For all of you Mizzou Tiger fans, please don’t get your hopes up. This No. 1 ranking has nothing to do with college football. According to an article in the Southeast Missourian, a Ball State University study has ranked Missouri as the No. 1 state for manufacturing in the country. Of the 20 categories that the 2008 National Manufacturing and Logistics Report Card took into account, Missouri was placed at the top for low long-term health care costs, health care premiums, and property taxes.

These high marks in health care costs and premiums can be attributed in part to the passage of HB 818, which helped the Show-Me State show the rest of the nation how free-market health insurance reform is done. This bipartisan solution to the state’s health policy dilemma helps put employees in charge, freeing them to choose their own insurance policies, and puts employers in positions where they can now contribute directly to employees’ plans without the burden of mandated contribution amounts. Furthermore, health savings accounts and individual health plans are portable, so employees are protected even in case of employment changes.

Another key factor associated with our manufacturing job growth (which might easily be overlooked) was the massive tort reform legislation that was passed in 2005. The Ball State rankings represent tangible evidence that good things happen when states reform and alter legal systems in an effort to shut down abuses that lead to “jackpot justice.”

In the midst of a poor economic climate and recent cutbacks in various plants, the great state of Missouri still prevails. Great job, Missouri … let’s keep up the good work!

With all due respect to my colleague, Sarah, the most ridiculous regulation imposed on the food industry comes from the recent decision by the Los Angeles city government to ban new fast-food restaurants from opening in poor neighborhoods. There was an excellent piece on this regulatory nightmare written by William Saletan at Slate.com, and another for the Los Angeles Times by Joe Hicks, but I want to reiterate several of the reasons why this is such a terrible idea:

• The fast-food ban assumes that poor people can’t be trusted (and therefore have no right) to make decisions for themselves. This is paternalism at its ugliest, because it says that people’s freedom can and should be stripped from them if the majority believes their choices might prove to be unwise.
• The ban ignores the realities of these communities. As unhealthy as fast food can be, it is the most convenient, most affordable way for many people to get a meal. Even if someone in a poor community had the time to shop at a grocery store and fashion home-cooked meals, it is far more expensive to purchase fresh foods and the means to prepare them than it is to swing by a local fast-food restaurant. Especially with the escalating cost of food, families worried about day-to-day survival can’t always afford the luxury of securing the most nutritious meals.
• Fast-food restaurants provide jobs for unskilled workers. While, as Dave Chapelle’s satirical take on this issue points out, these sorts of jobs aren’t likely to end poverty, they do bring money into the community and offer a first step toward more profitable types of employment. The fewer fast-food restaurants in the community, the higher that area’s unemployment level will be.
• The ban prevents competition in the fast-food market. Los Angeles has only banned new fast food restaurants, insulating the existing businesses from competition. Not only does this alleviate some of the pressure to keep menu prices down, it also allows the existing companies to pay rock-bottom wages because workers have fewer alternative employers.

Unfortunately, as with many ill-advised government schemes, this one seems to be catching on.

There are myriad proposals out there to create onerous new regulations, but this one takes the cake:

:In New York City this summer, a law kicked in requiring chain restaurants — from Starbucks to Burger King — to display on menus and menu boards the caloric content of the food they serve. In five other cities and counties elsewhere, similar labeling laws will take effect in coming months.

If the regulators’ goal is to help people make healthier choices, these regulations will probably do just the opposite of what they intend. Collecting information on calories is expensive, and the cost of complying with these laws will be most easily borne by the big fast-food chains. Small restaurants with potentially healthier fare will face this huge obstacle to setting up business. So we could end up with a situation where people know exactly how many calories are in each hamburger at McDonald’s but don’t care because that’s the only place to eat out.

(Not that they care so much now. Everybody knows that fast food isn’t good for you, even if they don’t have the exact calorie count in front of them when they order. It sells anyway.)

Fortunately, this concept hasn’t caught on in Missouri. Let’s hope things stay that way.

I blogged a couple of weeks ago about the North Carolina midwives who want the state to license them. Here’s an article about Massachusetts midwives who have followed suit. A state representative argues in favor of occupational licensure:

If the bill passes, they would have to apply for licensure and pass a series of requirements to practice legally in the state. “It will give any of the births currently being done more regulation and oversight,” Khan says.

This push for licensure might just be a strategy to legalize midwifery. Many Missourians, especially in rural areas, had a positive view of midwifery before the state allowed the practice. The legislation was controversial, but there hasn’t been public outcry about the fact that a private organization is licensing the midwives here. In states where the population is more wary of midwives, establishing a state board to oversee the profession could be the only way to legalize it.

On the other hand, lobbying for state oversight could be a way for the midwives to keep out competition and earn more money. The article notes that home birth with a midwife is much less expensive than seeing a doctor in a hospital. It doesn’t draw any connection between that and all the bureaucratic hurdles doctors have to jump through to be certified. If midwives have to go through a similarly long and costly certification process, you can expect the price for their services to jump.

If Massachusetts midwives need a state board to be recognized as legal, then I guess that’s what they have to do. But licensure should be a last resort.

This article from the St. Charles Journal is a few days old, but it’s still an interesting read. The subject: Tom-Jan Meeus, a journalist from the Netherlands who is traveling around the United States, and writing about politics and culture here. The article describes some stories Meeus has reported on recently, and one of them is the midwifery issue in Missouri. Meeus notes that midwifery has gained wider acceptance in the Netherlands:

“My two kids were born with the help of the midwives,” he says.

