For Immediate Release:
July 20, 2006

Contact:
Susan Martin: 415-955-6120
smartin@pacificresearch.org

SAN FRANCISCO –As 46 states begin their fiscal year this month, health care will prove to be one of the most costly expenditures. Medicaid spending alone is predicted to reach $320 billion this year. These dramatically rising health care costs should force state policymakers to lay the groundwork for meaningful and lasting reform according to health care expert John R. Graham, director of health care studies at the Pacific Research Institute and editor of the new book, What States Can Do to Reform Health Care: A Free Market Primer (available at www.pacificresearch.org or Amazon.com).

“The purpose of this primer is to educate state policymakers, legislators, and consumers about where we’ve gone wrong with health care and how we can fix it,” said Mr. Graham. “The solutions involve policies that permit more individual choice, increase competition, and result in greater fiscal stability.”

Seven leading scholars contributed chapters to the primer, which focuses on Medicaid (Nina Owcharenko), health insurance (J.P. Wieske), hospital certificate-of-need laws (Roy Cordato), malpractice liability (James R. Copland), physician quality assurance (Shirley V. Svorny), prescription piracy (Brett J. Skinner), and pharmaceutical costs (John R. Graham). Governor Mark Sanford of South Carolina wrote the foreword. The book examines important areas of health care where states have the responsibility to finance, legislate, and regulate. They include:

• Medicaid, the federal-state health program for the poor, faces draining state budgets and declining quality for those who depend on it. State policymakers should use successful welfare reform, which started at the state level, as a model for Medicaid reform.
  
  
• Many health-insurance reforms of the 1990s simply transferred costs from one group to another – often with net harmful effects. Insurance regulation that harms patients often rewards politicians – making positive reforms very challenging. Targeted, pro-market solutions like health savings accounts and tax credits provide the biggest bang for the buck. They ensure that the existing marketplace can operate and that specific populations will be able to obtain affordable health insurance.
  
  
• Malpractice liability costs have risen four times faster than consumer price inflation and twice as fast as medical price inflation, causing “defensive” medicine and shortages of physicians’ services.
  
  
• Most states prevent the building of new hospitals without government permission – a policy supported by incumbent hospitals to prevent competition. This leads to higher prices, communities without adequate medical resources, and money wasted on lobbying that could be devoted to patient care. States should repeal hospital certificate-of-need laws in order to increase competition, reduce prices, and increase access to hospital care.
  

Mr. Graham urges state legislators to use this book to develop free-market health care reforms that will benefit residents. “States have significant authority to make positive changes independent of what the federal government does.” said Mr. Graham. “Although every state faces a different situation, the policies outlined in this book can serve as a blueprint for reform.”

###

About PRI
For 27 years, the Pacific Research Institute (PRI) has championed freedom, opportunity, and individual responsibility through free-market policy solutions. PRI is a non-profit, non-partisan organization. For more information please visit our web site at http://www.pacificresearch.org/