Using the Market to Slow Costs, Increase Access
by Bob Asztalos
Expanding healthcare to more Floridians
and reducing the cost of health insurance
and services are two issues that legislators
are seeking to address in the 2008 session.
Florida’s current budget shortfall has prompted
key policymakers to look for ways to use market
forces and greater efficiencies to expand services
and decrease costs, a prospect that creates optimism
for long-term reform.
Last year, AIF created a health care task force to
investigate methods for halting the growing lack
of affordable and accessible health insurance for
Florida’s employers and their employees.
The task force conducted numerous conversations
with our sister organization, Associated
Industries of Massachusetts, regarding that
state’s implementation of a universal health care
program that combines an individual mandate,
a centralized health-insurance purchasing
mechanism, and a fee on employers who do not
provide employees with health benefits.
While a universally mandated insurance program
may appear attractive, the heavy-handed
regulation and inaccurate pricing mechanism
through the Commonwealth Health Insurance
Connector Authority has actually driven up the
cost of health insurance.
AIF believes the Massachusetts reforms, with
their heavy reliance on government-run centralized
planning, with mandates and controls, are
an inappropriate solution to increasing healthinsurance
coverage. We recommend a move in
the opposite direction, where health-insurance
reforms are based on consumer choice and control
and free markets. Thus, any reforms should
meet the following guiding principles:
- Do not create additional regulations or
costs in the current health care and healthinsurance
delivery systems.
- Facilitate access for employees and smallbusiness
owners to health plans with
varying types of benefit packages.
- Encourage employers to provide health
insurance to employees through tax credits
or other incentives.
- Identify the high-risk individuals who
generate a large amount of the health care
costs and develop programs to address their
unique health care needs without driving
up the cost of health insurance for others.
- Decrease unnecessary government regulations
that increase the cost of insurance
and thus drive up the number of uninsured.
- Increase consumer choice and input into
the decision to purchase and utilize health
care services.
- Decrease the litigious environment in Florida,
which promotes defensive medicine, shifts
precious health care dollars for patients into
the courts, and thereby increases the cost
of care.
Based on the above principles, AIF believes
Florida can incrementally improve Floridians’
access to health insurance by allowing market
forces and consumer demand to help control
health insurance costs. The following are suggestions
which AIF believes will facilitate improvements
to the availability and affordability of
health insurance.
Health Insurance Mandates
AIF believes that Florida employers and
individuals should be empowered to build their
health care coverage by choosing from plans with
varying degrees of benefit packages. Consumers,
not the government, should decide how much
money they are able to allocate toward their desire.
Florida law contains over 50 mandates on
specific benefits and providers that health insurers
must include in all the products they offer
to Florida consumers. Even though current law
requires that cost studies be onducted when the
Legislature considers a new mandate, the provision
has largely been ignored.
The time has come for lawmakers to take a methodical
approach to determining the benefits and
costs of each current or proposed mandate. The
study should identify whether the benefit gained
by a mandate justifies the increased cost of health
insurance and the increased number of uninsured.
AIF believes it is not politically possible for the
Legislature to individually address mandates
since each one has its own vocal advocacy group.
A mechanism similar to the Base Realignment
and Closing Commission (BRAC) should be created
and charged with investigating and allocating
costs to each mandate as well as determining
which mandates are beneficial, based upon the
cost to consumers, and which are not.
This commission should consist of actuaries,
medical professionals, and academicians chosen
for their professional expertise, rather than their
advocacy of a certain mandate. The commission
should recommend to the Legislature whether
each mandate should be retained, modified or
repealed. The Legislature should vote yes or no
on the entire panel of recommendations, similar
to the manner in which Congress handled the
BRAC recommendations.
Out of State Group Benefit Plans
Out-of-state group plans are those plans issued
outside the State of Florida, which are subject
to some, but not all, of Florida’s mandated
coverage requirements. As a result, out-of-state
group plans are more affordable than many
Florida group and individual plans. These out of state group plans provide coverage to many
self-employed Floridians who could not otherwise
afford coverage.
There have been attempts over the last 20
years to impose more of Florida’s statutorily
mandated coverages on out-of-state group health
plans. AIF believes imposing all state mandates
on out-of-state group carriers would be a step
in the wrong direction. A better direction is to
allow additional flexibility to Florida insurers
to offer policies free of unwanted and costly
mandates. AIF believes the Legislature should
allow all insurers to make coverage available at
the option of the consumer, priced accordingly.
Increasing regulation on these out-of-state group
plans would inevitably increase the cost of these
policies and take away the only form of insurance
some Floridians can afford.
Additional Medical Malpractice Reforms
All the previously discussed ideas are focused
on giving individuals a greater choice in
selecting insurance plans and services, thereby
allowing market forces to bring down the cost
of coverage. The Legislature should also look for
ways to slow other cost drivers. Many of these
factors are beyond the reach of the Legislature
and can only be addressed by national or even
cultural efforts.
The Legislature can impact the rising cost of
care by enacting more stringent medical malpractice
reforms. Even with the reforms enacted
in 2003, Florida’s legal climate continues to
encourage defensive medicine, diverts money
away from patients and into the legal system,
and is a disincentive to physicians practicing in
Florida.
Bob Asztalos is a partner with Buigas &
Asztalos and AIF consultant, (e-mail: bob@ baahealth.us) |
