Viewpoints

The End of Federalism - Can States Protect Themselves Against Massive Health Care Intrusion?

By Michael Ciamarra

As the U.S. House of Representatives leadership muscled through its complex, bureaucratic overhaul of 17 percent of our economy, states have not been waiting on the final outcome, if any, in the U.S. Senate.

Alabama State Rep. Mac Gipson, R-Prattville, will introduce in the 2010 session of the Legislature the Alabama Care Freedom Act constitutional amendment that will protect the rights of patients to make their own health care choices. Further, his measure prohibits penalties levied on patients for declining participation in any big government passed Pelosi/Obama health care plan.  To date, 22 states have introduced similar initiatives.

Indeed, states have much to lose whatever should pass Congress. Governors from both political parties watch in dismay as the Pelosi/Obama health care bill will saddle states with untold unfunded mandates and essentially transfer all health care decision making to Washington.  Rather than address the current health care market distortions imposed by heavy-handed government policies, the Pelosi/Obama health care bill would expand Washington’s reach and exacerbate what is broken in health care. Specifically, the legislation passed by the House proposes:

·         One-Size-Fits-All-Health Care. The bill’s rating restrictions, coverage mandates, and benefit requirements will halt innovation and drive individualized health products out of the market.  All plans would be subject to approval by a new Health Choices Commissioner who would have the authority to penalize any health plan that does not comply with this new federal bureaucracy.

·         Government Rationing. In an unprecedented power grab, this bill provides the federal government even greater leverage in deciding which medical treatments are worth paying for and which are not. In an effort to contain costs of its new health care entitlement, a new “Comparative Effectiveness Research” program will inevitably impose government control over physicians’ medical decisions and cause private-sector insurers to limit coverage in line with the government’s choices.

·         Price Setting. While the legislation suggests providers will be able to negotiate rates with the government, there is nothing to prevent this from becoming a take-it-or-leave-it, price-setting system. Put simply, prices will be dictated to health care providers at rates determined by the federal government.

The unsustainable growth in federal spending is driven largely by the exploding costs of existing federal government entitlement programs. Paradoxically, this bill attempts to address our entitlement and fiscal crisis through the creation of a costly new open-ended entitlement.  The Pelosi/Obama plan dramatically adds to the federal government’s already unsustainable liabilities, including the following specific spending concerns:

·         $3 Trillion Ten-year Price Tag. Proponents continue to tout a massive budget gimmick, using 10 years of revenues but only seven years of cost. Even with this timing trick, the Congressional Budget Office asserts that the Pelosi/Obama plan remains in excess of $1 trillion. Once the spending is fully phased in after 2014, its true cost exceeds $3 trillion over ten years.

·         Driving States Deeper Into the Red. Rather than make quality health coverage more affordable, the Pelosi/Obama plan attempts to cover the uninsured by adding them to ever expansive government-run programs. The dramatic expansion of Medicaid would force cash-strapped states to spend an additional $34 billion over the next 10 years – on top of the unsustainable Medicaid burdens states already face. One estimate indicates that 237,000 more people could be added to the Medicaid rolls in Alabama, adding $1.2 billion a year to the state's Medicaid budget.

·         $279 Billion Doc Fix Shell Game – In a final-hour political deal to pass the Pelosi/Obama plan, the Democratic leadership sought to gain credit for a Medicare reimbursement increase doctors want (the so-called “doc fix”), while hiding its $279 billion cost. This quarter-trillion dollar budget gimmick is a fiscally reckless stunt: the Democratic leadership will claim support for the doctors’ payment hike as part of their overall health care plan, but at the same time pretend its cost is a separate matter.

Moreover, the Pelosi/Obama plan imposes $729.5 billion in new taxes on families, employers and workers, including the following:

·         A total of $460.5 billion in job-killing surtaxes on small businesses;

·         Another $135 billion in employer mandates, including the “play-or-pay” scheme punishing even small companies that are unable to provide group health insurance;

·         An additional $33 billion in individual mandates – including an unprecedented Washington requirement that everyone must buy health insurance or be subject to federal penalties.

