One of the advantages of our federal system of government is that states can take the initiative when Washington does not. Congressional paralysis — at least in terms of substantive issues — certainly is the case right now. So we are seeing a spate of state action in areas that otherwise might fall to the federal government.
For example, some weeks ago British Prime Minister Tony Blair came to California to sign an agreement with Republican Gov. Arnold Schwarzenegger on climate change. In April, Massachusetts enacted a measure to achieve universal health coverage for that state’s residents.
In the same vein, Blue Cross and Blue Shield of Minnesota recently issued its proposal on how Minnesota could achieve the same goal of universal coverage. I’m not sure there is much chance of action since the political climate in St. Paul sometimes seems nearly as toxic as in Washington, but the Blues’ initiative should fuel a healthy debate.
Minnesota could rest on its laurels. After all, at 7.4 percent in 2004, the state has one of the lowest rates of uninsured of any state in the nation. Still, that is higher than the rate in 2000, and further restrictions in Medicaid might widen the gap. In human terms, nearly 400,000 people are uninsured in our state.
Some question the need for any action. Libertarians and others who emphasize personal responsibility and minimal government argue that health care is just another good that households can opt to buy or not with their resources.
Business owners are concerned about higher taxes, particularly on payrolls, in an era of sharp competition. This is especially true for small businesses with little power to set prices. Moreover, economists know that payroll taxes are a disincentive to new job creation and the history of France and Germany over the past three decades bears them out.
Still, there are good arguments for universal coverage. One is on the grounds of fairness. Health care is different from iPods or clothing. A wealthy society like ours should be able to provide all its members with some basic level of health care. I think the majority of Minnesotans agree with this argument.
There also is an argument on the grounds of economic efficiency. The uninsured do not go without any health care. Many eventually receive it at emergency rooms and are unable to pay, leaving counties or other consumers to absorb the costs one way or another. And the lack of insurance often keeps people from seeking care in a timely manner. Society ends up spending a lot of resources to achieve minimal levels of care.
Moreover, spending on basic health care often pays off in improved productivity and in reducing lost work time because of sickness or care of family members.
As the Blues’ proposal and public debate in Massachusetts emphasized, some uninsured actually are eligible for Medicaid or other existing programs with partial federal funding. Public information efforts to get the uninsured enrolled can secure greater inflows of federal money for a state.
Some uninsured are young people in good health but without many assets. They choose to forgo buying insurance because they don’t expect to get sick and because they know that with low net worth, they might qualify for Medicaid or other public resources in case of accident or injury. They are free-riding on the system, maximizing their current income while implicitly shifting health risks to society as a whole.
And then there are those people who would like to have health insurance but don’t qualify for any existing program or cannot afford to pay for coverage on their incomes. They simply are not going to have coverage without some public subsidy.
Exactly how universal coverage can best be achieved is complicated, but the Blues’ proposal and the Massachusetts law are good starting points. The Health Economics Program of the Minnesota Department of Health also released a very useful study last June with cost estimates for different universal coverage options.
Some skeptics question what is in it for Blue Cross and Blue Shield of Minnesota. A spirit of social concern might be primary, but the health insurance industry also has an interest in forestalling more radical single-payer, government-administered plans that would eliminate any role for the Blues and other private insurers.
The medical establishment, including the American Medical Association and the large insurers, has always been very protective of its turf and its financial interests whenever major changes are proposed in government health policies. That was particularly evident in the debate leading to the establishment of Medicare in 1965 during which the AMA exerted extreme pressure on Congress to eliminate proposals doctors disliked.
Nationally, the Blues always have protected their nonprofit status and campaigned for a role in carrying out programs like Medicare. So there may be an element of self-interest in this recent initiative.
But that is the way our political system works. The ball has been tossed out. It is time for the Legislature and governor to step up to the plate.
© 2006 Edward Lotterman
Chanarambie Consulting, Inc.