Proposals for universal insurance dominate the debate over health care, but many of them would make problems worse with expensive mandates and bureaucratic programs. The state of Hawaii is a prime example.
Hawaii has mandated employer-provided health care since 1974, but individual Hawaii residents don’t get to own their health care. Hawaii ranks a dismal 40th among the states in health ownership, according to a recent Pacific Research Institute study measuring government versus private control of health dollars, regulation of physicians, hospitals and insurance benefits, and medical torts. Businesses in Hawaii pay the highest percentage of employee health insurance premiums in the country.
Hawaii would benefit from modernizing its outdated system, and paving a new path toward individual healthcare ownership. Strong incentives for individuals are crucial for long-term reform, and this should be at the center of legislative agendas nationwide.
Employer-provided health care was a response to wage and price controls during the Second World War, providing a way for companies to compete for workers. As we no longer have wartime price rationing, health care should be tied to individuals, not their jobs. Today, the federal tax code creates the wrong incentives for employees who view health benefits as a deciding factor in taking or leaving employment.
Federal tax deductions for health care are also worth more to those who make more, and have higher tax rates. Americans who make less, or work in smaller businesses, don’t get the same benefits. That could change through the Every American Insured Health Act, proposed by Senators Richard Burr (R-NC) and Bob Corker (R-TN). Key provisions of this bill would balance the tax code for Americans who don’t get health care through their employers, give Americans the right to choose their own health care in a free market, and ensure more personal control of insurance.
Hawaii would certainly benefit from this change because health costs weigh heavy on the shoulders of employers, who must provide health insurance to employees who work 20 hours or more for four consecutive weeks. Even though it is still lower than the national average, Hawaii’s uninsured rate has doubled in the last twelve years. Forcing enrollment on Hawaii’s workers or higher prices on employers has not solved their insurance problem.
Incremental use of market forces will give Americans more control of health care. Once insurance is more affordable, people will enroll voluntarily. Preliminary reports show that Americans of varied age and income status have slowly begun to take the reigns, purchasing high deductible health plans (HDHPs) paired with tax deductible Health Savings Accounts (HSAs). Those who make that choice have benefited from personal savings and more control of health services, including the same preventive care, if not more.
The idea of health ownership is new to many Americans. It constitutes the right, not to government medicine, but to free choice of health care. It constitutes less government participation and more voluntarily negotiation between patients and providers for health services. The government is there to regulate illegal conduct and provide subsidies for people truly in need.
Unfortunately, many lawmakers do not understand the value of these incentives and instead seek to create more mandates. Americans need to understand the long-term consequences of these actions, which impair choice, access and affordability for individuals. Lawmakers should expand consumer choice instead of imposing plans that are heavy handed and counterproductive.
Truly effective legislation will increase access and lower costs by giving more power to individual Americans, making them free consumers of the best health care in the world. All states, especially Hawaii, should deregulate restrictive insurance laws and encourage more personal freedom of choice in consumer-directed healthcare plans.
Diana Ernst is a health care policy analyst at Grassroot Institute of Hawaii and a public policy fellow in health care studies at the Pacific Research Institute.
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