The Leaflet: Health Care Reform Options for States

Published February 3, 2017

With the fate of the Affordable Care Act (ACA) still uncertain, there are steps state legislators can take to improve the cost and availability of health care in their states. Heartland Institute Senior Policy Analyst Matthew Glans outlines 10 such reforms in a new Research & Commentary published in January. Glans argues states should not wait for Congress and the White House to fix our nation’s health care policies; they should instead, Glans says, implement proposals to help make health care more competitive, accessible, and affordable.

One of the ways states can reform health care is by expanding access to health savings accounts (HSAs). Under an HSA system, consumers contribute funds to health-care-dedicated savings accounts tax-free and use the funds to pay for qualifying health care expenses. Under many HSA proposals, the funds carry over from year to year.

Julie Appleby, a senior correspondent for the nonprofit news service Kaiser Health News, said in a recent article HSAs can save significant amounts of money because consumers bear a bigger share of medical care costs up front, which means they are more likely to shop around and avoid using unnecessary medical services.

As Appleby explains, under the current system, “HSAs … must be paired with qualifying health insurance plans that have annual deductibles of at least $1,300 for individuals or $2,600 for a family, although surveys show average deductibles are generally higher than those minimums. Unlike some other types of insurance, the consumer pays the full cost of most doctor visits, drugs or hospital stays until the deductible is met. There are some exceptions for services deemed preventive, such as certain vaccines, prescription medications or cancer screenings.”

Consumers who pair HSAs with high deductible plans have the potential to save thousands of dollars per year, making the health care system much more efficient in the process. Indiana has offered HSA plans to its public employees since 2006 with great success for both the employees and taxpayers.

Another way to improve the cost and availably of health care services in states is to roll back certificate of need (CON) laws. Glans argues in the Research & Commentary, “These laws block competition and innovation in the health care market. At present, 35 states require CON commission approval for a wide range of expenditures, including the construction of new hospitals, purchase of major pieces of medical technology, and the offering of new medical procedures. CON laws increase the cost of health care and limit access, benefitting those with political connections.”

States can also improve health care service availability by expanding direct primary care (DPC) access. Not to be confused with “concierge medicine,” DPC bypasses insurers and usually cost $50 to $100 per month. In a 2015 Research & Commentary, State Government Relations Manager Nathan Makla wrote, “Direct primary care empowers patients and doctors, giving them more freedom to establish and participate in health-care-provider models that work best for all patients. North Carolina should remove unnecessary regulatory barriers to direct primary care and allow more public-sector employees to participate in a DPC system.”  

State legislators should pass legislation specifying DPC is not a form of insurance, removing a common barrier facing physicians interested in adopting a DPC model but afraid a state bureaucracy might shut down their new practice. Lawmakers should also integrate a direct primary care program into their Medicaid system, a move that would help reduce costs and improve care.

States can and should take health care reform into their own hands to improve the lives of citizens and shore up state budgets across the nation.

What We’re Working On

Budget & Tax
Oklahoma Legislator Proposes Weakening Tax Relief Trigger
Dustin Siggins, associate editor for The Stream, writes in this Budget & Tax News article about a Republican state legislator in Oklahoma who is proposing a bill that would revise the state government’s “tax trigger” law, raising the revenue level at which the state government is required to reduce income tax rates. Trigger laws have become an increasingly popular method for states to use to reduce tax rates while not compromising revenue. A Research & Commentary on the issue is available here. Read more

Research & Commentary: Universal ESA Program Would Make Arkansas a National Leader in Education Choice
A bill has been introduced in the Arkansas House of Representatives that, if passed, would be the nation’s first universal education savings accounts (ESA) program to be funded via tax-credit scholarships. These ESAs would be available for use by parents to pay for tuition and fees at private and parochial schools, should parents choose to do so. In this Research & Commentary, Policy Analyst Tim Benson argues making available a universal ESA would greatly benefit the state. “Allowing all students in Arkansas to receive ESAs would be a giant step toward remedying Arkansas’ lackluster record of failing to educate its children,” Benson wrote. “When parents are given the opportunity to choose, every school must compete and improve, which gives more children the opportunity to attend a quality school.” Read more

Energy & Environment
Research & Commentary: Banning Fracking in Maryland Would Be a Mistake
In this Research & Commentary, Policy Analyst Tim Benson writes about efforts being made by some Maryland lawmakers to permanently ban hydraulic fracturing, commonly called “fracking,” in the state before the two-year moratorium on the process expires in October. The ban would be a mistake, Benson argues, because “as well as being environmentally safe, fracking has had a positive economic impact on those areas that have allowed the practice.”

“The fracking process has transformed the energy outlook of the United States over the past decade, and the rise of shale gas as a replacement for coal has been primarily responsible for the United States now enjoying its lowest level of carbon-dioxide emissions since 1989,” wrote Benson. “There is no scientific justification for banning hydraulic fracturing or over-regulating it out of existence.” Read more

Health Care
Research & Commentary: Health Care Sharing Ministries a Good Alternative to ACA
The rising health insurance premiums and deductibles that have occurred as a result of the Affordable Care Act (ACA) have led many families to seek alternatives to health insurance. One alternative that has drawn considerable interest and expanded rapidly since the implementation of the ACA is health care sharing ministries (HCSMs). In this Research & Commentary, Senior Policy Analyst Matthew Glans defines HCSMs and describes the many benefits they offer to those who take advantage of them. “HCSMs are the modern equivalent of mutual-aid societies, groups that voluntarily work together to ensure everyone gets the health care they need. States should allow this growth to continue and not move to add unnecessary layers of regulation, as many state insurance commissioners have recommended,” Glans wrote. Read more

From Our Free-Market Friends
The Buckeye Institute Releases New Policy Brief on Prison Reform
The Buckeye Institute recently released a new Policy Brief outlining an innovative policy solution that could reform Ohio’s outdated and overpopulated prison system. Ohio currently spends $1.7 billion every year on incarceration, and its prisons are at 134 percent of their capacity. Daniel Dew, The Buckeye Institute’s criminal justice fellow, argues, “Unless something is done to reduce this bloated population, the state could end up spending an additional $1 billion to build an entirely new prison. … Thankfully Ohio already paved the way to a solution with its reform of the juvenile incarceration system.” The Buckeye Institute’s Policy Brief explains these reforms in more detail and shows how Ohio policymakers could replicate them to solve the ills plaguing the state’s adult prisons. Read more