Please Do Not Bother Me With Facts!

Today let's review a few facets of health care reform that no one in the political class seems to be talking about but which could save the country a lot of aggravation, wasted resources, and tax dollars.

Don't Bother Me With The Facts Part 1 - Let's start with a short article that appeared in the November issue of Reason magazine, written by Peter Suderman. According to the article, a new analysis from the national Bureau of Economic Research "found strong evidence that being insured increases body mass index and obesity." The analysis also indicated that those people having public insurance are more likely to have higher levels of obesity than those with private company insurance. This evidence seems to be in direct conflict with the current health care reform effort that would put an emphasis on insuring everyone and having a public option to provide insurance. Mr. Suderman references another article, this one from Health Affairs journal, that claims obesity accounts for up to 10% of the nation's health care spending. Thus, more obesity equals more health care costs.

Thus, we have a dilemma: having health care insurance may actually drive up health care costs. Does not seem to make sense but these are two sources of research that imply that is actually the case. The Health Affairs journal uses behavioral economics to conclude that "insulating people from the costs of obesity-related medical care expenditures, insurance coverage creates moral hazards in behaviors related to body weight." In other words, if you have to pay to manage your overeating and obesity out of your own pocket, you would be more careful of what kind of physical shape you kept yourself in.

I cannot validate the information in either of these two studies. However, would it not be a good idea to at least investigate these "facts", analysis, and research before spending trillions of dollars on health care reform?

Don't Bother Me With The Facts Part 2 - Peter Sudeman has another health care related article in the December issue of Reason magazine (www.reason.com). In this article, he reviews how millions of Americans have been enrolled in so-called consumer driven health care plans over the past few years. In a consumer driven health care plan, insurance coverage does not start until the ensured individual or family has paid over a deductible threshold of costs out of their own pocket. Insurance coverage than kicks in to help pay continuing medical costs or catastrophic expenses for major surgeries and treatments. The insured individuals or families can use tax advantaged health savings accounts to offset the initial, pre-deductible costs.

According to a recent analysis by the American Academy of Actuaries, these types of plans have drastically reduced costs without sacrificing quality. The report found that medical expenditures, during the first year after converting to these types of plans, were reduced between 4% and 15% which is significant since costs in traditional insurance plans have been growing significantly on a year over year basis. The theory behind this cost reduction is that consumers are more careful in seeking medical treatment when they have a major stake in the costs of those treatments prior to attaining the deductible level. Just as with Part 1 above, when individuals have a stake in their health care decisions they tend to act more efficiently and effectively in managing health care costs. In other words, health care costs are controlled or reduced. Would it not be a good idea to investigate this characteristic of consumer driven plans prior to spending trillions of dollars on health care reform?

Don't Bother Me With The Facts Part 3 - And my favorite area that the political class has ignored in the health care reform debate, significant tort reform, i.e. getting the legal and malpractice problems in the medical field under control. Consider the following information that appears on the American Tort Reform Association website which highlights what happened when the state of Texas implemented significant tort reform in the medical field in 2003:

1. The AMA dropped Texas from its list of states in medical liability crisis.
2. Malpractice claims are down and doctor recruitment and retention are up.
3. The five largest Texas insurers cut their insurance rates which saved doctors tens of millions of dollars.
4. The Texas Medical Liability Trust, the state's largest liability carrier, reduced its premiums by 17%.
5. Fifteen new insurance companies entered the Texas market.
6. Health Care Indemnity, the state's largest carrier for hospitals, reduced its insurance rates by 15%.
7. The American Physicians Insurance Exchange and the Doctor's Company also reduced their premiums.

Tort reform in Mississippi caused the following to occur:

1. The Medical Assurance Company Of Mississippi, which provides malpractice insurance to 70% of the doctors in Mississippi, reduced premiums 5% in 2006.
2. This comes on the heels of not raising premiums in 2004 and 2005 after raising them up to 20% a year in earlier years.
3. Four other insurance companies returned to Mississippi to do business, likely resulting in more competition and further malpractice cost reductions.

Tort reform in West Virgina caused the following to occur:

1. An increase in the number of doctors practicing in the state.
2. West Virginia Physicians' Mutual sought permission to reduce malpractice insurance 5% in 2005 while insuring more doctors.
3. Woodbrook Casualty Insurance also applied for a rate reduction.

Why isn't tort reform a major, major piece of any Washington health care reform legislation? Could it be the lawyer lobby has blocked any effort to include these types of reforms that have been so successful at the state level? Much like Mattel blocked Congress from doing anything to affect their detrimental performance in the area of tainted toys (see yesterday's post), it appears that the ABA has done the same thing in this area from a lobbying perspective. Wouldn't it be a good idea to fully explore these tort reform facts prior to spending trillions of dollars on health care reform?

Unfortunately, the political class never lets facts and reality get in its way of acting. That is why the country needs to start over again on health care reform planning, this time without the lobbyists and following Step 28 in "Love My Country., Loathe My Government." Let's get some smart Americans working on the problem rather than the political class.

Visit our website at www.loathemygovernment.com to order an autographed copy of the book, "Love My Country, Loathe My Government -Fifty First Steps To Restoring Our Freedom and Destroying The American Political Class" and to sign up for the cause. The book is also available online at Amazon and Barnes And Noble.