The author of the article seems more interested in Meeus’ predictions about Obama, and quickly moves on to discuss politics and the upcoming election. The comments to the article, though, pick up on the midwife issue. Here’s what “Natalie” has to say:

I love that he interviewed the woman and her midwife. Very cool. That is definitely a big issue right now, whether women here will have the freedoms women have in other states and countries, and the access to skilled and personal care during pregnancy and birth.

I rarely find myself arguing that Missouri should resemble Scandinavian countries, but on the question of freedom for midwives and expecting parents, I’ve got to agree. Oh, and we could use more parental choice in education, too.

Continuing a series of blog posts that began in April 2007, and which was on hiatus until now, let us again consider the numerous atrocious ways government has entered our lives, from the most overreaching nanny-state activity to more complicated financial instruments. Sometime in the mid-’90s, Bill Clinton declared, “The era of big government is over.” How wrong he was.

The International Herald Tribune has a kick-to-the-gut article about how it is now the responsibility of the federal government to buy people a home and send kids to college. I am by no means an expert on these issues, but I find it offensive that the government steps in to save everyone from themselves. In this entire mortgage imbroglio, it always gets overlooked that people bear the responsibility for taking on too much debt to buy a house. Nobody forced them to buy more house than they could afford at an adjustable rate mortgage with no money down. And why is it now the federal government’s job to guarantee all the student loans for college? It just sickens me that so many people are so happy to have the government take care of them.

Now, we’ll go into the think tank world for Reason’s newest video from Drew Carey. I have had discussions with plenty of people who support these types of health mandates / control freak laws. (I, myself, can even see the benefits of a few of them, like smoking bans.) The crazy thing, to my mind, is that many supporters argue that because the public pays for the health costs of so many people, the government has a right to regulate the way we live — i.e., banning trans fats or forcing people to wear helmets when they ride a bike. The insane thing is that this argument always comes from people who support greater government involvemnt in health care (i.e., socialism), so they put themselves in the perfect circle of arguing for more socialism in health care out of some moral imperative, and then arguing for the right to control our lives out of fiscal responsibility in health care. The idea that maybe we should let people live their own lives and then let them deal with the consequences of their actions — which, in come cases, will be negative — does not seem to enter their mindset. That would, of course, be too much freedom.

How does all this connect to Missouri? Well, we are the nation’s leader in saggy pants ordinances, so we have struck a blow for decency and telling kids we don’t want to see their boxer shorts. It’s also a nice excuse to stop them and check them for drugs, while we’re at it. It’s all very depressing, and my mood is not helped by the fact that the Cardinals will now be playing in Stella Artois Stadium.

… He’ll ask for a bakery license from the state.

The trend toward occupational licensure seems to be hard to resist, even for mavericks like mice … or midwives. Midwives in North Carolina, where practicing tocology is currently a misdemeanor, are asking the state to license them:

“If there was licensure in place, there would be more midwives trained here, and there would be a selection. No one’s going to move to a state that’s not friendly to midwives,” said Kreutzer, a member of the North Carolina Friends of Midwives.

It looks like North Carolina could be the next state to legalize midwifery, which would be great for the midwives who want to work there and patients who’d like to choose this option. But “friendly” and “legal” doesn’t have to mean “licensed by the state.” I hope North Carolina will follow MIssouri’s lead and allow a private organization to certify the midwives. In fact, the ideal scenario would be several licensing organizations competing with each other.

If the North Carolina midwives want to increase their numbers, they should avoid state licensing. That tends to keep people out of the profession by creating lots of bureaucratic hurdles to jump over. It won’t bring new people in. (You don’t see geologists flocking to Missouri to be licensed here, do you?)

… is the perfect excuse for me to link the Post’s article with my case study about pharmacy privatization from last year. The Post-Dispatch article primarily details how neighborhood pharmacies are struggling in competition against corporate pharmacies, despite the increasing demand for prescription drugs from our aging population.

One thing that could help is for more governments to do what St. Louis County did in 2003 and privatize the pharmacy portions of the local public health care system. All of the local pharmacies in St. Louis County are able to participate in the public health system because LDI, a pharmacy benefits company, has the county contract (won through competitive bidding), and neighborhood pharmacies all accept the LDI card. If more local governments did this, it would save taxpayers money, improve options for citizens using the public health case system, and benefit local businesses. There is absolutely no downside to this, as my case study demonstrated. (The only potential downside could be government pharmacists losing their jobs, but because the article emphasizes the incredible demand for pharmacists, I don’t need to point out they wouldn’t be out of work for long.)

Dr. Philip Anderson, Dean of the St. Louis University School of Medicine, calls for tuition assistance for students studying to be primary care physicians over at the St. Louis Post-Dispatch. His rationale is that there aren’t enough primary care physicians, and tuition assistance would provide an incentive for young bright minds to move into the field.

I suspect that the supply of doctors is relatively inelastic, and thus tuition assistance woouldn’t have much of an effect on the number of primary care physicians available. The problem is that the supply of doctors is fundamentally limited by occupational licensing laws. It’s no secret that it costs an enormous amount of both time and money in order to become a doctor in the United States. As a result, there are fewer doctors than there would be otherwise, and those who do become doctors enjoy much higher wages. In the end, this hurts the average family who has to pay more for medical services — particularly low-income families who are already strapped for cash.

