Health care overregulation kills

Americans now consistently tell poll takers that health insurers, managed-care corporations and pharmaceutical makers are the least trustworthy organizations in the U.S. They point to HMO patients denied payment for life-saving treatments, and Big Pharma’s fierce lobbying to kill state/federal price negotiations and re-importation of drugs from Canada.

Now the Pacific Research Institute, a San Francisco-headquartered think tank committed to seeking free-market solutions to major sociological issues, is pointing at an unrecognized villain in America’s health care mess. The PRI’s latest study, “U.S. Index of Health Ownership,” makes a case that “gross overregulation” inflates health costs to the tune of $169.1 billion per year — an average of $1,500 per family yearly.

Even more disturbing, the excessive health care regulations and mandates are accused of actually causing the deaths of some 22,000 Americans a year, 4,000 more than the 18,000 annual deaths attributed to lack of health insurance. These PRI figures are primarily collated from papers done by professors in major universities, including the School of Public Health at UC Berkeley.

The “Index of Health Ownership” bolsters its argument by showing examples of how restrictions of free choice can lower the quality or accessibility of health care for patients: A disabled Medicaid beneficiary still able to live in his or her home might be required to use only a nursing aide assigned by the state, even if he or she prefers a different aide at the same cost. Or a nurse practitioner is unable to establish a low-cost clinic offering treatments she is authorized to provide, because state law requires her to be closely supervised by an M.D.

In other PRI examples: A group of surgeons is ready to invest in a clinic where they will perform only operations they specialize in, but the local acute-care hospital invokes state regulations blocking the competition. A privately insured individual wants to buy a low-premium catastrophic coverage policy while also starting a tax-exempt health savings account, but this option is unavailable under state insurance rules.

Among the 50 states, California health choice is squarely in the middle of the pack. Utah, Nebraska and Delaware are ranked the top three overall. Their residents appear to enjoy relatively low premiums and fees, along with a smaller percentage of uninsured. The three bottom-ranked states are New York, Vermont and New Jersey, with costly, baroquely overregulated systems with almost completely uncompetitive prices.

Interest groups benefiting from governmental interference lobby hard for their preferred policies. The PRI reportis realistic enough to recognize that its findings are counterintuitive to prevailing public thinking, and that government is unlikely to loosen its grasp on the half of health care spending it now directly disburses. The institute’s hope is that its report will help open the way for genuinely market-oriented reforms leading to better health care across America.

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