Latest health reform will backfire
By Mark Hillman,
Saturday, April 12, 2008
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Samuel Johnson called second marriages "the triumph of hope over experience." The same might be said for the latest health-care reform bill at the state Capitol.
For more than 20 years, crusading politicians have promised to deliver better health care to more people for less money simply by saying "make it so." With rare exceptions, the resulting legislation exacerbates economic distortions, makes insurance impractically expensive, drives insurers out of the state, and creates worse problems than originally existed.
Senate Bill 217, which the Rocky Mountain News inexplicably endorsed on April 6 ("Health-care reform for grown-ups"), seems to be a desperate attempt to "do something" without a game plan. What it does best is to create case studies in irony, hubris and cognitive dissonance.
At times, the bill's sponsors sound frenetic in their urgency, as when they propose to declare in state law: "Colorado cannot wait to address the current problems related to the delivery of affordable health care!" (Conspicuously absent exclamation point added.) Other provisions of the bill do not convey the same urgency. For example, the governor is instructed to appoint "a panel of experts" - yes, another blue-ribbon commission - to help craft a reform plan that could lead to substantive legislation not this year, or next year, but in 2010.
Elsewhere, it appears that the bill's sponsors never recognized that many of their objectives are irreconcilable. In calling for health insurance companies to design "value benefit plans" to provide a low-cost insurance alternative, the bill says that the state "shall not specify benefits or other details" of those plans. Just two paragraphs later, however, the bill stipulates a dozen mandated benefits or other details that value benefit plans must include.
Essentially, insurers are prohibited from proposing anything that's remotely innovative. They are commanded not to "interfere with the existing small-group market" but are locked into the same rating criteria that has devastated that market for most of the last decade.
Colorado's small-group market is verging on a "death spiral" - the point at which it is so overpriced and overregulated that anyone who is healthy enough to obtain insurance elsewhere has fled, leaving a pool that is disproportionately sick, aging and expensive.
Since 1998 when 536,367 people were insured through employers of 50 or less, the small-group market has suffered a mass exodus, largely due to well-intended but economically unreasonable price-fixing schemes imposed by the legislature.
By 2005 the state's population had grown by 16 percent, but the small-group market withered by 33 percent, covering just 358,264 insured lives.
If insanity is "doing the same thing over and over but expecting different results," then legislators need to own up to their own psychosis. Lowering health-care costs isn't as simple as passing a law demanding more for less.
If it were, Colorado wouldn't have the seventh-highest insurance premiums in the nation.
Legislators should permanently loosen the rating handcuffs, forcing insurers to compete for business, and repeal the mandates that have driven costs through the roof. Absent the courage to do that, they could at least allow insurers to propose choices that are popular and less expensive in other states.
SB 217 does change the existing health-care market in one dramatic respect, by signaling to insurance companies that state government is ready to force its incorrigible citizens to buy health insurance, even if it's unaffordable.
The bill calls for "a requirement that all Coloradans obtain health insurance either individually or through their employer" and provides for enforcement "though the state tax laws."
Rather than allow insurers to offer new choices or allow consumers to obtain coverage across state lines where Colorado's draconian regulations aren't strangling the market, legislators prefer to penalize taxpayers for the audacity of refusing to buy insurance that costs too much.
Even California Democrats recently figured out that it's wrong to tell working families to buy something they cannot afford just because government says so, joining Republicans to kill a heavy-handed mandate proposed by Gov. Arnold Schwarzenegger.
Economist Thomas Sowell has said, "The first lesson of economics is scarcity: There is never enough of anything to satisfy all those who want it. The first lesson of politics is to disregard the first lesson of economics." Unfortunately, Colorado politicians seem determined to again disregard sound economics and stick consumers with the cost of their political promises.
Mark Hillman (markhillman. com) served as majority leader of the Colorado Senate.