The standard argument for requiring doctors to be licensed is that this protects the public from fly-by-night operations that only endanger the public’s health. There may be some merit to this argument when it comes to invasive surgery. When it comes to things like treating a cold or giving birth, however, the argument loses much of its force. You simply don’t need an M.D. to effectively do many of the things doctors do. What this argument ignores, though, is that fully functioning adults are capable of making their own decisions. It may be a useful service to warn the public about the dangers of not using a doctor for any given medical need, but requiring the public to use a doctor only limits the options available.

Speaking of midwifery, as Justin Hauke notes, the Missouri Supreme Court has just upheld a law to legalize the practice. Midwifery provides a textbook example of how occupational licensing hurts both the consumer and the competition. The Post-Dispatch reports:

Doctors’ groups have fought efforts to loosen the regulations, arguing that midwives lack training and that pregnancies can quickly become dangerous.

Even if this is correct — and it probably isn’t — this issue is fundamentally a matter of personal choice. We don’t allow the government to treat us like children when we decide what to wear in the morning; why shouldn’t we insist on autonomy when it comes to health care?

My fellow bloggers  have written quite a bit more about midwifery in Missouri — for example: here, here, here, and here.

Clearly, Eric Dixon played an influential role in yesterday’s Supreme Court decision.

Missouri now becomes the 38th state to legalize the use of a midwife, certified by a private entity.

In the Post-Dispatch’s coverage, the state’s medical lobby provided a statement:

Tom Holloway, who lobbies for the Missouri State Medical Association, said the new law jeopardizes public safety because it allows midwives to "provide unlimited services related to pregnancy: C-sections, drugs, epidural anesthetic, even abortions, without any state regulation or oversight."

This clearly misses the point. The state’s oversight and regulations haven’t changed. Any expectant mother can still choose to use an “approved” nurse/doctor and receive the same care as always. But they don’t have too. And that is the point.

A letter in the Springfield News-Leader urges the state’s congressional representatives to vote for the adoption of the Fairness in Nursing Home Arbitration Act, which would allow the families of nursing home residents to litigate disputes. This law would invalidate many of Missouri’s existing nursing home contracts, which require families to sign a mandatory arbitration clause in order to insure them against a lawsuit in the case of an injury or death.

I’ve written an op-ed about nursing home regulations before. In that article, I argued that nursing home abuses are very much a reality, but that additional regulation will only make long-term care coverage worse. Saint Louis currently enjoys having the second-lowest nursing home costs in the country, averaging $42,877 annually. Nationally, the average annual figure is $65,200, with costs as high as $191,385 in some states. This is a tremendous bill to foot for 10 or 15 years of potential care.

It’s very obvious why nursing homes require an arbitration clause. They are charged with ensuring the safety of residents who often are suffering from dementia or Alzheimer’s and may be largely a danger to themselves. The costs of litigating every potential event (whether or not it results from negligence by the nursing home) would be prohibitive, and would force many nursing homes out of business — only driving up the costs of long-term care.

This doesn’t mean that we should exonerate negligent health care workers. Many nursing home contracts are already in violation of existing laws. We should concentrate first on enforcing the laws on the books before driving up costs to the industry with little guarantee of improvement in service.

One of the downsides of paying for health care through insurance is that patients have less incentive to conserve scarce resources. For example, someone who pays for medicine with savings will consider carefully whether a prescription is really helpful, whereas someone who goes through insurance will be more likely to take whatever his or her doctor suggests. Relying on insurance can lead to wasteful health care spending; putting people in charge of their own health care resources leads to greater efficiency in the market for care.

This column by Mary Jo Feldstein in the Post-Dispatch makes the same point about the waste caused by insurance, but comes to a different conclusion from mine. Feldstein describes a study that found no benefits from living in areas where more intensive medical treatment takes place (more days in the hospital, more tests and procedures, etc.). St. Louis is one of the areas with more intensive treatment. Therefore, Feldstein writes, St. Louisans need an attitude adjustment:

Too frequently physicians see survival as the only good outcome and they try to push for every treatment, test and procedure no matter the likely outcome.

The latest thinking asks them to expand their definition of success to include a peaceful dying process. While Wennberg and Fisher’s data shows change is needed in some areas, including St. Louis, shifting regional treatment patterns is not a complete solution. Their research should continue to inspire changes in medical education and physician payments. [...]

Understanding death as a natural phase of life is a cultural shift that will need to occur in the local medical community and the community at large.

In other words, because providing every procedure to every patient is wasteful, all patients need to give it up (the "cultural shift") and die graciously.

There’s a middle ground between, on the one hand, insurance paying for every available treatment, and on the other, all patients foregoing treatment and resigning themselves to their ends. People could use HSAs to cover some medical tests and treatments, and they could decide for themselves which treatments will improve their lives. It’s easy to say that too many tests are bad because a study found they didn’t improve quality of life on average. But maybe there are a few people out there who would have greater peace of mind from the extra, "unnecessary" tests. Patients differ in their willingness to take risks and try new approaches. Rather than telling physicians to cut out the risky procedures, defining risk by a single standard for everyone, patients themselves could decide what level of risk is acceptable to them. And patients differ in their attitudes towards death, too — some accept it easily, while others would prefer to try any procedure that could prolong life. There’s no need for everyone to come to a consensus; when people pay for care directly, they can vote with their feet.

We don’t need everyone to shift one way, or take the same approach to medical treatment. We should change the way the system works so that patients can express their own preferences.

