Medical Innovation Abounds–Except Under Single-Payer Systems

Published August 1, 2008

In late June, key members of Congress got another wake-up call about the serious threat rising government health spending poses to the future of our health care sector and the overall economy.

During a June 16 summit at the Library of Congress, sponsored by the Senate Finance Committee, Federal Reserve Chairman Ben Bernanke told committee members, “The decisions we make about health care reform will affect many aspects of our economy, including the pace of economic growth, wages and living standards, and government budgets, to name a few.”

The numbers are in fact frightening.

Federal Health Board?

Bernanke said, “higher government spending on health care … will, of necessity, require reductions in other government programs, higher taxes, or larger budget deficits.”

So what solution did the chairman of the Finance Committee offer? Sen. Max Baucus (D-MT) said he wants to create an “independent federal health board” to make health policy decisions involving payments through Medicare and other health programs.

That would mean Congress would delegate to an unelected board the authority to make decisions over hundreds of billions of taxpayer dollars to provide medical care for tens of millions of Americans. What kind of democracy is that?

Federal health boards are common in single-payer and other government-dominated health systems. The failed Clinton plan in the 1990s included one.

This is a very bad idea that needs to be put to rest immediately. Some in Congress may be paying attention to the critical importance of this issue, but sound decisions need to be made in the open political arena about spending and benefits. Congress can’t punt on this one, and it needs to get serious about reform while it still has options.

Single-Payer Health Care?

Speaking of bad ideas, advocates of single-payer health care are continuing their push, especially on the West Coast.

California state Sen. Sheila Kuehl (D-Los Angeles), chairman of the state’s powerful Health Committee, continues to press her bill to enact a health plan in which the state would collect taxes to pay the health care bills for all Californians, and the state would pay doctors, hospitals, and other providers directly (hence the name “single payer”).

But she, too, got a wake-up call from a study released June 15 by the state’s highly respected and nonpartisan Legislative Analyst’s Office. It concluded, in essence, the single-payer health reform plan would be a fiscal train wreck.

Kuehl’s single-payer plan would be more than $42 billion in the red in the first year. The state would collect an estimated $167 billion with a new 12 percent payroll tax and similar levies on small business and even on investments, but it would be faced with an estimated $210 billion in health care bills in the first year of operation (2010). And the red ink would continue to flow, year after year.

To close the shortfall, taxes would have to be raised to at least 16 percent, and then higher every year after that. Has anyone told Silicon Valley about this?

Talk about a jobs and economic growth killer! The familiar song would have to be changed to “Nevada, here we come!”

Market Innovations Continue

Meanwhile, in the real world, common sense and market innovations continue. Assurant Health announced in late June it has partnered with TelaDoc Medical Services to provide its customers with access to a network of board-certified, licensed primary care physicians on demand, over the telephone, 24/7.

Fast, convenient, and cost effective–isn’t that what consumers are looking for in health care? The service also helps people living in rural and other medically underserved areas and those with transportation challenges such as $4 a gallon gas prices.

Assurant Health focuses on individual and small group health insurance and is a major player in the health savings account marketplace. The company is always looking for ways to distinguish itself from bigger competitors, such as by offering same-day decisions to people who apply for health insurance.

Now it is taking innovation another step further by partnering with TelaDoc.

With one million subscribers, TelaDoc offers quick and convenient access to a physician consultation any time of the day or night, 365 days a year. It helps people avoid the time, expense, and delay of an office visit or trip to the emergency room.

In addition, last year Assurant announced MinuteClinics would be covered as an in-network provider of health care services for policyholders.

Can you possibly imagine these kinds of market innovations taking root in California under a single-payer system?

Grace-Marie Turner ([email protected]) is president of the Galen Institute.