Joe Siano

Access to quality health care must be affordable to more New Jerseyans, and all Americans, by bringing the power of free markets to bear to drive prices down.

The specific policies that I endorse are:

1. Empower consumers to own their own health insurance policies by making premiums tax deductible for individuals, not businesses. For low income Americans, tax credits could be used to enable them to purchase insurance.
2. Allow consumers to purchase health insurance across state lines. This will lower insurance costs through competition by enabling consumers to shop among hundreds of suppliers, not just the handful available in each state.
3. Reduce or eliminate government imposed mandates on what each policy must cover. This empowers individuals to negotiate with insurers for the coverage that best suits their needs. Many consumers may opt for low premium / high deductible or catastrophic coverage policies. Insurance premiums would be lowered as consumers elect to pay for routine or relatively low cost therapies out of their own pockets.
4. Offer tax incentives for consumers to create health care savings accounts. These accounts encourage preparedness for illness by setting aside dollars for a rainy day.  Patients would pay for deductibles or low cost services from these accounts.  Because patients would be buying services with their own money, they will shop smater and drive down prices. 
5. It is sad but true that certain individuals with “pre-existing” conditions cannot be profitably covered by private insurers. However, Americans are the most charitable people on earth. I propose that we create a voluntary tax deductible high-risk insurance pool that many private individuals as well as charitable foundations would be glad to support. Additionally we can offer tax credits to health care providers who treat those with pre-existing conditions at below market charges.

I commend Congressional Republicans for advocating similar positions. They admit that health care needs to be reformed and endorse the same approaches that I do. However, I question their commitment to this issue as they never addressed healthcare eform seriously  until the Democrats pushed socialization to the fore.

At its root, health care is science applied to solving practical problems.

Science that is applied to the task of solving problems is called technology. As any consumer who has been in and out of the market for personal computers, cell phones, MP3 players, HDTVs, GSNs, digital cameras etc., realizes - technology keeps getting cheaper and cheaper.

Why is it then that this collection of technologies that is known as “health care” keeps getting more and more expensive instead of cheaper?

The answer is that the market drives down the prices of technical tools. When new gadgets come to market, the early adapters will pay top dollar to own the latest and greatest. Marketers will then begin to expand production and lower prices to serve a second tier of consumers. Soon, licensees, imitators and knock-offs will flood the market with technology for the masses. Devices that were boutique items only a few years ago are now merchandised as loss leaders at Walmart.

The problem in health care is that there is no real open and competitive market for health care services. Years and years of government interference and regulation have effectively killed healthy competition in health care. Try calling ten garages around town for an estimate on a brake job and you’ll get ten different price quotes. Try the same exercise shopping for quotes on a gall bladder operation and you’ll get ten no-answers. How did this happen?

Most Americans have no idea what the “fair” price for various health care treatments might be. This is because someone else typically pays the bill. The reason that most American’s have come to depend on a third party payer comes from government meddling in free markets.

At one time, Americans paid most of their medical costs out-of-pocket. A person could learn the price tag associated with his physician’s recommendations and make a rational price / value decision. He could shop elsewhere for a better deal.

Then, during  theSecond World War, the U.S. government instituted wage and price controls. Profitable companies were suddenly competing for workers in the booming war economy. However, while employers were forbidden to compete on the basis wages and salaries, they were not prohibited from sweetening the fringe benefits packages. In short order, employer sponsored health insurance became a standard part of a “good” compensation package. On top of this, the Federal tax codes were devised so that the health insurance premiums were deductible for employers but not for private citizens.

This government induced shift to system of paying for health care through employer sponsored health insurance had several unfortunate consequences:

1. It caused the price of health care services and medications to rise as consumers no longer shopped for the best deals as they would with any other purchase. As long as someone else was paying, consumers would just get their health care where it was most convenient.
2. It also drove up the price of insurance as consumers no longer shopped on an open market for the coverage that best suited their needs and wallets. Unlike other insurance products such as life, automotive or homeowners insurance, consumers do not own their own policies. The employers, who bought group plans, had to purchase broadly tailored policies to fit the diverse needs of their employee pools.

Once employer sponsored health insurance became the American norm, further interference on the States’ part resulted in further price increases for insurance.

1. Prohibitions were imposed against selling insurance across state lines. This severely limited employers from shopping for the best deals. In many cases it created virtual health insurance monopolies or cartels in many states.
2. In an effort to protect consumers from the cartels that they created, the states then imposed coverage mandates on the insurers. This again served to drive insurance prices upward and to narrow the shopping range offered to employers. Employers are now confronted both a short list of suppliers to bargain with and a narrow range of coverage options from each.

Finally, with the growing emphasis on preventative care, consumers were encouraged to visit their physicians more often. This lead to the creation of various HMO type plans where routine office visits were covered. This is akin to using auto insurance to pay for routine maintenance such as oil changes. Such practices would send car insurance premiums through the roof

Therefore, I call for less government control of the health care and health insurance industries as the means to quality health care affordable to all Americans.