Reforming Healthcare

The President has correctly diagnosed the need for major healthcare reform in our country.  The problem is that the prescription being offered by the majority in Congress is worse than the disease.

Healthcare costs have been rising faster than inflation for several years.  These costs consume an ever-increasing portion of all family and business budgets, including the City government’s budget.  Indeed, the city and state governments face an increasingly difficult time balancing the budget because of the rapid escalating cost of healthcare coverage.  When I entered the City Council I was struck that even when the city saw an increase in tax revenues, almost the entire increase was consumed by increasing healthcare costs.

The solution, however, isn’t spending trillions of dollars and creating a new federal bureaucracy.  If the federal government takes over health insurance coverage, as some in Congress propose, the private healthcare industry will suffer.  Those who are currently satisfied with their doctor and healthcare will find a rapid race to the bottom.  Ultimately, with a nationalized health insurance system, all Americans will end up with a medical system that delivers all the compassion of the IRS and the efficiency of the postal service.  This is the wrong way to fix healthcare for Honolulu and our families.

Instead, major reforms that will increase competition and reduce the cost of healthcare, without bankrupting the taxpayers, should be instituted, including:

Tort Reform – It is estimated that nearly one-third of all medical procedures today are for “defensive medicine” to protect doctors from malpractice lawsuits.  Similarly, malpractice insurance is increasingly the largest single cost most medical doctors have to pay to continue to practice.  A cap on non-economic “pain and suffering” at the greater of $250,000 or triple economic damages will go a long way toward reducing healthcare costs.

Interstate Health Insurance – Currently, 90% of Hawaii residents get their health insurance from just two insurers: HMSA and Kaiser.  We should allow any validly licensed health insurance company in any state to offer health insurance in all other states to increase competition and offer more choices to the public.  More competition will yield greater coverage and lower medical costs.

Individual Tax Deduction of Health Insurance – Finally, we need to fundamentally change the way we tax health insurance.  Today, health insurance is largely offered through your employer.  Health insurance should instead be an individual choice and the health insurance market should be made more similar to the home or auto insurance market where individual families, not your employer, decide which insurance company you want to use.  By allowing an individual deduction for health insurance we can make health insurance a more “normal” market and better contain its costs.

A greater portion of the U.S. economy goes to pay for healthcare than any other Westernized nation and too many Americans are not covered by our healthcare system.  We need meaningful fixes that bring down the ever-escalating cost of healthcare and broaden the reach of health insurance.  Establishing a big new government program is not the solution.  Creative ideas to encourage more competition, however, are just what the doctor ordered.