There are two editorials in today’s Wall Street Journal that discuss and highlight the proper solutions (read: abolish needless government regulations) to the worsening health care situation in the United States. Both editorials are spot-on in their assessments, and should be read by all those who are looking for a solution.

The first editorial focuses on the Florida legislature’s unanimous passage of a health care reform bill during this last session. The bill was aimed at kicking the government out of our health care decisions, rather than trying to further regulate and manipulate the free market. Gov. Charlie Crist signed the bill in an effort to combat the notion that health care coverage has to be an all-or-nothing decision. Before this bill was signed, health care coverage plans were littered with state mandates and regulations that often drove up the price of the plan beyond the reach of average individuals. As the author points out, these erstwhile mandates included such "necessary" procedures as the age-old practice of acupuncture, not to mention chiropractic visits (I searched a long time for a clip from the Simpsons episode where Homer sort of becomes a chiropractor, but had no luck). All kidding aside, this is quite an accomplishment for those free-market advocates who think the government would only worsen the problem (jeez, who could think something like that!).

The second editorial also focuses on a bill that is working its way through the legislature in New Jersey (yeah, I know, New Jersey is ahead of Missouri — uh oh) that will allow residents to cross states borders to buy an affordable health care policy. By opening out-of-state markets, it allows competition to flood the New Jersey market, which can only benefit that state’s consumers. Rather than being held hostage by existing health care companies in the state that are able to coordinate and charge higher premiums, consumers will be able to select from a number of approved health care providers (don’t even get me started on what approved means, but that is a topic for a different day) throughout the United States.

Because New Jersey’s average health care costs are almost double the national average, this bill should be welcomed with open arms. Nevertheless, opponents of the bill say policy buyers will only be able to get "bare bones" coverage. That is simply not true. Even if did happen to be true, it is not like policy holders would switch to a lesser plan than they originally had; this would simply allow those who had nothing before to have something.

Let’s all hope this bill succeeds, and Missouri legislators take notice.

Alright, that is all for now. I have to get home so I can make it home for the two-hour "Lost" finale.

Check out this new website.  The Missouri Foundation for Health set it up to educate people about insurance coverage and collect ideas for policy solutions.

Giving people information about health care options is a great idea. And this website is easy to navigate, and has lots of information. Unfortunately, I don’t think it will be as effective as it should be because it’s more focused on insurance than on health care. The question we should be asking is: Can everyone pay for health care? (There are different ways to pay for care, like using a regular savings account, an HSA, catastrophic insurance coverage, traditional insurance, or some combination of the above.) Instead, this website asks, "Is everyone enrolled in a traditional insurance plan?" and then panics when the answer is no, without considering whether that kind of plan would be appropriate for everyone. Surely, we can all agree that a billionaire doesn’t need traditional insurance to cover routine check-ups, even though he or she might want long-term care insurance or a designated savings account.

This feedback form offers a humorous illustration of the website’s misplaced priorities. Along with basic information like your name, zip code, and email address, you’re supposed to check off whether you are "insured" or "uninsured." But without detailed information about someone’s financial and medical situation, a simple yes-or-no answer to to the "Are you insured?" question doesn’t mean very much.

I wrote about the Missouri Health Transformation Act (MHTA) when it passed the Senate last week, so I thought I would revisit the bill now that it has reached a stalemate in the House.

The primary point of contention in the bill (and the reason it has grown to the behemoth size I lambasted before) is how to insure low-income uninsured Missourians. The House wants to control costs. The Senate doesn’t.

Essentially, House leaders believe that low-income Missourians should receive “vouchers” to shop for coverage that meet their needs, rather than receive generic broad coverage by the state. I whole-heartedly agree. If consumers shop around for the best deal, prices will be lower for everyone. This is the real problem with the existing health insurance model. Do you have any idea how much a doctor visit costs? How much does it cost to get your teeth cleaned or to get your appendix out? Honestly, I couldn’t even ballpark these things. All anyone focuses on is their insurance deductible. So if it costs you $100 out of pocket to get your appendix out, do you even care what the true cost is?

The lack of medical price transparency has two negative effects. One, we overuse our insurance because we have no idea what the true costs are and the costs don’t accrue to us individually. And two, medical providers have no incentive to keep costs down if costs can’t be compared. Would you have any idea whether or not your doctor charges a “fair” price? Prices of various procedures could vary widely from doctor to doctor, but we would have no idea because our copay would be the same regardless.

The House wants to cover the uninsured in a way that keeps costs lower. It wants insurance providers to encourage competition and to publicly disclose medical costs. But, as the Saint Louis Post-Dispatch covers in an article in this morning’s paper, hospitals, doctors, and other groups are balking at the request.

I’d probably be upset too if I knew that doing so would reveal that I’m charging three times as much as the next doctor to perform the same procedure.

A new bill would create a 24-member panel to study autism in the state and recommend policy actions (KMOX coverage here).

This baffles me. The fiscal note (an estimate of the fiscal cost to the state) for this legislation is nearly identical to the anticipated costs of the Special Needs Tax Credit. But, in true bureaucratic fashion, lawmakers would rather spend money on “analyzing” the problem (maybe they’ll issue a report!) instead of actually helping those affected.

Sarah Brodsky wrote a great op-ed about this topic. Why not let parents decide what’s best for their autistic children? Considering the idiosyncrasy of the disorder (it affects individuals in vastly different ways), any general approach to addressing it will prove difficult anyway. It’s better to let parents deal with their children’s condition on an individual level.

