States Offer Valuable Insight into the Dangers of Socialized Medicine

The Commonwealth Foundation and Conservatives for Patients Rights recently hosted a policy forum entitled “State-Run Health Care: Costly Mistakes”, featuring policy experts from across the country who have seen firsthand the devastating effects of state-run health care. Here are some of the highlights:

• Michael Tanner, from The Cato Institute, discussed how state-run universal coverage proved to be one big headache for the state of Massachusetts. As Tanner discussed, in order to facilitate the individual mandate to buy insurance, the state extended subsidies to those up to 3 times the federal poverty line. The state run “connector” provided a pseudo-marketplace to buy private insurance, but only insurance plans that met strict state-mandated guidelines were acceptable, forcing many to drop their current private plans. The results included health insurance premiums rising twice the national average, a massive budget deficit and dramatic increases in waiting times.

• Dr. Eric Fruits, from Oregon’s Cascade Public Policy Institute, illustrated the effects the state’s decision to expand Medicaid had on accessibility. Oregon ranked all common procedures from 1-700, analyzed the costs and drew a line; everything above is covered, everything below is not. The effects of this rationing were devastating. One recent example included a patient being denied cancer treatment, yet assisted suicide was covered under the state plan. After nearly 20 years of the state program, there has only been a 0.6% decrease in the number uninsured.

• Brian Lapps, the former Director of Tennessee’s state-run plan, TennCare, shared the dire situation his state was in after implementing universal coverage. TennCare expanded Medicaid eligibility and allowed those without insurance to buy into the state plan, dramatically increasing the amount of enrollments. Unfortunately, moving to managed care proved to be an overload on the system, forcing cuts in the payments back to doctors by 30% and hospitals by 60%. This even prompted some surgeons to refuse to participate in TennCare. From 2000-2007, medical costs have risen 40% while enrollments have subsequently dropped by over 100,000.

• Tarren Bragdon, from the Maine Heritage Center, expressed the failures of Dirigo, Maine’s universal health care program. Dirigo was originally supposed to cover 128,000 yet today total enrollments are 9,500, only 3% of the total uninsured. In four years, benefits were slashed and premiums rose by 74%. If that wasn’t bad enough, 33% of the total enrolled dropped private insurance to use the tax-payer funded state plan, resulting in $155m in new taxes including taxes on private insurance!

• Finally, Pearl Hahn, from Hawaii’s Grassroots Institute, showed us the dangers of an employer mandate on insurance. In 1974, Hawaii imposed an employer mandate to cover all employees working 20 hours or more, as well as universal coverage for children. The employer mandate forced small businesses to cut back employee hours to 19 or less and led to many people dropping their private plans to opt for the cheaper government-managed care.

For more information on how we can address the concerns over our health care industry using free-market and pro-growth solutions, check out CF’s policy points on health care reform.