As the race for the White House heats up, health care has emerged as the nation's leading domestic political issue. On both sides of the aisle politicians have addressed it by centering their attention on the plight of the uninsured. By focusing on that facet of the nation's health care system, however, lawmakers have discounted the importance of people having control over their own health care decisions. Indeed, this dearth of "health ownership" is a big reason why consumers pay so much for health insurance, why taxpayers face an ever-higher burden for providing health care for the needy, and why so many Americans are uninsured.
Just look at New York.
With America's largest city, its second-largest economy, and the Yankees, New York is accustomed to coming out on top. But when it comes to the ranking of health ownership — a far greater impact on the daily lives of New Yorkers — this state uncharacteristically brings up the rear.
And its neighbor to the south fares little better — New Jersey comes in at number 48.
What does all this mean? The state governments of both New York and New Jersey have fallen prey to the temptation of excessive meddling in their respective health care markets — leading to sky-high costs for consumers, and too much dependence on overstretched government-run health care programs.
In New York, the state legislature has imposed an astounding 46 mandates on private insurance policies. So no matter one's age or medical condition, New York law requires one's insurance policy to cover things like hormone replacement therapy, drug abuse treatment, and chiropractics.
Requiring coverage of these treatments drives up the cost of insurance, pricing many families out of the market and limiting the ability of individuals to explore innovative new health insurance tools like tax-advantage Health Savings Accounts.
This over-regulation is one reason why New York's state Medicaid program is oversubscribed — with so many state mandates of various stripes, families that should be able to afford private health insurance are simply unable.
And ironically, New York's government has a strong incentive to expand its Medicaid rolls, as the federal government matches the state's spending dollar-for-dollar. All that cash from Washington gives politicians in Albany a strong incentive to increase the size of inefficient Medicaid programs with little direct cost to the state treasury.
Additionally, New York levies an 8% tax paid by all private insurers on health procedures. This tax is naturally passed onto employers, making private insurance even more unaffordable for the typical New Yorker and shifting a greater burden to taxpayers.
New Jersey's health insurance market is similarly restrictive, with 40 mandates for all private policies and little competition among providers of medical care. In fact, New Jersey's average annual premium for an individual is the highest in the nation at $6,048. It's cheaper for a family of four to lease a Ferrari in the Garden State than it is to buy health coverage.
The only reason New Jersey beats New York in health ownership is because Trenton maintains tighter control and oversight of its government-run health care programs. Also, New Jersey has a slightly more efficient tort system than New York. By just a hair, this keeps overall medical costs lower.
In contrast, the leader of the health ownership pack — Utah — features a lightly regulated private insurance market best exemplified by its paltry 21 mandates, its competitive marketplace for medical providers, and its effective government-run health care programs.
Based on the 24 variables used in calculating the health ownership rankings, Utah residents have twice as much control over their health care as New Yorkers.
These measures of health ownership and regulation aren't just theoretical. According to a study by a professor at Duke University, Christopher Conover, health regulation exerts a burden on the nation at $169 billion per year. The same study also found that health regulations were actually responsible for 4,000 more American deaths per year than the lack of health insurance.
Senator Clinton recently has announced a plan to extend health coverage to the uninsured. Unsurprisingly, she's expected to make it the centerpiece of her 2008 campaign.
But as New York and New Jersey illustrate, improving health ownership is a far more effective way to reform America's health care system and to bring insurance to those who lack it. Considering that New York is Mrs. Clinton's adopted state, she really ought to know better.
Mr. Graham is the director of health care studies at the Pacific Research Institute.