If we’re going to spend taxpayer money on autism, shouldn’t the money actually go to those that are affected?

Yesterday, Georgia Governor Sonny Perdue signed a comprehensive health care reform bill similar to Missouri’s landmark HB 818 legislation, which passed last year. We’ve praised HB 818 on this blog over and over (and elsewhere), but it seems Georgia has one-upped even that innovative piece of legislation (extensive coverage can be found here).

The most significant improvement in Georgia’s health insurance reform bill is a provision that allows insurers to provide incentives for healthy behavior. For example, health insurance companies will be able to reward individuals for things like quitting smoking or losing weight. This provision will go a long way toward reducing long-term costs.

In addition, the law mimics HB 818 in making the premiums paid on Health Savings Account–eligible insurance plans 100 percent deductible against personal state income taxes. To encourage employers to participate (particularly small businesses), the bill also allows a $250 tax credit per employee for employers that offer HSAs.

The bill also improves upon earlier legislation in that it allows health insurance to be sold across state lines, rather than through the monopolistic cartels that currently exist. So Georgians now have the opportunity to purchase HSA plans provided by Missouri companies. The increase in competition will help improve quality while lowering premium costs.

It’s really refreshing to see positive health care legislation being passed around the country. Makes me less of a cynic.

The Missouri Health Transformation Act of 2008 (SB1283), which would implement several state health care reforms, has passed the Missouri Senate and is now headed toward House approval.

This bill is a perfect example of bureaucracy at its finest. Considering the amount of administrative minutiae in this bill, I’d be surprised if anyone in the Senate other than the bill’s sponsor actually read it.

So what exactly will be “transformed” under the new bill? I’ve spent the better part of the past hour trying to figure that out. Apparently, one “transformation” would be the creation of a new Department of Redundancy Department, which would consist of the existing members of the current state health care agencies. Apparently, this new body is supposed to “coordinate health policy collaboration” across the state by issuing “official state recognition” to employers that promote “healthy workplaces.” The new cabinet also hopes to express its approval of “telehealth” — health advice provided over the phone.

But if that’s not enough, the bill would contain a litany of additional health care “fixes,” such as providing tax credits to private homeowners who modify their homes to be “accessible” (no description of what that means), providing a $400,000 grant to create a “website,” and a $350,000 grant “to be used for the establishment of a study to assess the feasibility of [health] pilot projects in the greater St. Charles area.”

I just don’t understand who this bill is supposed to appeal to. The provisions it would implement are mostly superficial or redundant. The one bright spot is the creation of a state income tax deduction equal to the premium paid by taxpayers for high deductible health care plans purchased through a health savings account. But that benefit seems superfluous when the bill simultaneously expands the Missouri Consolidated Health Care Plan coverage to include benefits such as marriage counseling at the taxpayers’ expense. Considering the degree to which MCHCP is currently underfunded (stay tuned for the future release of our study about Missouri public pensions), this seems like shooting yourself in the foot.

The only thing this bill might “transform” is creating a greater conviction that an expanded role for government management of health care would be a huge mistake.

Health savings accounts are growing in popularity, according to this article. Six million people are now enrolled in plans that allow them to use HSAs. Critics are still claiming that the plans are just for the wealthy, but that doesn’t match the data:

Karen Ignagni, president and CEO of the trade group America’s Health Insurance Plans, said the GAO’s numbers showed that the typical enrollee deposited $2,100 in a health savings account in 2005 and withdrew $1,000. She said those figures hardly represent amounts that could be described as a tax shelter for the wealthy.

The average HSA owner still has a higher income than the average American, but that’s because most ordinary people haven’t had access to the accounts. Missouri reformed its health care regulations last year, allowing more small business owners and employees to take advantage of the plans. Unfortunately, most states lag behind. Wealthy people are also more likely to have the latest information about which health plans are to their advantage. HSAs are a relatively new addition to the health-care market, and their use will probably spread as people learn about them.

Another criticism of HSAs is that when people have to pay for care themselves (using money saved in an HSA) they receive less health care than they would if they didn’t see the cost. That’s true — and it’s a benefit of HSAs. When everyone uses all the health care services available, without regard for cost, it leads to shortages. Then the people who most need those services may not receive them. HSAs don’t prevent anyone from purchasing health care they need or want — they just give them an incentive to take the cost of care into account.

Please take a moment to read this article, published by Chicago’s Heartland Institute in its monthly Health Care News magazine. Written by Aaron Hilmer, the reform-minded president of the Mehlville Fire District who has done some amazing things during his time in office, it is a great example of what HSAs can do for the benefit of taxpayers’ and employees’ health care.

We’ve been very proud at the Show-Me Institute to be at the forefront of HSA reform in Missouri. The “new rules” of health care necessitate a more personal approach, one in which individuals manage their own health care needs directly.

But it’s not just SMI that believes in the market approach to health insurance. An article on CNN Money this morning is waving the HSA banner too. And really, when you think about it, how strange is it that the country has been so slow to embrace an open-market approach to health insurance in the first place? What continues to amaze me is that we as a nation continue to view health insurance premiums and coverage as “one size fits all.” How alien that would seem to us for any other type of insurance policy. Just think how much consumers have benefited as insurance has been deregulated in other markets.

In part, the CNN Money article chronicles Jason Jeffords of Bedford, NH. Jason pays $240/month for a high-deductible comprehensive health insurance plan for his entire family. His premium is determined by his own health risk and that of his family.