But states can also weigh in and challenge these mandates should this particular bill or any similar one pass Congress.

With President Obama's intensity of wanting to rush through an unprecedented big government managed system, Rep. Gipson's bill, if approved as a constitutional amendment, will become an essential tool in securing the rights of patients to make their own health care choices. 

When consumers control the dollars, they make the decisions.  On the other hand, a single-payer health system — which forces patients to enroll in a one-size-fits-all plan with rich benefits and weak cost-sharing — will cause spending to skyrocket and policymakers to ration care as a cost-containment measure.

Look at what's happened in New Zealand where breast cancer patients were blocked from accessing the lifesaving drug Herceptin — because it cost too much.  Or think about brain injury patients in Canada — a country that ranks 19th among 26 reporting OECD nations in access to CT scanners.

Under a socialized medicine scheme, many patients will suffer and some will die on a waiting list.  Patients don't deserve that kind of treatment.  Rep. Gipson's bill will prevent patients from being enrolled in a single-payer health system that will simultaneously pay for everyone's health care and limit access to it. 

The Alabama Health Care Freedom Act ensures a person's right to pay directly for medical care.  Single-payer systems, like in Canada, make it illegal for citizens to go outside the government's health care plan and contract for their own medical services.  Cost overruns require most single-payer plans to restrict patient choices and instead mandate an "evidence-based" treatment schedule that standardizes care.

Rep. Gipson's bill ensures that patients — not government officials — should decide which doctor to see, what treatments to get, and whether or not to get a second or third opinion. 

Should the Alabama Health Care Freedom Act pass, along with many other states passing similar measures, it could cause a federalism clash. Rep. Gipson stated in a recent Tuscaloosa News interview that, "the main thing I want to do is have something for a legal challenge. Letting people vote gives us a vehicle if there is to be a court challenge." 

States should heed the painful lessons set by Wisconsin's high-cost universal health plan.  In 2007, that state proposed — and rejected — a single-payer health plan for its citizens.  The Wisconsin plan would have required all citizens to drop their private health coverage and instead enroll in a state-administered plan.  Financing the plan would have meant a $15.2 billion dollar tax increase — the largest tax increase ever enacted by any state.  And the plan would have become more expensive every year — comprising nearly 40 percent of Wisconsin's budget in the first year alone. 

Rep. Gipson's bill would challenge any congressionally passed bill that imposes costly, bureaucratic penalties for choosing to obtain or decline health coverage.  This provision strikes at the heart of an individual mandate — implemented in Massachusetts and elsewhere — that penalizes individuals and businesses for failing to purchase health insurance.

The Massachusetts example is particularly instructive for states facing an individual mandate.  Three years into the mandate, Massachusetts still hasn't achieved 100% coverage. In fact, the Bay State still has more than 200,000 uninsured residents.  Many of the uninsured were exempt from the mandate because coverage was too expensive.  Over half of those who did get insurance got fully- or partially-subsidized coverage, courtesy of Massachusetts taxpayers.

What's worse, health spending has increased by 42 percent in Massachusetts since the mandate was enacted; taxpayers, doctors, and hospitals are facing increased taxes and fees and patients are finding it hard to see a doctor.

Simply put, Rep. Gipson's Alabama Health Care Freedom Act would protect against intrusive mandates that just don't work and the fatal conceit that government planners can spend health care dollars better than patients and doctors in the marketplace.

Michael Ciamarra is vice president of the Alabama Policy Institute and a fellow with the Center for Health Transformation. He can be reached at michaelc@alabamapolicy.org. The author wishes to acknowledge Christie Herrera of the American Legislative Exchange Council and U.S. Rep. Tom Price of Georgia for their insights. 

Note: This column is a copyrighted feature distributed free of charge by the Alabama Policy Institute. Permission to reprint in whole or in part is hereby granted, provided that the author and API are properly cited. For information or comments contact: Michael Ciamarra, Alabama Policy Institute, 402 Office Park Drive, Suite 300, Birmingham, Alabama 35223, (205) 870-9900, e-mail michaelc@alabamapolicy.org. To subscribe or unsubscribe to this column, please email joannl@alabamapolicy.org.