Economic professors at Baylor suggest that insurance reform must expand coverage to the uninsured 37 million Americans

Published on August 24, 2009 at 9:26 AM

Two professors at Baylor University's Hankamer School of Business lay out a universal health care plan in their new book Health Care for Us All: Getting More for Our Investment, published by Cambridge University Press, that does not create a government entitlement program or threaten in any way the insurance coverage or health care of Americans who currently have coverage.

First and foremost, say the professors, public health care arrangements should respect the features of American health care that are the best in the world.

"Health care and health insurance are best provided through robust competition in private markets," said Dr. Earl Grinols, Distinguished Professor of Economics at Baylor and co-author of the book. "To keep costs down, the only known reliable self-regulating mechanism requires competition, such as requiring health care providers to publicly post their prices and charge all consumers who buy the same service on the same terms at the same price, so consumers could shop for services."

Most people who are uninsured do not purchase coverage because of high premiums. Homogeneous risk pooling with premiums based on age and sex would lower the price of health insurance to the group with the highest rate of uninsurance - the young and healthy. The authors say that current Congressional proposals are counterproductive because they ignore economic principles and have already been shown in many places they have been tried not to work.

The economists recommend an intervention plan that includes income subsidies that would be available to everyone, but would primarily go to the hard to insure -- the five to 10 million who don't have insurance due to low earnings or previous medical conditions.

ACCORDING TO THE FEDERAL GOVERNMENT TOO MUCH OF AMERICA’S GDP IS SPENT ON HEALTH CARE.

BUT THE FEDERAL GOVERNMENT CREATED THE PROBLEM:

Decades ago the government passed ‘pay or play’ tax incentives that encouraged employers to provide employees with health insurance.

And America was hooked on health care the way junkies get hooked on smack. The dealer gave free samples until the client was hooked.

When I was young America was the world’s wealthiest nation. And employer provided health insurance paid 100% of medical costs. Because it was free it was abused. Mom took children to the emergency room for a rash and to the doctor for a small cut. Demand was artificially high.

Cost shifting provided for the uninsured. Patients with good insurance policies and wealthy patients with no insurance policies received inflated invoices to cover the costs of those who could not pay. Health care providers and hospitals robbed from the rich to provide health care for the poor.

It is instructive that during the time when America enjoyed great wealth the Federal Government expressed no concern for the plight of the uninsured!

But over time manufacturing jobs moved overseas and were replaced with lower paying service economy jobs. Consequently, employers offered health insurance with less coverage and higher deductibles and co-pays.

Were factory jobs lost because America could not compete with manufacturers in countries where government paid for health care? Regardless, American leaders would not raise tariffs to level the playing field and signed GATT and NAFTA into law!

And America’s leaders permitted millions of ‘illegal’ aliens to cross the border to do work American’s would not do. Our schools educated their children, our State governments gave them drivers licenses, our banks granted them mortgages and our hospitals provided them health care.

BOGUS SOLUTION

Now that America is the worlds biggest debtor nation the Federal Government has decided the plight of the uninsured is unconscionable and universal coverage is a moral imperative.

But this is not about the 46 million uninsured. It is about assuring health insurance companies’ market share and health care professionals expected incomes and lifestyles.

The health system in America has been based on a larger and more affluent generation of young policy holders offsetting the health cost of middle aged and seniors. This formula is being upset by the WWII baby boomers generation approaching retirement and the global recession.

President Obama wants every American citizen to be required to buy a health insurance policy. He compares it to the requirement that motorists purchase auto insurance. But while driving is a privilege, life and the pursuit of happiness is a right!

Where in the Constitution or Bill of Rights is the Federal Governments authority to require the purchase of a health insurance policy as a condition of having been born?
Where is freedom when government has the power to tell you how to spend after tax dollars? What distinguishes disposable income from taxes?

As for the proposal that the IRS be charged with fining citizens who do not purchase a health insurance policy, since the federal government just prints more paper money to pay debt why is taxation or the IRS even necessary. Just shutdown the IRS and transfer its budget to indigent care!

FREE MARKET IS THE SOLUTION

Is providing health care an enumerated power or responsibility of the Federal Government?

The Federal Government lacks any authority to preach fiscal responsibility. It has exhibited none in my lifetime and has reduced the wealthiest nation on the planet to world’s biggest debtor nation.

But Ma and Pa citizen have had to balance a checkbook their entire lives. The solution is to return control of health care spending to them.

Pass a law making it illegal for an employer to offer health insurance as an employee benefit. End wage stagnation and give employees raises instead.

Doing away with group health insurance and forcing insurance providers to compete for individual business will permit cost conscious Ma and Pa to shop for the best deal, like they do auto insurance. Then the free market will bring costs under control!