The catch is that Jason’s deductible is $10,000, meaning that all costs below that level are paid out of pocket. But that’s where HSAs come in. Similar to a 401k, Jason opened an HSA account through his employer, allowing him to contribute tax-free earnings each month. His employer ups the ante by contributing $5,800 annually. These funds can be withdrawn at any time to cover medical expenses that fall below Jason’s annual deductible (again, tax free). And the interest on Jason’s HSA earnings grows tax-free. If funds remain when he retires, they can be withdrawn exactly like in a 401k. They’re also portable, so Jason can change employers and still retain his benefits.

HSAs are the model for the future of health care. Employers are much better off contributing funds to their employees’ plans indirectly than financing their employee’s health care costs directly. And the portability and choice aspects allow families to better manage their health care as new needs arise. This solves the problem of the nation’s current uninsured (who generally must live sans insurance if their employer doesn’t provide it) while keeping costs under control. In other words, the nation’s current insured will no longer be able to abuse the system by having their costs subsidized through a diffusion of responsibility. It is this system that has priced so many people out of the insurance market to begin with.

Anyway, the article is a great read and I’ve rambled on long enough. The point is that a health care revolution is coming and people who choose to manage their own health care today are poised to be much more financially secure than those who wait until change is thrust upon them. Which group do you want to be in?

Today, the St. Joseph News-Press reported about the efforts of an area doctor (also, incidentally, a Missouri representative) who is sponsoring legislation to get rid of Missouri’s Certificate of Need (CON) requirement for most health-care facilities — except for those providing long-term care:

Anyone in the hospital business wanting to set up shop in Missouri must endure a stringent application process with the state under a Certificate of Need program.

The same goes for long-term care facilities, such as nursing homes, and certain medical equipment, such as MRIs.

Rep. Dr. Rob Schaaf, R-St. Joseph, wants to take hospitals and medical equipment out of the equation.

“I’m just a believer in the free market and I don’t believe in central control,” Dr. Schaaf said.

Dr. Schaaf is in good company. Last year, we published an op-ed by Steve Bernstetter, "Taking the CON Out of Certificate of Need Laws," that argued in favor of largely the same perspective. Steve pointed out the drawbacks of CON laws here:

Proponents of maintaining current CON laws make two key arguments. First, they assert that CON laws keep prices down and assure both quality and availability of service. Evidence for these claims is spotty at best. Success with and without the program varies greatly from state to state, and it is extremely difficult to separate the differences in care created by CON laws from differences created by other variations in healthcare systems between states. Additional study is required before any solid conclusions can be drawn as to the affect of CON laws on price, quality, and availability. However, conventional economic wisdom holds that when multiple firms compete, quality rises and prices drop. There’s no reason to assume that the health care industry would be exempt from this effect.

He went on to propose an alternative model:

The ideal system provides a variety of options, in both price and quality, for all. Such a system is best achieved in a market where firms are free to specialize to meet consumer demand. Such a market depends on consumers with a variety of options making informed decisions. As such, CON law reforms should focus on increasing the transparency of the market while simultaneously fostering competitive growth within it. A balanced approach to competition, in which artificial barriers to entry, such as CON laws, are eliminated and the healthcare needs of all are well represented, offers the best chance for guaranteeing all Missourians access to affordable, quality health care.

Last week, Missouri’s Supreme Court justices heard arguments on both sides of the dispute about whether a provision legalizing midwifery should remain in the free-market health insurance reform bill, HB 818, that the General Assembly passed last year. The Missouri Medical Association contested the provision, arguing it violated the single-subject requirement for amending the state Constitution.

It looks as though the Court may base its decision on its interpretation of that requirement, rather than on any reputed benefits or drawbacks of midwifery itself. From the Post-Dispatch:

Assistant Attorney General John McManus argued that the provision indirectly related to health insurance because lawmakers could not insure midwives if the practice was illegal.

Making it legal "is the initial step," he told the court. "The Legislature can’t take any other steps with relation to health insurance and certified midwives unless they take this step."

Several judges questioned that argument on Wednesday.

"Had the title been worded, ‘An Act relating to health care services,’ there would have been no problem," said Judge Stephen Limbaugh.

Chief Justice Laura Denvir Stith said that under McManus’ argument, lawmakers could legalize almost anything in the bill. "It seems that anything that’s insurable can be put in this bill," she said.

A few months ago, I wrote an op-ed about midwifery and concluded:

Hopefully, this provision will be resurrected — either on appeal, or through a less controversial legislative action. It’s important that consumers be allowed autonomy not only in choosing insurance policies, but also in choosing what type of care they want to receive.

Regardless of what the Court decides about the technical validity of this particular provision, there’s little question that legalizing midwifery is a good idea. Several advocates of midwifery submitted an amicus brief to the Court that provides thorough arguments about the benefits of the practice, and answers the objections of critics. An excerpt:

Contrary to the AMA’s unsupported assertions about home birth safety, the “clear preponderance of medical literature” suggests that home births, when they are planned and attended by a well-trained professional midwife, in fact, may be less dangerous for mother and baby than giving birth in a standard hospital [...] Among the myriad studies on home birth, the only study cited by the AMA to support its assertion that home birth is risky is the only one to have found otherwise, yet this study has serious design flaws that undermine its validity.

Ultimately, though, determining which side has a greater degree of evidence to support its claims of health and safety is of much lesser importance than the simple question of freedom that is so often overlooked in these debates: Should you have control over your own choice of medical care, or should the choice be left to politicians?

