2014 Election Issues - Healthcare

Healthcare costs are exploding, and we all want to see some level of sanity.  Nobody wants to abandon the poor, the mentally ill, or the catastrophically sick to fend for themselves.  However, the current approaches, while well intended, will not keep costs in check, provide an incentive for healthcare innovation, or truly provide the level of care intended.

First, we need to stop any further federalization of health-care policy. Federal policies are a major source of the problems in our health-care system. Federal laws increase many of the problems they were meant to address, they produce a host of new problems, and they render states powerless to fix anything. The Affordable Care Act ("Obamacare") is only moving us further in the wrong direction. Our experience with health care is proof that centralized planning by politicians and bureaucrats simply doesn't work.  Any time the government decides to combine a complex bureaucracy and a complex problem, the results are bad.

Health-care regulation should rest with the states. In addition to eliminating many of the laws, regulations, and tax rules that wreak havoc on businesses and employees, we also need policy freedom at the state level with regard to public spending on health-care for the poor and elderly.


I favor a three-part approach to overhauling public health-care spending:

1. Focus on catastrophic, not comprehensive, insurance/care. Comprehensive insurance programs are ridiculously expensive, but the benefits in health outcomes do not justify the cost. The most salient benefit is protection from financially ruinous catastrophic health problems, which can be provided at much lower cost by catastrophic insurance. Washington needs to open its borders to competition for health insurance, and allow market forces to set insurance policy prices, benefit offerings and coverages.
2. Focus public spending on mental-health care. Studies suggest high returns on public spending on mental health.
3. Focus on cash subsidies. Rather than having bureaucrats decide what services should be available and at what cost, providing cash subsidies gives patients greater flexibility to meet their individualized health-care needs, purchase insurance that gives the coverage they desire, and restores market incentives to keep costs down and to innovate in the provision of services.

Second, we need to recognize that the federal government is not the only source of bad laws that undermine a well-functioning health-care economy. There are numerous examples of state laws and regulations that are designed to insulate market incumbents from competition.

One example of bad state regulation is the "Certificate of Public Need" regime. Before a health-care provider can offer a new service or purchase a major piece of new equipment, it must prove to a state bureaucracy that there is a "public need" for the additional services being offered. The state bureaucracy exercises discretion under the influence of protectionist lobbying. The result is a process that is costly, counter-productive, and patient-harming. It snuffs out job-creation, entrepreneurship, and cost-saving innovation. It is totally unnecessary. The very fact that an entrepreneurial physician, or other service-provider, is willing to take on the business risk of making a major capital expenditure and offering a new service should itself be sufficient evidence of public need. The regulatory regime offers no additional benefits to the public, only private benefits at public expense.

Federal laws and regulations undermine competition and innovation in the health-care industry. State governments cannot undo these counter-productive policies, and in fact add their own policies to further undermine a well-functioning health-care market, resulting in increased costs without improved health outcomes.

Political control of health care ends up siphoning money into whatever is politically popular, rather than what is most beneficial.

Bring the power back to the state.
I strongly advocate a return of health-care policy to the states, either directly, or through conversion of Medicaid into block grants to the states with policy freedom at the state level, or via waivers allowing the States to redesign programs more intelligently.

Removing the stigma of mental illnesses.
Many voters with mental illnesses have lamented the social stigma that goes along with having a mental illness. But attitudes are changing, especially at the generational level. Young people are increasingly understanding of mental illnesses, including of the science behind them and the use of drugs, therapy, and other methods to treat them. Focusing on the treatment of mental illness will reduce overall medical costs, crime rates and poverty.

Removing state-level barriers to health-care service provision.
As noted above, state governments often make the problems stemming from federal regulation of health care even worse. Washington is no different. State-level regulations have numerous damaging effects that reduce the availability of services, increase costs, and decrease competition and innovation. 

I discussed the "Certificate of Public Need" problem, above. In another example, our current system inhibits nurses from practicing independently and offering primary health-care services to the public. That decreases options and drives up costs for patients. The overregulation of health-care professionals via increasingly onerous licensing requirements, restrictions on what those professionals can do, and centralized planning of the use of medical resources all work to harm patients, especially those suffering from mental-health issues.

While Washington is progressive in its allowance of naturopathic practitioners to write prescriptions, and in other areas of alternative care, we must continue to revisit our state-level laws and regulations to make healthcare accessible and affordable, not just focus on federal policy and implementation of the Affordable Care Act.