Dakota Beacon

Time To Re-Boot The Healthcare Debate 

The debate has skipped over disscussing the causes of high healthcare costs, and ignored reforms beyond replacing the current system. 

November 30th, 2009

It is amazing sometimes how elected officials are allowed to get away with diverting attention from real issues.

Case in point:  Congressman Earl Pomeroy has made himself out to be a victim of the "out-of-state interests."  This tired old line doesn't pass the smell test when one takes into account that the congressman's own campaign has consistently been 70%+ funded by out-of-state donors.  We aren't supposed to pay attention to what goes on behind the curtain.  (Click here if you want to see where Congressman Pomeroy gets his funding from.) 

Plowing through that distraction, and getting back to the real issue:  much has been made by Congressman Pomeroy (as well as Senators Conrad and Dorgan) about the provision of "negotiated rates" for the public option rather than tying rates to what Medicare currently pays providers. 

This is deceptive.

The dirty little secret is that Medicare does not reimburse doctors and hospitals at a dollar-for-dollar cost level for services.  As a result, doctors and hospitals charge private insurance more to make up the lost ground.  This means Medicare itself is driving up the cost of private health insurance. 

In many ways, spiraling health insurance costs are a self-fulfilling prophecy perpetuated and stoked by the government itself. 

Medicare "covers" seniors for healthcare, but only pays a portion of the bill.  Providers are then forced to charge private health insurance companies artificially high rates to offset Medicare's shortcomings.  

Now, after Medicare has driven up the cost of private health insurance, Congress wants to add more government to solve a problem government created in the first place.

Congressman Pomeroy is correct to point out that Medicare rates are hurting North Dakota providers. 

While the negotiated rates will be higher than Medicare rates, they will still be lower than what private insurance pays providers.  As a result, a public option that attempts to under-cut private insurance will push the cost of private insurance up even more than what would happen without the public option.

To make matters worse, the current structure of both the House of Senate healthcare bills imposes mandates on employers to either provide health insurance for their employees, or pay up to 8% in new payroll taxes.  There is a very high likelihood that the public option will drive the cost of private health insurance well past 8% of payroll costs, and businesses would be economically stupid to not put their employees on the public plan and pay the 8% tax.

Of course, even with Medicare rates lower than provider costs, in all its managerial glory, Medicare is on the verge itself of going broke within a decade.  Congressman Pomeroy fails to mention that the government, via Medicare, is a primary driver of higher private healthcare insurance prices.

The public option, as proposed with other taxes, penalties, and mandates will transform, eventually, into government-run healthcare.  The government will own its own insurance company, and will make the rules by which all insurance companies run.  It does not take too great a leap to assume that Congress will make the rules in such a way where only their company will succeed.

The pundits, politicians, special interest groups, and the public at large have been distracted by the debate over what is or is not in the bill. If the debate was really about reform, our Senators and Representative would be discussing what should be in the bill rather that what is or is not in the bill.

The healthcare debate is no longer about reform, it has been unmasked as an attempt to completely replace our current healthcare system, under the guise of reform, rather than reform it.

What would real reform look like?

• Fix Social Security and Medicare first.  With a combined level of unfunded liabilities of nearly $100 trillion over the next 35 years, the time is now to fix these existing government health and safety-net programs. 

• Allow individuals to deduct heath insurance premiums, and out of pocket healthcare costs, on their tax returns. 

• Allow everyone to own a Health Savings Account (HSA) and create incentives for businesses to match their employee's contributions to those accounts.

• Encourage states to amend their laws to allow the purchase of insurance policies across state lines and empower insurance commissioners to negotiate agreements to ensure consumer protections.

It is clear that the government cannot reduce the cost of healthcare without drastically under-cutting provider costs.  Even when it does not pay providers what it takes to breakeven, the government's current healthcare plan, Medicare, is insolvent and going bankrupt.

With two layers of government entitlement programs (Social Security and Medicare) already buckling under their own weight, there is no reason to add another layer of unsustainable and unstable government bureaucracy.

It's time to start talking about actual reforms to the healthcare system, and forget about replacing it with something entirely new.

- Dustin Gawrylow, Executive Director

North Dakota Taxpayers' Association