Watching the legislative budget conference committee debate the proposed government-run health care plan for three hours had me thinking about a lot of things. Most notably, I wondered how much liquid drano I would actually have to ingest to make sure I didn’t have to watch any more.
However, there’s one point the committee Democrats keep reciting that deserves a little more scrutiny than it has gotten. Senate Democrats keep pointing to the fact that their plan “saves money,” since the amount of revenue their newly imposed tax brings in falls a couple billion short of what health care currently costs. According to the Lewin Group powerpoint presentation prepared for AARP Wisconsin, current health care spending for the Healthy Wisconsin (HW) Plan population is $18.5 billion. The HW plan is expected to bring in $15.2 billion in tax revenue to pay for universal health care. Thus, $3.3 billion in health care spending will be eliminated from the market.
Let’s back up for a moment. That $18.5 billion is what health care currently costs, as determined by the market. Health care costs what it costs. It factors in what doctors charge, what equipment they need, what insurance companies charge for premiums, and so on. In setting all these costs, it is the people actually in the health care arena determining what to charge – due to competition within the system, many of these costs are controlled as much as possible, as a company has to meet some price level to attract and retain customers.
Senate Democrats, however, believe they can actually do a better job of setting these prices than can the people actually performing the heart surgeries and building the CAT scan monitors. In fact, they think they can pull $3.3 billion out of the health care system without any adverse effects on consumers, while at the same time greatly expanding the number of health care users in the system.
This brings up an interesting contradiction within the Democratic ranks in the State Legislature. Think about the University of Wisconsin System and the nearly $1 billion the state provides to the system annually. Now imagine the state cutting $300 million from the UW System and freezing tuition, while doubling the number of students the state’s campuses had to accept. Is there any Democrat in the Legislature that wouldn’t say the quality of education those students receive would be drastically harmed by such a scenario?
Yet this is similar to what the Healthy Wisconsin plan proposes doing. Democrats are proposing pulling $3.3 billion in “savings” out of the health care system, while drastically increasing the scope of individuals and procedures covered. And this isn’t supposed to affect our quality of health care?
Plan supporters argue that numerous insurance companies operating within a market creates inefficiencies within the market. They believe having the state being the sole insurance provider can save bureaucratic costs and negotiate better drug prices through bulk purchasing. They argue that more of an emphasis on preventative care will lower health spending in the long run, since people will be healthier.
It’s adorable that Democrats have suddenly embraced the idea of streamlining bureaucracy. They seem to be all for streamlining the bureaucracies of private companies, yet defend state government administration as apparently too valuable to face even modest cuts.
Furthermore, is there anyone in the state that believes once government takes over paying for health care that costs will actually be reduced? The Wisconsin Taxpayers Alliance has demonstrated that the more rapid increases in health care costs versus personal income could push the tax rate for the program to 20% in 10 years. Either the tax will continue to rise, or benefits will have to be cut. Given the lack of political will that spawned this plan, you can guess which is more likely to happen – workers will be picking up more of the tab, so legislators can avoid kicking people off of certain procedures covered by the plan.
Finally, who is more likely to know what procedures cost and are actually necessary – doctors and insurance companies or the newly created Healthy Wisconsin Board of Trustees? This Board, incidentally, is made up almost entirely of labor, farm, and business interests, with no representation from insurance or doctors’ groups. There are a couple slots for health care administrators, but they are non-voting members. When the Board implements “cost containment strategies” (i.e., rationing and price controls) it will do so without the input of a single appointed doctor or insurance representative. Apparently representatives of the AFL-CIO will know what types of procedures are more medically necessary than actual doctors. In fact, if they added Doctor McDreamy to the Board, it would have more medical credentials than it has now.
There’s no doubt that insurance companies can institute more effective cost-saving measures. In fact, many of them haven’t had to slim down administration due to the healthy profits they have been collecting. Sadly, when many insurance companies look to trim costs, it generally means dropping coverage for their sickest patients.
But to think that somehow government is going to tell insurance companies how to cut bureaucracy is laughable. I’d rather my dog got obedience training from Michael Vick. The only thing that will get insurance companies to cut costs is more competition. This is where tax-free health savings accounts can be effective. As more people get comfortable with the notion that they can pay for quality health care without insurance, it will force insurance companies to become more consumer-friendly. Think of it as getting a birthday card from Saddam Hussein.
The instances where government takes over a program and costs explode are too numerous to mention. The idea that the Healthy Wisconsin plan is going to somehow save everyone money without affecting the quality of care is simply a chimera. Ultimately, the Healthy Wisconsin plan, as all government plans are, is going to be judged by how quickly it grows, not by how effectively it can hold down costs.