Policy Diagnosis: Seize the Moment to Reform State Health Care Laws

Published February 24, 2017

Editor’s Note: The election of President Donald Trump signals an unprecedented opportunity for Congress and state lawmakers to pass health care reforms centered on patient choice. Health Care News Managing Editor Michael Hamilton asked Dr. Hal Scherz, board secretary for the Docs4PatientCare Foundation, how the Trump administration is changing the health care regulatory environment and what actions lawmakers should take to improve health care.

Hamilton: How important was President Donald Trump’s nomination of Rep. Tom Price (R-GA) for secretary of the Department of Health and Human Services?

Scherz: Price knows more about health care than anybody in Washington, DC right now, as an orthopedic surgeon, budget chairman of the House for the previous Congress, and author of the Empowering Patients First Act, which he has introduced in four consecutive Congresses. He has his finger on the pulse of health care like no one else. Now that the Senate has confirmed him, a process Senate Democrats slow-walked, Price will start walking back some of the Obamacare regulations.

Hamilton: Trump signed an executive order minimizing the regulatory and fiscal burdens of Obamacare on January 20, 2017. What else can the executive branch do to dismantle the Affordable Care Act?

Scherz: Trump’s order was a gesture fulfilling one of his campaign promises, which was to address health care out of the gate. We are at a standstill until we get a Health and Human Services secretary. Obamacare gave the HHS secretary almost imperial powers over health care. Now that Price has the nod, he will be able to do what I think is the most important thing: eliminate the minimum essential benefits mandates of Obamacare.

Hamilton: How would eliminating insurance mandates increase health insurance and health care options for patients?

Scherz: Insurance companies would regain the opportunity to write customizable insurance policies, including bare-bones plans that cover catastrophic events, which is really what insurance is meant to cover. People could affordably pair catastrophic coverage with a direct primary care membership, which covers about 80 percent of all the care people need. Catastrophic insurance would cover the worst of the other 20 percent.

Hamilton: Obamacare’s individual mandate and tax penalty dissuade patients from buying catastrophic insurance plans, which cost less than bronze-level Obamacare plans. How affordably could patients pair catastrophic coverage and a direct primary care membership?

Scherz: Right now, insurance companies are not able to offer affordable catastrophic health policies because of the minimum essential benefits clause of Obamacare. When this is stripped away by Secretary Price, we will begin to see a robust market for these policies, which, practically, should cost less than $200/month. When combined with a direct primary care arrangement, which may cost at most $100/month, a person will be covered for most of the health care that he or she should need for about $3,600 annually.

Hamilton: How would expanding health care provider options for patients reduce the cost of health care?

Scherz: In many states and communities around the country, regulations have forced health care to be delivered in the most expensive health care delivery site in the system: hospitals. Anybody who has been in a hospital knows the hospital bills are out of control. In many cases, they are five to 10 times greater than what that same service would be if it were administered outside of the hospital.

Hamilton: The Heartland Institute and Docs4PatientCare Foundation continue to urge state lawmakers in 35 states to repeal certificate-of-need laws. How do CON laws restrict hospital care access and quality?

Scherz: The problem is certificate-of-need laws are anticompetitive. If I wanted to open up a competing entity against the hospital, I couldn’t do it in my state of Georgia, because I would first have to apply for and obtain a certificate of need. The CON review board would put my application out for review. It could be contested by my competitors.

It’s as if I wanted to open up a hamburger joint but couldn’t until McDonald’s, Burger King, and Wendy’s signed off. That’s never going to happen, and the hospitals are now so wealthy that they use that money to influence state lawmakers. CON laws need to go, because the minute they go away, you’ll have entities that can compete, not just on cost but on quality.

Hamilton: How will the Trump administration affect Medicaid, and what action should state lawmakers take to improve their Medicaid programs?

Scherz: I like Trump’s nomination of Seema Verma to run the Centers for Medicare and Medicaid Services. She is an economist who put together one of the best-run state health care plans in the country, Healthy Indiana. This is one of the shining examples of how states, given the opportunity to run a Medicaid system, can do it well, make patients healthier, empower patients, and cut costs. The plan gives patients financial incentives to make smart choices as consumers and patients. These are the kinds of programs states can build without taking care away from the poor.

Michael T. Hamilton ([email protected]@MikeFreeMarket) is a Heartland Institute research fellow and managing editor of Health Care News, author of the weekly Consumer Power Report, and host of the Health Care News Podcast.

Internet Info:

Matthew Glans, “Research & Commentary: 10 Health Care Reform Options for States,” Research & Commentary, The Heartland Institute, February 1, 2017: https://heartland.org/publications-resources/publications/research–commentary-10-health-care-reform-options-for-states

Michael T. Hamilton, “States Should Protect Direct-Pay Health Care Model,” Consumer Power Report, The Heartland Institute, January 26, 2017: https://heartland.org/news-opinion/news/states-should-protect-direct-pay-health-care-models?source=policybot