Comments
Posted by roger44 on April 12, 2008 at 4:58 a.m. (Suggest removal)
Mass. wants to raise cigarette taxes by a dollar a pack to cover their costs of the state mandated health care, encouraging folks to cross state lines, and black market tobacco. Politicians will make crooks of us to pay for their "mandates"
Posted by KaySieverding on April 12, 2008 at 7:45 a.m. (Suggest removal)
One problem with providing health care thru long term insurance is that the costs are generally later when the person is older. Will the insurance dollars be there when needed? I already documented over 10 insurance companies selling professional liability insurance in Colorado without registering with Colorado Insurance regulators and the State as yet has done nothing to stop them from continuing to sell insurance in Colorado. Most of these were advertised as being backed by the full regulatory guarantee of the State of Colorado. The population of Bermuda is only 90,000 people yet it has over 12,000 insurance companies--one for every 75 residents--doing most of their business in the U.S. In Bermuda, the management of an insurance company does not have to sign anything certifying their belief that the financial reports are accurate. It is not reasonable to assume that the insurance companies we are paying now will actually pay claims and not just transfer the money away. As another example, TIG Specialty Insurance, which had a good "rating", has gone out of business and the assets were transferred to TIG Holdings. TIG Holdings is not selling insurance at all, has no public financial statements, and is based in East Africa. The insurance business could be the next sub prime mortgage crisis. At least with government health care we know the money stays in the U.S.
Posted by KaySieverding on April 12, 2008 at 7:53 a.m. (Suggest removal)
Sorry for typo. It is 1200 insurance companies in Bermuda, not 12,000. Still one for every 75 people. In Colorado:
“ Every insurance company doing business in this state, on or before the first day of March in each year, shall submit to the commissioner a report, signed and certified by its chief officers, of its condition on the preceding thirty-first day of December, which shall include a detailed statement of assets and liabilities, the amount and character of its business transacted, and moneys received and expended during the year, and any further details of expenditures, and such other information, to be included in the report or supplementary thereto, as the commissioner deems necessary. A synopsis of such statement, together with the commissioner's certificate of authority to transact business in this state, shall be published in some newspaper of general circulation, published at the state capital, for at least four insertions. Such publication shall be made within thirty days after such certificate of authority is issued, and a copy of the paper containing such publication shall be filed in the office of the commissioner. The commissioner shall revoke and refuse to reissue the certificate of authority of any insurance company failing or refusing to furnish the reports or other information requested by the commissioner as provided in this section.” C.R.S. 10-3-109. Reports, statements, assessments, and maintenance of records - publication - penalties for late filing, late payment, or failure to maintain.
Do you see these required insurance financial reports being published in the Denver Post or Rocky Mountain News?
Posted by KaySieverding on April 12, 2008 at 8:09 a.m. (Suggest removal)
Look at this list of insurance companies
http://www.abanet.org/legalservices/l..., which connect to web sites with insurance purchase information and compare the companies listed as admitted in Colorado with the State of Colorado records:
http://cdilookup.asisvcs.com/CompanyS...
I contacted the Colorado Division of Insurance to ask them about the discrepancies but get no answer. They also do nothing about Mutual Insurance Limited of Bermuda which doesn't even have an NAIC number. I complained to them that Mutual Insurance insured the Steamboat Pilot, appeared in a civil law suit without filing the required insurance disclosure forms, CRS 10-3-1004 etc., and talked Judge Nottingham into putting me in jail "in the absence of criminal information" for the sole stated purpose of deterring my presentment in other courts of a defamation claim that Judge N dismissed without a jury trial or a decision conforming to Rule 52a (stating reasons and facts) after the magistrate "struck" our motion for summary judgment and engaged in ex parte conferences. Don't think that this couldn't happen with health insurance claims. I wrote to Judge Nottingham's criminal defense lawyer, Stephen C. Peters, and asked him if there was any reason why what Judge N did to me was not § 1513 Retaliating against a Witness, Title 18 Part I Chapter 73 § 1512 Tampering with a witness, and Title 18 Part 1 Chapter 13 § 242. Deprivation of Rights under Color of Law but he didn't respond. In 10 years we could be unable to collect on the insurance because we will be put in jail if we don't go away.