MarketWatch tackles this question. The article mostly considers the dueling Clinton/Obama “mandate” requirements for a national health insurance plan for the nation’s uninsured:

[M]any analysts believe a requirement that individuals buy health insurance — when paired with subsidies for people who can’t afford it, effective purchasing pools and easy enrollment — is a critical mechanism for extending coverage.

National health care advocates argue that health insurance mandates should be required, in the same way that automobile insurance is required for drivers. They recognize (correctly) that this is the only way to cover the high costs of the elderly and the sick (by forcing younger, healthier Americans to directly subsidize them through mandated enrollment).

I have never understood this auto insurance analogy. Sure, states require that drivers have liability insurance — that is, that drivers have insurance that covers the costs inflicted upon the counterparty in an accident. But states don’t require drivers to enroll in comprehensive coverage for their own car, which would be a much more valid comparison.

There’s no external cost to an individual’s illness. If I get sick, the cost is borne by me, and me alone. We don’t purchase insurance to cover the costs of those we infect when we cough in a crowded elevator. Comprehensive auto insurance would run into the same problem as health care if it had a mandated requirement. Owners of old, beaten-up cars would never enroll in comprehensive coverage without being required to do so. They would recognize that the perceived benefits they might receive from such insurance would never justify its costs. This is why it’s so much more expensive to insure a new car — because the insurance pool is overwhelmed by newer cars that lead to more expensive payouts when something goes wrong.

A mandated comprehensive insurance policy would effectively subsidize new car owners at the expense of older, used car owners. It’s like the health insurance problem in reverse. How many drivers of a 1987 Ford POS would be willing to subsidize the insurance costs of a 2008 Ford Mustang?

MIdwives make an appearance in the Kansas City Star:

What if hospitals are overwhelmed by casualties, disease or infection? Many first responders are not prepared to deal with the special needs of pregnant women and infants. Where will women give birth during the next disaster?

The answer, according to this op-ed, is midwives, who are used to helping with births outside of hospitals — so a natural disaster would be no big deal to them.

I’m having trouble imagining a natural disaster that is so huge that women can’t get to hospitals, and that at the same time allows for easy communication with and transportation of midwives.

But even during the good times, women should be able to choose midwives without breaking the law. The op-ed notes that some religious groups do not use hospitals. For them, the choice is between an experienced midwife with some medical knowledge, and doing it themselves. Rural women who live far from hospitals might prefer to have a midwife close-by. And while there are risks involved in giving birth with a midwife rather than with an MD, there are also risks of exposure to infection and disease whenever you go to the hospital.

In short, legalizing midwifery is a good idea right now. We don’t need to wait for disaster to strike.

Last year we released a case study on the privatization of the county’s pharmacy services. With the release of the 2008 county budget at the end of last year, we have been able to update and correct come of the information it contains. Here is the original study. Here is a statement explaining the updates and corrections in detail. Finally, here are some things to keep in mind about the update and corrections:

• Nobody called us on this. Our own follow-up research led to the corrections, and we are making these changes in the interest of accuracy.
• The error in the 2007 data was not our fault. We used a number provided to us by Saint Louis County. I am certain that nobody intentionally gave us a lower-than-accurate number. It was just an error. These things happen; you correct them and move on.
• Most importantly, the essential point of the case study, and its conclusions, remain exactly the same: that privatization has been great for county government, patients, and taxpayers. The only change is that the new numbers show lower savings — but there are still savings. If you adjust for inflation, the new numbers still show substantial cost savings. The improvements to patient services brought about by privatization remain a primary argument for the benefits of privatization, and are not changed by these new numbers.

The St. Louis Post-Dispatch has a very thoughtful editorial this morning (link via Combest) about the Bellefontaine Habilitation Center in north Saint Louis County. The problems there are heartbreaking and long documented. There have been cases of abuse, neglect, and patient death both at the center and among patients who have been moved to private facilities for care. Each case is awful. The Post states, "As it turns out, privatization is no magic bullet."

Indeed, privatization is not necessarily the best choice for circumstances such as this, which deal with the absolute neediest members of our society. If I may digress a bit, one of larger problems I have with the welfare state is how quickly and easily the definition of "needy" gets expanded to include a very large number of people. You expand Medicare to serve anyone who wants it, and then when the governor merely tightens the eligibility requirements, to try to focus more resources on those who truly deserve it, he gets ripped for destroying families — regardless of whether that actually happened. So, yes, I clearly favor substantial reductions in the welfare state at the state and federal levels.

But that is not really an issue here, because everyone can agree that the patients at Bellefontaine clearly deserve state care if their own families are unable to provide it. And I don’t mean financially unable — the level and difficulty of care required for many of these patients is beyond what most families can perform. The state has a role in providing for these citizens, and the question is whether the state or the private sector should actually perform the job.

As for these patients who require lower levels of care, I don’t see anything wrong with allowing qualified private facilities, with appropriate state oversight, to provide that care. And I certainly see nothing wrong with firing 125 employees who are no longer needed because the patients have been moved. However, for the remaining 160 or so patients who need the greatest level of attention, the state should continue to provide the highest level of care possible. Only after private facilities have proven they can handle the most demanding patients, which may never happen, should the state consider moving them out of Bellefontaine. Until then, resources must be directed to provide for those patients.

Now, I look foward to discussing the SCHIP program and wondering why the hell families at 300 percent of the poverty level deserve to have the taxpayers pay for their kids’ health care, so I can return to being a tightwad.

