The 5-4 U.S. Supreme Court decision to uphold the federal health-care law doesn’t close the book on health reform. The court ruled that the individual mandate requiring everyone to purchase insurance is constitutional because the fine for not buying insurance is a tax, not a penalty.
That may have resolved the legal issue, but it did nothing to make health care more affordable.
How does ordering people to pay for something they can’t afford solve the problem? Despite its name (Affordable Care Act), the law focuses almost entirely on getting more people insured. But unless we actually reduce health-care costs, we will simply have dumped millions more people into an unaffordable system.
The federal government was a minor player in health care until Medicare and Medicaid were enacted in 1965. Those programs worked for a while, but the baby boom generation that funded the lion’s share of the Medicare and Medicaid taxes through payroll deductions is retiring and will soon become the largest consumers of those benefits.
Statistics from the Centers for Medicare and Medicaid Services show health-care spending per capita increased from $356 in 1970 to $6,697 in 2005 and is projected to rise to $12,320 in 2015 (in 2007 dollars).
How will mandates help if people and employers can’t afford insurance? Yes, there are subsidies, but taxpayers pay those, so we’re still paying too much for health care.
The key to health reform is to reduce costs, not just spread them around.
In 1993, Washington’s Legislature passed health reforms mandating that all employers provide health insurance.
That law ran into a brick wall called ERISA (Employee Retirement Income Security Act), which requires that firms operating in several states must have the same benefits for all their employees. Without a federal ERISA exemption, Washington couldn’t mandate reforms.
In 1995, Democratic Gov. Mike Lowry, who supported the 1993 reforms, gathered employer groups to find new ways to insure workers in small businesses. Out of those discussions came Association Health Plans (AHP), which provide small businesses with affordable health insurance.
Today, AHPs cover more than a half-million Washingtonians, nearly half of whom were previously uninsured because costs were too high.
The bottom line is there is no free lunch. Providing health coverage for 40 million additional people will be expensive. To help pay those costs, the Affordable Care Act reduces current tax breaks and adds 21 new taxes. Still, health reform will sink our economy unless we do more to control costs.
There are several innovative ways to do that:
Improve competition and reduce prices by letting people shop across state lines for health insurance that fits their needs and budget.
Granting individuals the same tax deduction for health insurance premiums as businesses.
Allow people with healthier lifestyles to benefit through lower premiums.
Allow people to keep affordable plans like health savings accounts and AHPs.
Implement tort reform to reduce frivolous lawsuits. Fear of lawsuits forces doctors to order unnecessary tests and causes malpractice insurance rates to skyrocket.
Unfortunately, all of these easy, affordable innovations are missing from the federal health reform law.
Even though the Supreme Court has spoken, there is much work to be done if we are to realize the goal of improving access to affordable health care. Government must be part of that innovation, not just the traffic cop handing out tickets and collecting fines.
Don Brunell is the president of the Association of Washington Business, Washington’s oldest and largest statewide business association. It has more than 7,900 members representing 700,000 employees. For more about AWB, go to www.awb.org.
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