Health care reform action needed at the federal level, but also at the state level
There are people out there who thought that once ObamaCare was signed into law last March, the debate was over. Thankfully, that’s not been the case. With big changes at the ballot box in November, debate and action regarding the new health care law has been rekindled.
The U.S. House of Representatives voted to repeal the Patient Protection and Affordable Care Act (PPACA) by a
245-189 margin in January. On Feb. 2, a vote for repeal failed along party lines in the U.S. Senate, 51-47 with all Republicans voting for repeal.
After establishing where members of the new Congress stand on this major issue, other steps are being taken to start chipping away at PPACA. For example, while failing to vote for repeal, the Senate did vote 81-17 to remove the requirement that businesses file a 1099 form for annual purchases of goods and services of more than $600 from a vendor, which would be particularly burdensome on small firms. The
House is expected to approve the termination of the 1099 mandate scheduled to take effect next year, and President Barack Obama has said that he will sign the change into law.
There’s plenty of action on the health care law in the courts as well. The latest was a decision on Jan. 31 by U.S. District Court Judge Roger Vinson that the mandate requiring individuals to purchase health insurance violated the Constitution, and therefore, the full health care law must be voided. This decision follows a ruling in December by Judge Henry Hudson, who also found the individual mandate unconstitutional. A November decision by Judge Norman Moon and another in October by Judge George Steeh upheld the law.
It’s clear that forcing individuals to purchase health insurance or pay a fine —not to mention mandating that businesses offer coverage or pay a fine — goes far beyond anything the federal government has ever done and can’t be justified under the commerce clause of the Constitution. Inevitably, the U.S. Supreme Court is going to decide whether or not ObamaCare is constitutional. Whether a majority of Supreme Court justices agree with the Constitution is anyone’s guess.
But there’s still more action on health care in the states, which have their own health care policies that affect access to and affordability of health insurance and health care services.
How do the states compare in this policy area? Some answers are provided in the recently released Small Business & Entrepreneurship Council’s Health Care Cost Policy Index for 2011.
The index ties together seven measures, including tax treatment of health savings accounts, various forms of guaranteed issue regulations, various community rating regulations, the number of insurance coverage mandates and whether or not states offer high-risk pools. The fundamental points is that expanded government programs and spending mean fewer incentives to be concerned about prices and use of health care services, with costs rising as a result. And more mandates on insurers, while they often sound quite appealing, inevitably mean higher insurance costs. And with increased regulation, costs increase as government effectively overrules or distorts the private, competitive marketplace.
In contrast, consumer-based,
market-driven reforms expand choice and competition, which in the end reduces costs and improves quality. Health Savings Accounts (HSAs) offer a key means for boosting choice, competition and consumer control in the health insurance marketplace. HSAs are tax-free savings accounts owned and controlled by individuals. Funds are deposited tax-free into the account by the employee, employer, or both, with earnings accumulating tax-free as well. These funds are used by individuals to cover medical expenses. Since each HSA is tied to a traditional catastrophic insurance plan, the individual is protected against large, unforeseen health care costs, which is the purpose of health insurance in the first place. HSA deposits and earnings are tax-free at the federal level, but some states do not allow for such deductions.
Who’s best and worst?
Among the 50 states and District of Columbia, the best 10 states in terms of state health care policies are: 1. South Carolina, 2. Alaska, 3. Iowa, 4. Indiana, 5. South Dakota, 6. Nebraska, 7. Wyoming, 8. (tie) Montana and Oklahoma and 10. Alabama. The 10 worst states are: 42. Florida, 43. Colorado, 45. Connecticut, 45. Washington, 46. Vermont, 47. New Jersey, 48. New York, 49. Rhode Island, 50. Massachusetts, and 51. Maine.
So, it’s not just about Congress and the courts. Work needs to be done at the state level as well to roll back costly government initiatives if the point is to make health care more accessible and affordable, especially for the self-employed and for small businesses and their employees.
Raymond J. Keating is chief economist for the Small Business & Entrepreneurship Council. Reach Keating through the website atwww.sbecouncil.org.