Fred Horch on Universal Health Care

Our highway signs say "Welcome to Maine: The Way Life Should Be." But when it comes to access to essential health care, Maine should do better.

Our health care system should be more efficient, effective and fair. We provide free public education as a right; we can provide free public health insurance as a right. Every other government in the developed world does. Experience shows that providing health care to all is more affordable and more humane than denying health care to some.

We can achieve universal health care in Maine by creating a single public insurance pool that covers everyone from birth to death. This will lower costs across the board, eliminate billing hassles and bankruptcies, and ensure that everyone in Maine always has access to excellent health care when they need it. A single public insurance pool means no more fights over pre-existing conditions, no arguments about who deserves subsidies, and no disagreements about guaranteed rates of profit for private insurance companies. We can cover everyone, all the time, with an efficient system we all support through our taxes.

Universal health care is a big change that raises important questions. How will we transition people from employer plans to a public plan? How will we implement payroll, inheritance or sales taxes to pay for a public health insurance plan? How will we guarantee high quality care and better outcomes for essential health needs? How will we ensure that overall expenses will go down for families and businesses once a public health insurance plan is in place?

We can answer those questions by examining decades of experience in Canada, Europe and Asia. Their record shows that universal health care saves money and works better than patchwork health care.

Last century economists explored why health care is more affordable when it is universal. Maine's patchwork optional health care system suffers from two fatal flaws -- two market failures that explain why our health care system is the world's most expensive: 1) it encourages risk takers, and 2) it allows providers to drive up costs.

The first market failure, risk taking, happens because none of us knows when we'll need health care, how much we'll need, and how much it should cost. Some lucky few of us will never need hospitalization in our lives. Others will suffer from a terrible accident or a devastating disease.

Some of us are forced by economic circumstances to take a risk on health insurance; others of us could afford excellent insurance but gamble by buying less than we could. People who do not know how much health care they'll need, or when they'll need it, can rationalize their decision not to buy health insurance -- or to buy "affordable" health insurance that doesn't cover most expenses. They think they are being frugal and saving money by avoiding expensive health insurance premiums; in reality they are free riders, taking advantage of other people who must foot the bill.

The cheaper a health insurance policy, the less it pays when you need it. This is unavoidable since the basic profit model of any private insurance company is to collect more in premiums than to pay out in claims. No amount of consumer education or shopping across state lines changes this fundamental fact about insurance. You get what you pay for; if you buy less health insurance, you get less health care.

When uninsured or under-insured people do have a health care crisis, the rest of us have to decide: do we just let them suffer, do we pay for their care, or do we force doctors and hospitals to provide charity care? When a person decides not to see a doctor about a persistent fever or cough because they can't afford the visit, the rest of us suffer the consequences of more infectious diseases circulating in our communities. When a huge percentage of people decide -- either by economic necessity or by rational calculation -- to save money by taking a risk on health insurance, that drives up costs for everyone else.

The second market failure, high costs, also comes from the fact that sick people and their loved ones don't know exactly how much health care they need. For many health care situations, time is of the essence, treatment options are complicated and difficult to understand, and results are not guaranteed. All of this adds up to most health care consumers being at a tremendous information disadvantage to providers. No matter how much time and effort you invest in trying to overcome your information disadvantage, in most cases it is your providers who determine how much health care to provide and how much to charge.

More than a century of study of the economics of health care have produced a clear answer: to overcome these market failures we must require everyone to pay for the health care system so everyone can use it. Everyone pays in. Everyone gets covered. Everyone gets essential health care without having to know when and exactly how much they'll need personally.

If we require everyone to pay for our health care system, we can do it either by forcing everyone to buy private insurance (the Affordable Care Act or "Obamacare" approach) or we can simply tax everyone. Of those two options, a tax for public health insurance that covers everyone is more efficient.

We tried allowing private insurance without regulation. We got scams: charlatans create insurance companies, take premiums, and then never pay claims. So, if we allow private health insurance, we need a robust regulatory system. And we need to give insurance companies a profit incentive to play in our market. That adds up to extra expense: the overhead of regulation plus profits for investors.

Paying for public health insurance through taxes is simpler and cheaper. We pool our money in one public health insurance plan that covers everyone all the time, with none of the money being siphoned off to pay profits to investors.

Universal health care works better than our current patchwork system for three reasons. First, we can plan based on statistics. We can't tell you if you'll get cancer, but we can tell you some people in Brunswick will get cancer. We can't tell you if your doctor will cure you, but we can tell how effective treatments are statistically. Because of risk taking, we can't count on individual consumers to buy enough coverage on their own to ensure that we have enough doctors and hospitals to meet our health care needs. But if we study our community health care needs, then collect taxes and use them to pay excellent doctors and hospitals to provide effective treatments, then we will have the necessary health care personnel and facilities available when we need them.

Second, a single payer that represents many consumers has access to the necessary information and resources to negotiate a fair price from providers. This overcomes the high cost problem that exists for individual consumers. Having a single payer who is in a stronger negotiating position than individual consumers is an effective way to keep costs low.

Third, in a universal system, more of the money we spend on health care goes to health care. Less is wasted on advertising, administration and overhead. In a universal system, you'll never receive a bill for an essential health procedure. You'll never face bankruptcy for unexpected expenses. Your public health insurance covers all necessary health care expenses for you. Eliminating paper pushers, bill chasers, and bankruptcies are effective ways to keep costs low.

As one of your legislators, I will work diligently to answer questions about universal health care, eliminate unnecessary costs, and introduce and co-sponsor legislation to improve our health insurance system to cover everyone in Maine from birth to death.

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