Posted by Art on April 12, 2008 at 8:50 a.m. (Suggest removal)
Ms.Sieverding makes several good points. In the end it comes down to how the state can enforce the law requiring everyone to purchase health insurance. In Mass they are attempting to tax people more who do not buy the insurance that they are unable to afford. This shows that taxes are just another form of slavery. Since when do we use taxes to punish people? What then happens to people who cannot afford to pay the extra taxes? I suspect that they will be jailed for not paying taxes. Of course then the state would have to provide health care for them in jail. This is absolute stupidity, far different from insanity. Also think of the bureaucracy that will be necessary to keep track of who has purchased health insurance and who has not purchased the mandatory insurance. There are so many things wrong with these schemes that one just does not know where to go next. We must all urge our legislators to put a stop to these very ill conceieved plans. I would venture to guess that the insurance industry is behind the plans as they see a windfall coming to them. They certainly will raise their premium rates and co-pays when and if these plans go into effect, just as has happened in Mass.
Posted by SASQUATCH on April 12, 2008 at 8:58 a.m. (Suggest removal)
Achtung, achtung...it looks like the "Health-Nazis" are out of control. Mandated participation in a monopoly can never work, monopolies are always hostile to the consumer. Free markets, choice and competition is the only way to ensure the best possible service at the lowest possible price. The proposed fix insures a giant step in the direction of healthcare rationing and reduced service supported by a "play or pay" tax penalty.
Posted by KaySieverding on April 12, 2008 at 10:42 a.m. (Suggest removal)
What if the money is raised, at great sacrifice, and then it is not used to provide medical services but instead is laundered away thru various schemes by inadequately regulated insurance companies?
What you fail to acknowledge is that everywhere there are criminals seeking to steal other people's money. One of the reasons that state insurance commissions were created was that there was so much crime involved in insurance. One scheme is to buy life insurance on someone else and then murder them. So what has happened in recent years? Reduction in regulation effectiveness everywhere + the Internet. First you buy auto insurance from GEICO, then you buy health insurance from XYZ Company over the Internet. Then XYZ Company merges to become XYZABC Company and changes its location from State 1 to State 2. If you follow TIG for instance there are claims to be regulated in California but in California the address they have is in New Hampshire. When I wrote to them in New Hampshire and asked them about an insurance policy they sold to Klauzer & Tremaine law firm in Steamboat Springs, without a record that Peg Brown of DORA can find, I was referred to their attorney in Denver Traci Van Pelt. She confirms the insurance policy covered the claim but beyond that will release no information even though she represented them as a claims handler. Even though: "Every person acting in the capacity of insurance adviser, counselor, or analyst shall report to the commissioner every insurance policy or contract covering a subject of insurance in this state which has been entered into by an insurer not authorized to transact such insurance business in this state." 10-3-908. Reporting of unauthorized insurance. So here is an example of an insurance company that disappeared after not filing required reports. The Atlanta DOJ announced that the management of one Cayman Island Insurance Company actually plea bargained to a money laundering scheme in which they took all the assets of an insurance company selling medical malpractice and converted it to personal real estate. So that is a second example.
Years ago I was involved with a small manufacturing company in Colorado, which went out of business. We had company medical insurance thru MetLife. When we ceased operations one employees wife was pregnant. I paid her medical insurance after the company had ceased operations for 6 months and then when she was 8 months pregnant the company terminated the insurance plan. I wrote to the Colorado Insurance Division and complained but they didn't provide any relief.
Posted by paulhsiehmd on April 12, 2008 at 2:58 p.m. (Suggest removal)
Thank you, Senator Hillman, for injecting some much-needed common sense into the debate! A similar plan of mandatory health insurance has already been in place in Massachusetts, and has led to rising costs, worsened access, and decreased quality of patient care. This is a direct result of increased government controls on health insurance and providers.
Instead of more government interference in health care, we need a free market. Repealing the current mandates and allowing Coloradans to purchase insurance across state lines would go a long ways towards making quality health insurance affordable to thousands of Coloradans who currently can't due to our bad laws.
The current crisis in American health care is the result of decades of government interference and violations of individual rights in health insurance and medicine. Hence the only moral and practical solution to the problem is not more government controls but instead to gradually and systematically transition to a rights-respecting, fully free market in those industries.
For more information on free market medicine, I'd like to refer interested readers to the article, "Moral Health Care vs. 'Universal Health Care'", which recently appeared in the Winter 2007-2008 issue of the journal, "The Objective Standard".
