RALEIGH – If it’s a good idea for voters to “own” elections, as advocates of taxpayer-funded campaigns put it, why isn’t it also a worthy goal for consumers to own their own health-care policies?
Last month, North Carolina’s Sen. Richard Burr explained the intent behind his new health-reform legislation by arguing that “personal freedom means owning your own health care without the fear of losing your job, your employer taking your insurance away, or being forced into a government-run health care plan.” For using the phrase “owning your own health care,” Burr was pilloried by left-wing politicians and activists who said he was just playing politics.
Pot. Kettle. Black.
Actually, the Burr approach – the centerpiece of which would convert the current tax exclusion for employer-sponsored health benefits into an individual, refundable tax credit – is substantive, innovative, and reflective of a fairly broad consensus among health care economists and specialists about the problematic role of taxes in the benefits market. The current tax code favors employer-based models for selling group insurance, archaic models that date back to the peculiarities of World War II-era price controls and wartime tax rates. Because tax deductions are more valuable to those with higher marginal tax rates, and lower-income workers are relatively less likely to work for large firms with full benefits, the current system of tax exclusions for employer-sponsored health plans is also steeply regressive.
The tax code’s artificial preference for employer-sponsored benefits results in the familiar problem of “job lock,” where some workers who would rather seek employment elsewhere feel compelled to stay put because it is costly or impossible to take their health plans with them.
It’s neither cynical nor weird to envision a health-care system in which individuals and families own their own insurance policies and other payment plans. Indeed, it’s the current system that’s weird. Most of us have long owned the financial instruments that insure our lives, our autos, our homes, and other possessions. The market for insurance is highly competitive and, thanks to modern technology, highly personalized. Although consumers differ substantially in preferences and risks, somehow the market manages to coordinate the formation and pricing of these insurance risk pools without requiring that employers be involved.
The idea that we ought not to be discouraged from owning our own health-insurance policies is only the starting point. As John Graham describes in a new study for the Pacific Research Institute, the concept of health ownership is a broader one – encompassing the right in a free society of willing buyers and sellers to bargain for medical services and benefit plans without interference from government regulators and tax collectors, other than to deter fraud and to provide a limited safety net for the truly destitute and abandoned. Ownership signifies the right to decide. In many ways, current laws, regulations, and transfer programs infringe on this right.
PRI has constructed an index to rank all the 50 states on the degree of health ownership (or health freedom, take your pick of terms). Included in the index variables are measurements of government vs. private control of health dollars, regulation of health providers and benefits, and medical torts.
It’s getting a bit tedious to have to report that, yet again, North Carolina comes out poorly in a national ranking, but that’s the reality here. Our state ranked 47th in the PRI study. Only New York, Vermont, and New Jersey ranked worse. What wonderful company we’re keeping these days.
North Carolina’s poor showing stems largely from the fact that the General Assembly and the state Department of Insurance have imposed relatively heavy regulations on the insurance market, with deleterious results for small-group and individual purchasers of health plans (because most health plans sponsored by large employers are exempt from such regulations under federal law governing self-insurance plans). North Carolina’s Medicaid and medical-tort costs are also fairly high.
Naturally, none of these conditions worry those North Carolina politicians and activists who, to put it bluntly, oppose personal ownership in health care. They want the government to monopolize the provision of health plans, to maximize the government's control of the hospital market, and to have government bureaucrats and judges insert their own judgment for that of medical providers and their patients over what services, pharmaceuticals, and devices can be advertised and consumed.
Under the sway of mid-century socialist economics and the latest propaganda film from Michael Moore, they advocate a government-controlled, “free” health care system for all. That’s what prisoners and Cubans get (though I repeat myself). Thanks all the same, but I prefer the freedom to choose and to own my own health care.
Hood is president of the John Locke Foundation and publisher of CarolinaJournal.com.
