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Minority Report

Minority-Report (January 2008)
Author: Linda Gorman & R. Allan Jensen

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SECTION 1: Introduction

This document offers an alternative to the recommendations approved by the Colorado Blue Ribbon Commission for Health Care Reform (the 208 Commission or Commission) at its meeting on November 19, 2007. Its authors are among the Commissioners who voted against that set of recommendations. On November 7, 2007, the Commission passed a rule requiring any commissioner who wished to submit a minority report to vote against the entire package of recommendations. Although the authors voted against the entire package, they do agree with some of the recommendations contained in the set.

In general, the authors believe that the Commission recommendations view the private sector as the source of U.S. health care woes and an expansion of government control as the solution. The authors of this report have an opposite view. They believe that ill designed government interference has done positive harm to the development of the U.S. health care system over the last 80 years. As government programs have grown, they have begun to stress U.S. health care to the breaking point.

In short, government is the problem, not the solution. Significant health care reform requires a transformation of government policy, with the goal of lowering costs through deregulation and of aligning incentives by ensuring, to the largest extent possible, that individuals buying health care are not spending someone else’s money.

One of the biggest problems in health care reform is that parties with different viewpoints do not agree on basic facts. Simple logic dictates that it is nearly impossible to agree upon a reform plan without agreement on what needs to be reformed, and a basic weakness in the overall 208 Commission process was the failure to establish an agreed upon body of basic facts. Without this factual basis, the Commission members often could not even agree upon the problems that needed to be addressed let alone on sensible solutions to them.

There are three main areas in which the Commission recommendations fall short. The first is that a vibrant free market for private health care and health insurance, one that offers responsible people a wide choice of health plans, physicians, and treatments, with a variety of ways to pay for each, should be the central part of any serious health care reform plan. Though some Commission recommendations mention consumer choice and market reform, other recommendations make such reforms impossible, too many of its recommendations would destroy or severely damage private health plans, private health insurance, and private medical care.

An unacceptable number of Commission recommendations simply mimic the salient control points in the 2006 Massachusetts health care reform legislation, along with the disastrous Massachusetts decision imposing guaranteed issue and community rating on the individual insurance market in the early 1990s. Those regulations destroyed the Massachusetts individual insurance market and ultimately led to the adoption of the 2006 statute. Similar regulations had similar effects in other states, effectively destroying the individual insurance markets in New Jersey, Maine, Tennessee, Kentucky, New York, and Vermont. Their imposition in Colorado will cripple its individual market, increase health insurance costs for large numbers of people, expand dependence on government programs, and retard innovation in health care delivery and coverage.

The second major area of disagreement is the Commission’s neglect of promising developments in account-based consumer-directed health care initiatives and the decision to instead favor various mandated insurance programs directed or controlled by government. While there is considerable evidence that account-based consumer-directed programs reduce costs, there is no evidence that the Commission recommendations for government expansion programs decrease costs. There is, in fact, some evidence that such programs actually increase them.

The third area of disagreement is that the Commission recommendations substantially extend government control of medical practice without addressing compelling evidence that this has the potential to degrade care and increase costs. Though the Commission frequently asserts that its recommendations will lower costs, improve care, extend medical care to more people, or foster useful innovation, it does not provide adequate evidence to support its case. Cost estimates for the reform plans are likely understated because the model used to estimate costs was subject to a number of known problems. They are discussed further in Section 4.

It is the authors’ view that any successful health care reform policy needs to address: 1) substantive reform of government programs, 2) incentives to reduce waste, and 3) the reduction of costly and unneeded administrative and regulatory burdens. These are the foci of the largest cost problems in the current health care delivery system. When the cost of health care drops, health insurance premiums drop and paying cash for care becomes possible. Paying cash further reduces costs by reducing third party payer overhead, with the result that more people can receive better health care for the same money.

The authors also believe that the organizational processes adopted by the Commission likely caused its decision making to suffer from moderate to severe anchoring, framing, and availability biases. The lack of structured fact finding, discussed in detail in Section 5.4, was an important contributor to these problems.