Insurance Program (SCHIP) is described as “gross overregulation.”  The fact that SCHIP enrollment increased between 2003 and 2004 is not a demonstration of the need for the program, in the author’s bizarre worldview.  It is instead, he argues,  “perhaps the most appalling element of the unlimited growth of government-run health care.”  It represents the “willingness of its advocates to break up families’ health care by capturing more children in these programs instead of creating incentives for Americans to buy [private] health-insurance plans that protect their entire families.”  And states that failed to expand their children’s health-insurance programs do well.  As the author points out, “as many as 13 states actually reduced the number of children delivered unto their government health-care bureaucracies.”   (Emphasis supplied in both instances.) 
  • “Roped into” Medicaid: States with high concentrations of low-income people fare badly on the “index” – and the terminology misleadingly confuses “eligibility” guidelines with coercion. Medicaid income eligibility is another prime example.  Medicaid now accounts for one in every six health-care dollars spent in the U.S.  This expansion means that more and more Americans are “being taken out of the private health-insurance market and roped into this welfare program.” (Emphasis supplied.)  In Minnesota, everybody earning less than 275 percent of the Federal Poverty Level is eligible for Medicaid and, therefore, it takes last place in these wacky rankings, while Alabama takes first place because it cuts off eligibility at just over the Federal Poverty Level.   
  • States that require coverage of addiction-related or other services by private health plans:  According to Graham, mandates on private plans that require coverage for services such as drug and alcohol treatment, blood lead-poisoning treatment, and including non-custodial children in family coverage.  The “mandates” identified by Graham range from 13 in Idaho to 62 in Minnesota.  Because they allegedly “force” the insured to buy coverage, more mandates – usually required by states to cover services that are highly desirable but insufficiently covered by health insurers – means, in Graham’s topsy-turvy world, less “health ownership.”

Overall, Utah, Nebraska, Delaware, North Dakota and Alabama come out on top in this index.  These states generally more lightly regulate the insurance industry, provide more limited government programs and have a hostile tort environment.  But even this is not good enough for Graham – “even in these states, the level of government control is far greater than necessary.”

The author’s aim is to appeal to our “Marlboro” nature.  We all want to be free from government interference, don’t we?  Even if it means that millions cannot have health insurance, millions of claims are denied by callous claim adjusters and billions are wasted on unnecessary paperwork.  Once you understand the motive underlying this pseudo-academic briefing paper, we hope you will exercise your “freedom” to relegate it to the trash bin of flawed documents.