20 Changes For 2010: Health Care

Recommendations 3 and 4 from the Civitas Institute Agenda “20 Changes for 2010: A Primer for State Reform,” focus on how North Carolina can make health care more affordable and protect state residents from predatory federal mandates.

The Problem: Rapidly Rising Health Care Costs and Overreaching Federal Mandate Proposals

This year health care reform emerged as a forefront national issue. Our nation’s health care spending continues to rise and is projected to reach $3.1 trillion in 2010, amounting to 17.7 percent of GDP.1  Congress is considering legislation that would effectively overhaul our nation’s health care system at a staggering cost to states already struggling in the midst of a prolonged economic recession.

Disappointingly, the proposed legislation does not address the true problems affecting the health care system, which usually stem from government overregulation creating distortions in the market.

• In general, increased regulations and mandates price people out of the health insurance market.
  • North Carolina, for example, has 47 state-imposed insurance mandates, which arbitrarily designate the services that must be covered by all insurance providers in the state.  
  • A 2006 study shows that 16 states with the fewest health insurance mandates averaged an uninsured population of 13.1 percent, while the states with the highest number of mandates had an average uninsured population near 20 percent.2 

Both versions of the health reform legislation in Congress include a provision to create mandates forcing individuals to purchase health insurance coverage, and business to provide insurance to all employees.  These types of federally imposed mandates erode personal liberties, create perverse incentives and limit choice, raise costs in the system by artificially increasing demand for medical care while the supply of doctors in the system continues to decrease, and also challenge the sovereignty of the states.

Indeed, the list of needed reforms to the current government-dominated health care system is lengthy. But the following two recommendations would go a long way toward protecting North Carolina consumers from predatory federal mandates and making health insurance more affordable for citizens of the Tar Heel state.

Solutions:

3. Exercise state sovereignty and protect North Carolinians from federal mandates

Voters were asked whether or not they believed the inclusion of health insurance mandates in the congressional reform legislation was a good idea. A majority, 51 percent, replied it was a bad idea, while 41 percent said they thought it was a good idea.  (Jan. 2010 Civitas DecisionMaker poll.)

• According to a Centers for Medicaid and Medicare Services (CMS) report earlier this year, the inclusion of mandates forcing individuals to purchase health insurance would still leave 19 million people uninsured and raise taxes by $29 billion.  Massachusetts, a precursor state in establishing mandatory health insurance purchase, has seen its health care costs increase by as much as 42 percent since the mandate was adopted 2 years ago3. 
• Forcing individuals to purchase a product is an assault on our individual liberty, and quite possibly a violation of the U.S. Constitution.

Recommendation:

• Create opt-out legislation to counter the potential federal mandate forcing all citizens to purchase health insurance.
  • A preliminary version was drafted by North Carolina legislators earlier this year entitled the “Health Care Protection Act.” The bill would counter federal mandates forcing individuals to purchase health insurance.   

4. Expand consumer choice and competition to reign in insurance premiums

An overwhelming 86% of voters said they would prefer to be allowed to purchase health insurance plans from other states. (July 2007 Civitas DecisionMaker poll)

Allowing access to more affordable out-of-state health insurance plans will not only enable more North Carolinians to purchase health insurance, but also will lead to lower prices for in-state plans by introducing more competition.

• More options means that consumers could tailor their insurance plans and purchase options that best fit their needs. 

Recommendation:

• Create legislation that would allow for the purchase of health insurance across state lines. 
  • In the 2009 legislative session, SB 725 (Berger, R-Rockingham) proposed this very measure, but the proposal was rejected in committee.