The URL is:
http://www.theobjectivestandard.com/i...
or http://tinyurl.com/25zffu
Thank you,
Paul Hsieh, MD
Freedom and Individual Rights in Medicine: http://www.WeStandFIRM.org
Posted by KaySieverding on April 12, 2008 at 5:24 p.m. (Suggest removal)
How would you make sure that any insurance company will actually use most of the premiums collected to pay claims and will use ethical claims handling policies? As an example of an insurance company I had a problem with, consider Colorado intergovernmental Risk Sharing Agency. What type of legal organization is "CIRSA"? It is not registered w the State of Colorado that I could find as a corporation or partnership or charity. The Col AG has already filed in court a document saying that CIRSA is not a state agency. It does not pay state or federal income taxes. The Director is not appointed by the governor nor elected. I have a so called audit by KPMG that does not even name the people who conducted the audit and discloses that its director was also paid a reinsurance company it has some sort of contract with. This same person was then relied on as the only source of an estimate for the potential liability of pending claims. CIRSA does not disclose that I could find, the compensation of its senior managers, nor the names of its board of directors. The directors are apparently part time city council members from small municipalities.(In most of Colorado, city council members are only required to have a high school degree and are not disqualified for committing felonies). CIRSA sells insurance for public officials errors and omissions and employee crime to Colorado local governments and also insures water supplies. I had/have a claim for damages from errors, omissions, and crimes by officials of the City of Steamboat Springs, CO. I called there to ask about my claim. The adjuster said that he found my claim on his computer and that I should call back. When I called back that afternoon, I was told that he was told to hang up on me. Which he did. The Colorado Insurance Division is not supposed to regulate CIRSA because they are not defined as an insurance company even though they advertise insurance and sell contracts for a product they describe as " insurance".
Bermuda advertises “there is no legal requirement in Bermuda for their CEOs to personally certify their company's financial results… Many countries and their regulators require extensive filing of policies, policy forms, actuarial documentation, and regulatory compliance … While they may provide protections, they may also produce significant costs... The European Union, Japan, Australia and the United States are examples…” http://bermuda-online.org/insurancead... So what kind of regulation of insurance companies do you believe is appropriate and how are Colorado residents supposed to get that "buying insurance across state lines" since there is no federal regulation of insurance? Will we be "safe" buying health insurance from Bermuda or like CIRSA, will they hang up when you call? Do you trust a country with 90,000 residents and high illiteracy (Bermuda) to make sure that their insurance companies treat Americans fairly and pay their insurance claims?
Posted by KaySieverding on April 13, 2008 at 5:54 a.m. (Suggest removal)
Dr. Hsieh
Another point is that Colorado citizens can now legally buy medical insurance from any company that files the required financial information with the State, regardless of their location.
Posted by dilligaf on April 13, 2008 at 11:24 a.m. (Suggest removal)
SASQUATCH said:
"Free markets, choice and competition is the only way" That is what we got now. And it is broke now. So if it is the only way. why does it need fixed?
Posted by infidel91 on April 13, 2008 at 1:52 p.m. (Suggest removal)
Go look at all the statutes and regulations micromanaging insurance in this state and then tell me we have a "free" market.
Posted by infidel91 on April 13, 2008 at 1:54 p.m. (Suggest removal)
. . . and regulating the practice of medicine. How is EMTALA consistent with a free market?
Posted by KaySieverding on April 13, 2008 at 5:43 p.m. (Suggest removal)
Actually I've been reading the State Insurance laws and it doesn't look like "micro managing" at all to me. People always discuss who should be making decisions about the details of medical care, but it is also important to regulate the maintenance of financial reserves. As they said on the recent Samuel Adams mini series "if men were angels, we wouldn't need government". You think the sub prime crisis is bad for the economy, try lopping on insurance company bankruptcies. It is quite possible that their funds were invested in more risky securities than the public realized and that all types of risks from weather to theft to medical to malfeasance will have increased incidence. Since many of these companies do not have a physical building or other assets located in the United States, and chose to take advantage of low regulation domiciles including Bermuda and The Cayman Islands, money laundering and asset theft are too easy to accomplish. The public and our officials need to vigilantly guard our insurance assets and not get diverted away from that necessity. If we lose the accumulated insurance reserves, we will be even worse off than having no insurance at all.
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