Oregon Health Initiative Offers Wrong Prescription

Published October 28, 2002

Oregon residents will go to the polls November 5 to decide whether to be the laboratory for testing the nation’s first broadly applied single-payer health system. Limited versions of the single-payer scheme have been tried in other states, like Tennessee, Kentucky, and neighboring state Washington, with disastrous results.

“Oregon Health Care For All” advocates promise medical care for everyone, but experience says they can’t deliver on what they themselves consider an “audacious” promise. Just like England’s National Health Service, the end result will be lousy health care for all and an unending demand for higher taxation.

The initiative known as Measure 23 would create a health plan covering 100 percent of medically necessary health care costs with no deductibles and no out-of-pocket expenses. Prescription drugs, preventive care, mental health services, long-term care, dental and vision care, and many alternative therapies would also be fully covered.

The proposal requires creating an operating fund financed by a personal income tax increase capped at 8 percent and employer taxes assessed at 11.5 percent of payroll, redirection of current state and federal funding for Medicare and Medicaid to the single-payer plan (which, by the way,has not been approved by the Centers for Medicare and Medicaid Services), and elimination of the state workers’ compensation system.

Red ink likely

According to a research project conducted by the Legal and Economic Consulting Group in Wayne, Pennsylvania, the Oregon plan could lead to substantially higher medical costs, increased taxes, and decreased health benefits due to the application of cost-containment measures.

The study, commissioned by the American Association of Health Plans (AAHP), estimates the Oregon single-payer plan would require additional annual revenues of $14.5 billion to $21.4 billion, or $4,000 to $5,900 per Oregon individual and $10,000 to $15,000 per household.

The payroll and income tax increases permitted under Measure 23 would raise approximately $11 billion in revenue – creating an estimated shortfall of a minimum $3.5 billion. The shortfall could be as high as $10 billion if higher payroll taxes cause some businesses to reduce investment in the state and some citizens to relocate to lower-taxed states.

Blaming markets

Oregon’s advocates of socialized medicine, like their counterparts in other states, blame “market failure” for rising health care costs, the loss of patients’ rights, waste, and fraud. They fail to understand (or refuse to admit) that previous government interventions similar to those now being proposed are largely responsible for the current dysfunctional health care market.

Over the years Oregon passed all manner of benefit mandates and regulations that have all but strangled the life out of the private health care marketplace. The state’s patients’ bill of rights law, mental health parity law, guaranteed issue and community rating laws, and hundreds of unfunded benefit mandates have made Oregon of the most over-regulated health care and health insurance markets in the nation. This toxic regulatory cocktail has driven many private insurers out of the state and encouraged many people to remain without health insurance until they need it. This has caused health insurance premiums to soar, resulting in some 400,000 uninsured citizens.

A gathering storm

Supporters of the Oregon initiative are benefitting from the financial support of proponents of a single-payer system in places like California, Massachusetts, and Washington. Dr. Harvey Frey, director of the Health Administration Responsibility Project in California, is urging others to send money to the campaign whether or not they live in Oregon.

Last July, a single-payer advocacy group called Health Care 2000, based in Washington state, voted to change its name to Health Care for All-Washington. They are now in conformity with the single-payer organizations Health Care for All-Oregon and Health Care for All-California. These aligned groups also agreed to join Health Care Is a Right, a broad-based national coalition which is planning a conference next March to explore launching a ballot initiative advocating universal health care in the city of Seattle.

Proponents for a single-payer health care program believe the political landscape may have changed substantially since the defeat of Clinton’s 1993 Health Security Act. A good showing in Oregon, even if the measure fails to pass, could provide the momentum to pursue additional efforts on the state and federal levels.

Leap of faith

Less than a month before the vote, a Portland Tribune poll showed supporters and opponents of the measure split almost evenly, with 25 percent of voters still undecided. This is, I think, testimony to the public’s frustration with rising costs and less control over their health care, two problems that moving to a centralized government-run health care plan is least likely to correct.

Supporting socialized medicine in the early years of the twenty-first century requires a huge leap of faith and a significant level of intellectual confusion. Countries that have tried this in the past – Canada and England – have long waiting lines, limited access to new technology, and pigmy-sized domestic pharmaceutical industries. They are now moving to privatize their health care systems.

Advocates of the Oregon initiative claim with sufficient funding, their state can do what has never been done before: socialize the cost of health care without needing to impose price controls and other kinds of rationing. At best, their single-payer system would resemble the managed care system Oregonians say they hate, but without the innovation and accountability that come from competition. At worse, their plan would resemble Medicare, which seniors rightly complain about all the time.

Conrad Meier is managing editor of Health Care News, a monthly newspaper published by The Heartland Institute. He can be reached at [email protected].

For further information, contact Heartland’s Public Affairs Director Greg Lackner at 312/377-4000, 773/489-6447, email [email protected].