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Mandated Competition « Ian Morrison

Mandated Competition

We have got to get over this freedom thing and stop cheating.

By Ian Morrison

Americans hate mandates. Mandates to cover specific diseases and conditions drive health insurance costs up. Mandates to provide open access to Emergency Rooms sink geographically undesirable hospitals. Mandates to collect, collate, and communicate data create burdensome administrative chores. Now we are going to add more mandates in healthcare. We are now talking about millions of Americans, even all of us, being mandated to buy health insurance. We are also talking about insurers being mandated to offer insurance and not have the freedom to walk away from risks they don’t like.

But while many healthcare folks hate mandates there are also a lot of mandates they really like. Doctors of all stripes like the mandates that you have to be a doctor or a certain type of “ologist” to do certain procedures and tasks and access the income streams associated with it. Hospitals like the mandate that they are the place where certain procedures can be done. Employers like the mandate that because of ERISA they can’t be mandated by states to do things. Sweet.

We have to put up with other mandates in our lives, like income tax, parking tickets, bridge tolls, paying admission to ball games, and so on. We are not mandated to vote like the Australians, (maybe we should be, then look out).

Coverage Mandates. Let’s be clear: there is no such thing as voluntary universal coverage anywhere in the world. By the same token, while many countries including Japan, Germany and Holland have mandated insurance that achieves almost complete universal coverage, similar schemes in America would not yield anything close to universal coverage. Why? Because we would cheat. We have to have car insurance and many of us don’t. We have to have children in order to claim children as dependents on our income tax, but until some smart aleck at the IRS started asking for the social security numbers of the kids, more than seven million non-existent kids were claimed as dependents. We all listen to NPR and we never pledge. So even liberals cheat. That doesn’t mean that mandates in healthcare might not make a lot of sense, we have to worry about enforcing them in a nation of cheaters. Part of the reason cheaters cheat when it comes to car insurance and possibly health insurance is that the cheaters can’t afford it or the consequences of not having insurance are less dire than buying it. As Judge Harry Low, former California Health Insurance Commissioner once famously said, “You don’t need insurance, unless you have assets to protect.” I would favor phased-in mandates, for individuals starting with kids and applying to all Americans over time, with instant enrollment and subsidy for the lowest income families. But I also favor employer mandates, starting with the largest and moving down to all employers over time. Eventually we will meet in the German middle where healthcare is paid by a payroll tax (half employer paid, half employee paid) with a ceiling on total payment close to our current FICA ceiling on income, because we upper income folk don’t like progressive taxation.

Issuance Mandates. Health insurers should not just pick and choose worthy risks. There are precedents internationally for risk adjustment factors that even out the adverse selection effects on insurers (see my column on Australia). Cream skimming by insurers that leaves vulnerable families destitute, is more of a crime than inadequately adjusted adverse selection experienced by a multi-billion insurer.

Provider Mandates. At a recent meeting of the World Healthcare Congress, a New Zealand doctor was asked how that country achieved virtually universal adoption of electronic health records by that nation’s primary care doctors compare to approximately 20% of primary care doctors in the US. In his wonderfully quiet and clipped New Zealand accent he said: “The government won’t pay you unless you have one.” Brilliant. Now, I am sympathetic to the economic plight of American primary care doctors who now earn approximately half of the pay of their British brethren. So here’s my idea: tell doctors that they can’t bill Medicare unless they have an electronic medical record by 2010 and give them a tax credit to put one in. While we are at it we should have mandatory public reporting of standardized costs and quality metrics by all providers.

Patient Mandates. We slothful consumer should not get off the hook. Everyone should be mandated to complete a Health Risk Appraisal before enrolling in any health insurance plan. No HRA, no coverage. Our co-payment should rise if we are not in compliance with our treatment plan. And we should all be mandated to submit to arbitration before we get to sue our health plan, our doctor, or our employer over health issues.

Then let’s have it in a good old fashioned market, competing head to head on the basis of cost, quality and value. And let’s not whine about it.

Ian Morrison is an author, consultant and futurist based in Menlo Park, Calif. He is also a regular contributor to H&HN OnLine.