Editorial: Fixing health care the right way

There’s a case for a consumer-oriented health care that promises to stabilize out-of-control costs. You do it by fostering greater individual choice and free-market competition. The case is made powerfully in a new Pacific Research Institute study, “What States Can Do to Reform Health Care: A Free Market Primer.”

California gets some good marks from report editor John Graham, the PRI health care studies director, for being among the least restrictive states when it comes to imposing excessive rules. Those rules drive up malpractice insurance costs for physicians and create unnecessary difficulties in building new hospitals.

Graham even has a few kind words for Mayor Gavin Newsom. At least, Graham says, Newsom is attempting to rein in his inherited health care mess by introducing a basic universal health insurance plan for San Francisco’s lower-income uninsured. However, Graham warns, the most likely result of widening health coverage by simply imposing a new tax would be a dramatic rise in unemployment as more small businesses flee The City, the way many larger corporations have already done.

The institute finds significantly more benefit in how states such as South Carolina and Colorado have converted their Medicaid programs to primarily a voucher system. “The old way was that housebound Medicaid patients had to use whatever home nurse the government registry sent over,” Graham said. “With vouchers, these patients can choose whatever nurses they prefer.”

He pointed out that this resembles a food stamp program where recipients make their own food choices from the supermarket instead of just taking home a bag of groceries selected by a free distribution center, but the vouchers can only be used for food. This same principle would apply to tax-free health savings accounts, which the PRI report also supports.

Another emerging trend endorsed by the institute would be the spread of budget-priced, in-store health clinics staffed by nurse practitioners at convenient sites such as Target and Wal-Mart stores, which would be far more economical than going to a hospital emergency room for routine treatments.

Similarly, the report suggests the most effective way to reduce prescription costs would be to provide tax incentives for pharmaceutical manufacturers to offer the lower-income market more discount programs.

As far as the Pacific Research Institute is concerned, perhaps the best single health care reform for California might be to remove the state mandates currently barring insurance companies from offering customers the option of inexpensive catastrophic-only coverage with deductibles as high as $10,000. Such policies more likely could enroll the thousands of uninsured self-employed or small-business workers who now choose to risk not buying insurance because of the high cost.

At the very least, the new PRI study is encouraging in how it points out new approaches — approaches that actually seem politically feasible and could well succeed at overcoming America’s health care problems betterthan the ongoing tax-heavy efforts.

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