Medical Politics
Kelly Sloan

Kelly Sloan

The distinction seems obvious, but is so infrequently made that it is necessary every now and again to state it — that is, between “heath care” and “health insurance.” Proponents of bulldozer government reforms get away with fixing the odds by appealing to the general public empathy towards ensuring everyone receives treatment when sick or injured. That even the most indigent among us do — hospitals are, by federal law, required to provide a health screening and necessary treatment to anyone who walks through their doors — is conveniently shunted aside.

The issue, of course, is not one of health care, since by virtually any measurement America’s is the best in the world, but of who will pay for it. Here too relatively few are left far behind; the elderly, who are the largest consumers of health care, are nearly universally covered by Medicare, and the poorest of the younger generations are by and large covered by Medicaid. That leaves a handful in the middle who cannot afford individual plans (largely because government mandates and regulation of insurance have priced it out of their reach,) but do not qualify for Medicaid, are too young for Medicare, and happen to not have employer-sponsored coverage or VA benefits.

It is worthwhile to have discussions over what to do about the rising costs which continue to deny health insurance coverage to that segment, and the Polis administration, like every government elected anywhere in the USA in at least the last 30 years, has pledged to do just that. What it has come up with — a public, state-backed health insurance option — is a study in what not to do.

Blissfully disregarding the disastrous history of wage-and-price controls, the public option touted by the Polis administration effectively imposes a price control on health insurance financed by a price control on health care providers, especially hospitals. The proposal requires the insurance carriers to offer a government health insurance plan at a rate well below market value; who, then, will pay the difference? Well… that would be the folks providing health care.

Hospitals in the state are expected to bear nearly the entire burden of this scheme by absorbing enormous cuts in the amounts they are reimbursed by the state. As Kim Bimestefer, executive director of the Colorado Department of Health Care Policy & Financing explained it, since the federal government already smacked around the insurance industry with the Affordable Care Act, it was now the hospitals' turn on the rack.

And there really is no other reason in particular for making the hospitals and health-care providers the scapegoat.

Besides sporting an air of blind vindictiveness, the state’s proposal detours around the principal cause of accelerating health care costs, which is increased demand being met with undercompensated supply. Any time health care is provided for “free” two thigs happen; a) more people use more of it and b) someone, somewhere pays for it — either through higher prices or reduced supply. The government can only afford to offer an insurance plan at well below market value by paying the providers at well below market value.

So what will be the ultimate effects? Well for starters, the providers could decide that they simply can’t continue to operate financially under such a deficit and refuse to accept the public insurance, as several do with Medicaid and Medicare. But this leaves the state in something of a bind, having offered large numbers of people health insurance that few will take, meaning Canadian-like waits to see a doctor who will. Ah, but not a problem, according to Ms. Bimestefer: “If we feel hospitals are not participating, we will require their participation,” she said with a certain Stalinistic appeal to state efficiency.

As several analyses of public health insurance plans, including one conducted in Colorado by Common Sense Policy Roundtable, routinely demonstrate, this leaves the hospitals with unattractive options to cut their own costs commensurate with their new budget — cut staff, from doctors, to technicians, to the janitors; and/or reduce services. A third non-exclusive alternative is of course to increase the prices charged to those in private plans, eventually escalating the price tags sufficiently to compel migration to the state plan.

Ultimately the result of the public option will be to bring whatever remnants of a free economy still exist within the latticework of health care under state control. Given the enormity of the proposal, the opaqueness of the process — the report not being released until hours before its first hearing, for instance – is not surprising, though no less disappointing than its product.

Kelly Sloan is a political and public affairs consultant and a recovering journalist based in Denver. 

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