Health Care Made Easy

(Note: The following is an excerpt of comments made by Michael Tanner at the Mackinac Center for Public Policy’s March 5, 2007, Issues & Ideas forum. The full text of his comments can be found here, or you can click here to listen to the speech only.)

Now, mostly I’ve spent my time here and I always feel bad when I come to a state because I spend almost all my time telling you what you shouldn’t do. Frankly there’s not a lot of choice on that. I understand why states and state legislators and others get frustrated with what’s going on in Washington. The absolute inability of Washington to wrestle with the issue of health care reform but the fact is the real problem with health care in this country can only be fixed at the federal level. The fact that they stem from federal tax law and federal anti-trust law, federal regulations and the Medicare system and so many things of that nature that you really can’t fix at the state level. So I urge you not to let your frustration drive you to do something that you’ll later regret. In health care reform the first rule of thumb should be is to follow the Hippocratic Oath and "first do no harm" and the vast majority of what state legislators can do ultimately is bad policy.

But there are a few things that you can do and I would urge you to do them. You can deregulate your health insurance market. I would urge you to look at repealing mandated health insurance benefits and allowing people to buy low cost, bare bones health insurance, particularly young and healthy people. You want to get them into the insurance market when they’re young and healthy, not have them wait until they’re old and sick. The best way you can do this is to enable them to buy low cost health insurance and buying a bare bones policy will say they don’t have enough health insurance is better than having none. So if you could lower the cost of health insurance I think you would be much better off for these folks striking out the mandated benefits is a good way to do it.

A better way of doing it, I understand the political problems of going out there and trying to fight particular mandates and say we’ll take the podiatrist out and the podiatrists will go crazy on you and I understand how difficult that is. So here is a suggested way you might be able to get around that. Change your insurance law to allow for sale in this state any insurance product that is approved for sale by any state in the union. Right now you have to buy insurance that is approved by the Insurance Commissioner in the State of Michigan. But why shouldn’t a person go to say Idaho, a state that has the least mandates in the country, find an insurance product that is for sale and approved by the Insurance Commissioner in Idaho and buy that insurance product. Or small business being able to go to Illinois or to Wisconsin or to wherever and be able to buy insurance there. A simple change in the law would allow that to happen. There’s a federal bill that would create this power by John Shadegg of Arizona but you don’t need to wait for the federal government to act on that, that’s something you can introduce on the state legislative level. There is an excellent study coming out on how this can be done from the Goldwater Institute in Arizona and I would urge you to track that down. It should be published shortly. It would not only allow individuals and small businesses to be able to buy insurance at low cost, it would create an enormous incentive of regulatory competition, the same way you have tax competition between states to get business to come in or whatever you would find regulatory competition on health insurance. People would be competing to have the best health insurance climate so that people would buy health insurance from their state. You will find that some states would be out there to become you know like South Dakota is for credit cards, some state would be the health insurance industry and states would be competing to do that and I think that would be a terrific thing if you did that.

The second thing I would say you could apply to your Medicaid rules the same rules you applying to TANF (Temporary Assistance to Needy Families). Prove Medicaid to be what it is in terms of welfare. Third is you can set up policies to enable people and small businesses through their 125 Plan to purchase health insurance on a pre-tax basis. Fourth, you can expand health savings accounts, encourage state employees to purchase them, bring them into your system, and make sure you have the tax advantages and regulations right so they can be expanded as much as possible. Fifth you could offer a state tax break for people who purchase individual health insurance. You could simply create a standard tax deduction for people who purchase health insurance regardless of where they get it or how they get it.

I think these could be small incremental steps in the right direction. I think that in the end they will help. They won’t solve all the problems but they also won’t hurt the health care system that we have today. In the end, "first do no harm," then do what good you can. I think that is the message I would like to bring to you today. With that I would like to close and take any questions you might have. Thank you for listening to me. Thank you.

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Michael Tanner is director of health and welfare studies at the Cato Institute, a non-profit public policy research foundation headquartered in Washington, D.C.