The American Spectator

Bob| 9.9.09 @ 7:07PM

Actually, Philip, I agree with all of your recommendations except #5:

"Eliminate artificial restrictions on the supply of health care services and products, such as the overregulation of drugs and medical devices, as well as state and federal restrictions on who may provide medical services and how they must be delivered."

So you would allow drugs and medical devices that have been shown to kill people to be marketed? After all, if you do this in conjunction with tort reform, there would be no reason for companies to allow a small number of people to die if it were profitable. Furthermore, you obviously don't care if medical personnel are licensed and qualified to perform certain procedures. I do.

However, here's a question... If you allow the purchase of health insurance over state lines, who would be the regulator for out-of-state patients? With banking, it was regulated nationally. Are you saying that we should create a new federal regulator of health insurance?

And for companies that self-insure, how do we make sure they have the financial reserves to pay for the claims?

You did leave out the issue of pre-existing conditions which leads me to believe that if someone actually gets sick, they are out of luck.

That said, again, I agree in principle with 6 of your 7 points assuming you can create a mechanism to deal with the problems I mentioned above.

Gregory Conko| 9.10.09 @ 10:02AM

Bob,

Thank you for the comments. In response to your questions and criticisms, I'll note first that, under our proposal (which, as you probably realize, has been proposed by others as well) an insurance policy purchased by a resident of state A from an insurer in state B would be governed by the regulations of the state in which it was issued -- i.e. state B. Insurance purchasers could therefore shop, not only for policies and providers they want, but also for the regulators they want.

Second, in the paper, we don't call for the elimination of existing financial reserve requirements for companies that self-insure. In general, they're not extensive now, but not non-existent. And workers are free to take that into consideration when determining whether or not they'd like to participate in an employer's insurance plan.

Third, we only call for capping punitive damages. As we state in the paper, we would not support the capping of compensatory damages for an injured plaintiff's actual physical, emotional, and/or economic injuries. Rather, we only call for eliminating punitive damages altogether. Again, we note in the paper that punitive damages serve a useful function in deterring future acts of negligence by the defendant who must pay them and others who are not a party to the case at bar.

Fourth, although there are a variety of ways in which a functioning market for drugs and medical devices could ensure safety and efficacy without oversight by the Food and Drug Administration, our paper only calls for the elimination of "over-regulation" by the FDA. So, it's unfair to argue that we "would allow drugs and medical devices that have been shown to kill people to be marketed."

Nor is it fair to argue that we "obviously don't care if medical personnel are licensed and qualified to perform certain procedures." We nowhere call for the termination of training or licensing laws, though there are many ways to reform licensing laws to allow for greater provider flexibility. For example, there is a lot of evidence in the peer reviewed medical literature showing that trained and licensed, but non-physician midwives provide child-birth services that are as safe as licensed physicians. But most state laws effectively prevent midwifery. Similarly, the training and licensing for nurse practitioners -- which requires both a bachelor's and master's degree and special pharmacology training -- is very extensive, but many state medical licensing laws effectively preclude nurse practitioners from prescribing even basic medicines without direct supervision by a physician.

You say that you do care whether medical personnel are licensed and qualified. The wonderful thing about de-regulation is that you could still choose to only see a physician to treat, for example, a head cold and sinusitis. But others would be free to see the nurse practitioner and pay less for service that most scientists agree is just as good.

Finally, it is not true that we "leave out the issue of pre-existing conditions." We acknowledge that, even with the reforms we recommend, there would likely still remain several million (the exact number is hard to calculate, but likely in the range of 10 to 15 million) individuals who, due to chronic pre-existing conditions would find it impossible or too expensive to get insurance. We suggest that once we eliminate the others barriers and distortions of the health care market created by the unequal tax treatment of employer-sponsored health insurance, and fifty years of federal and state regulation, governments would find it considerably easier to address this problem of the chronically uninsured. Most likely, this could be done through the existing system of state-operated high-risk insurance pools, but I believe Phil and I would be open to other suggestions as well.

In any event, I hope that addresses at least some of your concerns. And I thank you again for your generally positive comments and for your constructive criticism.

-Greg

Gregory Conko| 9.10.09 @ 10:05AM

In my third paragraph above, the third sentence should read "Nor do we call for eliminating punitive damages altogether."

Bob| 9.10.09 @ 3:26PM

Gregory -- excellent and logical response. Having been an insurance executive, I don't think your scheme of state regulation would work as there is a virtual oligopoly of health insurers in most states. I agree that insurance should be purchased across state lines, but I would much prefer the scheme we use with national banks as this would be a form of interstate commerce. And yes, you'd unfortunately need a bureaucracy to administer this. Furthermore, this would eventually end up with less competition than you'd imagine at first because there would be a consolidation within the health insurance industry. I've dealt with state regulators and they are not up to the job you require because when you look at an out of state policy you must confirm that they are consistent with out of state laws -- and they differ dramatically by state which is why insurers file policies on a state by state basis. For example, if one state mandates pre-existing conditions, you couldn't sell a policy in that state without that requirement. It is much more complicated than you seem to know. National banks got around these limitations by being governed federally and therefore state laws did not apply. So I like your direction, but not the details of your solution.

Regarding licensing of medical personnel, I guess I just don't trust everyone to tell their potential patients the truth about their capabilities. While 90% of them me be perfectly fine, would you like to take that 10% risk? I wouldn't. Thus I still believe that your solution here would lead to increased deaths due to malpractice. And with tort reform (and we both agree on that), there would not be a sufficient deterrent. Therefore, I'd rather handle this on the front end rather than the back end.

You need to include a solution for pre-existing conditions, policy limits, and bankruptcy reform in your recommendations if you want it to be taken seriously. Your assumption that governments would eventually handle this is both naive and inconsistent with past behavior. I think you could add these "mandates" to your solution without significantly affecting the outcome. If you are serious, you will.