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Government shows it's no help with health reform

• Published June 22, 2009

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It is unsettling to see the degree to which many in the business community are coming out in support of health care reforms that further centralize control in the federal government.

Businesses in general, and small businesses in particular, have every reason to be concerned about the increasing burden of health care. However, the idea that more government control is the solution could not be further from the truth.

President Barack Obama has made health care a priority issue for his administration. This is not the first time health care has been a federal priority. Since the attempts of the Clinton administration in the early 1990s, many states increased their efforts at health care reform. The Obama administration can benefit from the experiences of these state programs.

Government-managed state reform plans like those tried in Washington, Oregon, Tennessee, Hawaii, Massachusetts, and Maine have provided a clear indication of reforms that do not work.

These programs used price controls, penalties for employer nonparticipation, mandates, and business and sin taxes among other things in an effort to centralize control of health care costs and availability. In every case the effects of these reforms were devastating.

These states experienced an exodus of health insurance companies, less competition from health care providers, an increase in health care premiums, a decrease in the quality and availability of care, and an increase in the number of uninsured.

Specifically, in Massachusetts lawmakers dramatically underestimated the cost of their “connector” system. Within two years, program costs doubled from $630 million to $1.3 billion per year, leading to a significant increase in both taxes and health care premium rates.

In January, Hawaii abandoned its children’s health coverage program after costs exceeded projections and no additional dollars could be found.

Last November, voters in Maine repealed the excessive taxes needed to support their attempts at health care reform which cost $164 million to cover roughly 5,000 people.