The Post-Dispatch ran a two-part article this this weekend (and this morning) on Missouri’s midwifery battle. The casual reader may find our preoccupation with this issue bizarre. But it’s not the midwife focus per se that we care about — it’s the Show-Me Institute’s staunch opposition to most occupational licensing regulations.

Advocates of midwife-assisted deliveries argue that the experience is more natural, offering new mothers the opportunity to experience the miracle of childbirth in a relaxed, conscious setting. Dr. Laurel Walter-Baumstark, a family physician on the board of the National Association of Birthing Centers, argues that "there is just no better model of preventive maternity care than the midwifery model."

But opponents counter that their opposition to legalized midwifery is focused on pre- and post-natal safety concerns, not money. For example, Dr. David Redfern, an obstetrician in Springfield, Mo., who testified against midwife legislation last year, argues, "[H]ow we [deliver babies] is very important, and we have to take patient safety into consideration."

But the doctor’s opposition misses the point. Eliminating occupational licensing requirements doesn’t mean an end to medical safety. The state is free to continue to sanction doctors (and other professionals) who properly meet their standards. What’s more, the state should set medical standards, as a way for consumers to ensure the quality of their medical practitioners. But it is not the state’s role to tell people how to live their lives. If a new mother wants to use a midwife to assist in childbirth, that’s her decision — a decision that no one is better-equipped to make than her.

And as the Post documents, doctor-assisted births aren’t necessarily qualitatively better than midwife deliveries (emphasis added):

“Medical interventions are on the rise. The rate of labor inductions in the U.S. has more than doubled since 1990 to 22 percent. The 2006 rate of births by C-section has reached 31 percent, the highest ever. But the Centers for Disease Control and Prevention says it can find no medical reason to justify the increases and says the interventions are not producing better maternal or infant health outcomes."

Before you dismiss this issue (or dismiss consideration of the role of occupational licensing in general), think of it this way: Are you really comfortable with surrendering your freedom to make your own decisions about your body? We shouldn’t be afraid of this type of choice; we should embrace it.

Our own policy analyst and Show-Me Daily blogger extraordinaire Justin Hauke had a letter to the editor published in today’s Wall Street Journal. The letter responds to a recent op-ed about universal health coverage written by Robert Reich, former U.S. Secretary of Labor in the Clinton administration, and is packaged with a letter from a Florida resident that also makes some great points about government involvement in the health care industry.

Because online newspaper content doesn’t always remain available indefinitely, I’m reproducing Justin’s letter below for posterity’s sake:

Mr. Reich’s op-ed disappointed me, not only for its blatant disregard of economic logic, but for its presupposition of controversial facts about what universal health-care coverage would entail.

Mr. Reich correctly recognizes that mandates (and their big government connotations) are the most sensitive part of the health-care debate, so he dismisses them as a smoke screen. But, as many presidential candidates have recognized, mandates are the most important part of any potential national health-care plan. Older Americans are among the most expensive to insure, yet Mr. Reich asks readers to believe that they could be covered without a mandated influx of healthy Americans to contribute to the plan without utilizing its benefits.

Mr. Reich argues instead that high-cost participants would be subsidized by the general revenue that would be realized if the Bush tax cuts were to expire. Yet even if we assume that higher taxes would increase revenues without pushing the country into recession, such an increase in tax revenue could not offset the enormous cost of health care for millions of high-risk Americans indefinitely — particularly when fixed premiums encourage health-care abuses.

In order to appease Americans who want to believe that universal health care can be achieved without significant cost or government intrusiveness, Mr. Reich has ignored the real health-care debate and dismissed the bureaucratic mess of government-mandated coverage as the "least important aspect of what (the Democrats) are offering." But it’s not "The Road to Universal Coverage" that Mr. Reich offers us; it’s "The Road to Serfdom."

Justin P. Hauke
The Show-Me Institute
St. Louis

I see on the Ethical Society’s website that they just had a program presented by Free the Midwives and showed a new film about maternity care. You can follow that last link to see snippets from the documentary.

I agree with the director that the legal environment discourages choice. Doctors can charge their patients more because they don’t have to compete with the cheaper midwives. However, from the trailer, it looks like this film is less about extolling the benefits of competition and more about putting down the people who run and work at hospitals.

This strategy could backfire. The trailer says that hospitals just care about money. But most midwives aren’t volunteers, and they have to admit that women who give birth in hospitals enjoy extra security thanks to all the lifesaving equipment hospitals have ready — expensive equipment that patients have to pay for. And while many mothers have been satisfied with their experiences with midwives, there are some high-risk births that midwives will never be able to handle.

It’s also inconsistent to censure hospitals for moving women out of hospital beds too quickly, while praising midwives for helping women stay away from the hospital. Hospitals have good reason to try to get women to go home as soon as possible; there’s the risk of infection, for example.

And some of the complaints about what happens in delivery rooms could be more fairly directed at patients. Women have a responsibility to talk to their doctors about what medications they’ll take and what will be done in case of complications. If they don’t choose to inform themselves when they go to the doctor, they may make the same mistake even with a midwife.

Women should be able to choose midwives if they wish, so I’m rooting for the midwives. But I hope they’ll turn their PR efforts away from exaggerating the extent of their persecution and spreading fear about hospitals, where most babies will be delivered even under the freest laws. Even if hospitals do a good job, and I think most do, women should still have the choice to use a midwife.