Tommy Thompson on Health Care

Yesterday, former governor Tommy Thompson announced in Milwaukee that he will be running for president. Apparently, there\’s no truth to the rumor that he will be picking Sanjaya Malakar as his running mate. In his speech, he discussed his plan for health care:

Thompson devoted part of his speech to health care, stressing preventive medicine and using information technology to cut costs. He talked in general terms about using the public and private sector to \”require health insurance for all\” in a way that avoids a \”heavy-handed mandate.\”

Apparently he prefers a \”softer\” mandate that requires everyone to buy health care. Maybe when you get your new mandated health care bill, it can be in the shape of a heart. When he signs the new law, he can put a teddy bear sticker on it.

All kidding aside, Thompson appears to be talking about a health care framework similar to what Governor (now presidential candidate) Mitt Romney signed in Massachusetts in 2006. The law requires all Massachusetts citizens to purchase health care by July of 2007, increases subsidies for the poor and uninsured, and assesses a fee to businesses that do not offer health insurance to their workers. The law creates a new state department called the Connector that is responsible for helping people find \”affordable\” health care.

When Romney signed the bill, it made national news, and began a discussion among conservatives about the merits of the program. The Conservative Heritage Foundation lauded the bill, as it provided near-universal coverage while maintaining the ability of health care providers to work in the private marketplace. They recently wrote an update on what they perceive to be the successes of the new law. WPRI columnist Ben Artz also recently expressed an open mind to the idea.

When the uninsured get sick, they go to the emergency room for care. Naturally, emergency room care is an expensive way to treat illnesses – and the cost of that care is passed on to other health care consumers or taxpayers. Massachusetts actually had a framework that allowed hospitals to bill the state for emergency room care for the uninsured (called \”uncompensated care\”). The state would then reimburse the hospital for their emergency room costs for treating the uninsured. In many states, the costs for uncompensated care are merely absorbed by the hospitals and the costs are passed on to other hospital customers.

Under Romney\’s plan, there wouldn\’t be any need for the state to pay for uncompensated care (since everyone would be insured), so it freed up nearly $500 million for the state to spend on subsidies to pay for health care for people under 300% of the federal poverty line.

The end result of Romney\’s law is that people above 300% of the poverty line would be forced to pay for their own health care, rather than having the cost of care being shifted to them. People who don\’t purchase health care for themselves are punished by not being able to take the individual deduction on their state income taxes.

Other groups, such as the Cato Institute, see Romney\’s law as overbearing government intrusion. An excellent criticism of the program by Michael Tanner of Cato can be found here.

Tanner points out that government mandates eliminate consumer choice and could damage the quality of health care individuals receive (the Canadian Supreme Court once said that \”access to a waiting list is not access to health care\”). He points out that the uninsured tend to be people between the ages of 18 and 24 who often choose not to heave health care because they\’re healthy and looking for a job that will provide benefits, and that uncompensated care only accounted for about 3% of health care spending in Massachusetts. Both those facts, according to Tanner, point to a lack of need to overhaul the entire system.

Furthermore, Tanner points out that Massachusetts chose not to repeal any of the current health insurance mandates that keep the cost of insurance artifically high (for my take on mandates, see my last TV appearance). While Romney wanted everyone to have health insurance, it is unclear how dedicated he was to making it \”affordable\” by not addressing many of these mandates.

Tanner also addresses the comparison of the health care mandate to the requirement some states have that all their citizens purchase auto insurance. He notes that in some cases, the rates of the insured are actually lower in states that require insurance than in states that do not. He said a similar situation could exist with a health care mandate.

If Thompson goes down the road of pushing for mandatory health care, it\’s unclear how his plan would differ from Romney\’s. And since Romney is actually running for president (and said this would be his signature issue), it will be interesting to see how Thompson distinguishes himself from a governor who has actually signed such a framework into law.

UPDATE: A reader e-mailed me to make another point argued by supporters of a univeral mandate: Generally, since the uninsured are young and healthy, it leaves an older and more fragile population left to pay for health care – which currently makes it more expensive for everyone. Requiring all the healthier people to take part in the health care pool should lower health premiums for everyone, as it spreads the risk out among a broader range of people. Or so the argument goes.

There\’s still that little issue about it being a government mandate, however.