Health Care Insurance Without a Public Option

A recurring concern within our national health care debate has been about insurance, and how to make it work for our friends that don’t want, or cannot afford, to participate. This led some of us to examine how that problem is solved elsewhere. One approach is seen in Switzerland. As many are aware, Switzerland is a country with a history of high-quality health care. It has 7.2 million people living in 26 cantons (states). The 1994 Swiss health insurance law requires everyone staying in that country for 90 days or more to purchase a basic health insurance policy.

Before 1994, health care insurance was not compulsory in Switzerland and premiums were risk-related. That older system was similar to what we have now in the United States. At that time, most people with jobs had some form of private health care insurance supplied by an employer. Members of the military and full-time government employees had health care insurance through a government-owned company. People outside of those categories were able to purchase insurance, and the rates varied over a wide range. A publicly discussed concern at that time was the fact that certain individuals, classed as high-risk because of chronic disease and age, found health insurance unaffordable. In response to the public outcry about that, the Swiss Federal Health Insurance Act was designed to help all the people without insurance and to promote competition between health insurers.

Now there are 91 Swiss health insurance companies that offer these compulsory policies through their “not-for-profit” divisions. Market forces are such that some companies have chosen to limit the cantons where they sell insurance. In each canton, as a result, there are about 50 companies competing in the health care insurance marketplace. The compulsory policy premiums are community-based, so everyone living within the same mail code is charged an identical fee, without regard to any previous medical problems. The competing insurers differentiate themselves and make their profits by selling extra benefits through complementary policies managed by the for-profit divisions of those companies. The extra benefits available through those insurers include things like dental care programs, hotel-quality single bed hospital rooms, “in-your-home” child care when a parent is ill, spa/gym memberships, etc.

The Swiss health plan purchasing process is designed to make consumers aware of their personal ownership of the insurance policies. A nationwide website guides people to the most appropriate plan to match their personal needs. Each policy must be bought by an individual, even though the government may reimburse a purchaser for part of the cost. The policy belongs to the purchaser, and goes with the purchaser when moving to a new job, because it is not a job benefit.

People that are indigent have health care insurance, too. In each canton, a “means test” determines how much the canton will reimburse an indigent resident, but that person gets to pick their own preferred private insurer just like everyone else. Then, the cantonal government issues a voucher that the recipient transfers to the insurance company. In 2001, the cantonal governments paid about 19 percent of the health care policy premiums.

Regulations there require a given insurer to charge the same fee to each purchaser for the basic policy, without regard to any preexisting health conditions. This results in a universalized program that provides for the treatment of illnesses, accidents, and pregnancies, and which includes the costs of all medical treatments, hospitalizations, and medications. However, at every interaction with the health care system, an individual must contribute something out-of-pocket. This is intended to make the purchaser acutely aware of the medical costs. These payments are not just nominal amounts of money, as seen in health insurance co-pays in this country; it is the full price of the interaction. In a typical Swiss policy, an individual pays a deductible, and the initial cost of all treatment and medications are paid out-of-pocket. Then, after the event, the patient is reimbursed by the insurer for almost 90 percent of the amount paid. However, to avoid any sudden economic calamities, the compulsory policies have a pre-set maximum out-of-pocket level, and all expenses beyond that are paid directly by the insurer.

The Swiss compulsory universal health insurance program was developed through a series of referendum elections in each canton. Significant improvement in health care access has been reported, because the system is intended to allow everyone to see a physician whenever necessary. Perhaps as a result, about five years ago Swiss life expectancy at birth was 79 years for men and 84 years for women. In comparison, U.S. life expectancy is just this year beginning to approach 78, and in Missouri, during the most recent year with accurate data, it was only 76.4.

Such care is not inexpensive, but it costs less than what we pay here. Implementation of the Swiss plan resulted in spending on health care representing only 11.5 percent of that country’s GDP, at a time when the health care spending in the United States approached 15.3 percent of our GDP. Although our country is not the same as theirs, maybe there is something we can learn from them.

To learn more about the Swiss and other health care systems, please see “The Grass is Not Always Greener: A Look at National Health Care Systems Around the World,” by Michael Tanner of the Cato Institute.

Lessons Learned From Kelo

The Wall Street Journal reflects on Pfizer’s recent decision to leave its location in New London, Conn. I like the following statement from the op-ed in particular:

If there is a lesson from Connecticut’s misfortune, it is that economic development that relies on the strong arm of government will never be the kind to create sustainable growth.

This is a lesson that cities like Saint Louis should remember and asseverate in their future development projects. As demonstrated in New London, government involvement produces opposite-than-desired results, such as driving out businesses and attracting feral cats.

The Scales of Justice

There’s an article on the Wall Street Journal‘s website about fishing rights in New England. It’s a very interesting case. It seems that a small-time commercial fisherman refuses to get the mandated fishing license, asserting that his right to fish the waterways is protected by a 423-year-old legal compact between the former British governor and the local townspeople. According to the article, a post-revolutionary war court upheld the “Dongan Patent” in 1777, and there are apparently other legal cases providing a precedent for the right to fish the local waters of Long Island’s East End without obtaining any extra permission.

As is evident from the far-reaching historical backdrop of this case, government regulation of fishing has a very long history. The economics of fishing permits are fairly cut and dried: This is an application of the tragedy of the commons. When a number of individuals have a right to consume from a public region — i.e., fishing on a river or other waterway — each one of them is individually incentivized to get as much as possible as quickly as possible, especially when it is their livelihood rather than their recreation. On the other hand, in cases where there is only a single owner, there is much less reason to worry about others “getting theirs first,” and the owner can economize with an eye on maintaining the future value of the property. The problem with a single concern having access is the same as the problem with any monopoly: higher prices and less service, with none of the benefits of competition. One solution to the tragedy of the commons is some form of social arrangement, with social stigma or other punishment for “cheating.” These sorts of arrangements have been studied at length by Elinor Ostrom, and she recently won a Nobel Prize in economics for her work.

A far more common solution, though not necessarily more efficient or desirable, is a government regulation of “the commons,” such as by requiring fishing licenses. If regulators can accurately determine the impact of each additional fishermen extracting each additional fish, they can set a price on licenses such that the most efficient outcome will be reached. This level of prescience is less likely than what actually happens in practice: License fees are set too low, in which case you still get overfishing, or they are set too high, in which case not enough fish are extracted to maximize value over time. I don’t know which case is more likely, but I strongly suspect the former is more common.

For what it’s worth, the state of Missouri sells recreational fishing licenses in unlimited quantities, and they are quite affordable — a daily pass is cheaper than a movie. Although I’m sure it’s a nice revenue stream for the Missouri Department of Conservation, I seriously question whether this is a proper area for government involvement in people’s lives.

Should Missouri Reassess Property Less Often?

There is no reason Missouri could not do just fine if we went through reassessment every three years instead of every two. I’m serious, here. Today, Combest linked to a story from the Rolla Daily News about budget cuts in the state’s assessment reimbursement fund. Every county gets repaid by the state for a portion of its assessment costs, because county assessors value property for many entities other than just the county. School districts, fire districts, state government itself (for the blind pension fund), cities, and many other governments utilize property taxes based on the county assessments. So, now that we have that straight, what do we think about cuts to the assessment fund?

It’s perfectly fine with me. In tough budget times, the state has to cut spending somewhere, and assessors deserve the cuts just like everyone else. (I am fully aware of the mistaken Keynesian arguments in favor of increasing government spending at all levels right now.) The assessor in Phelps County is complaining that the cuts to the reimbursement fund — from $6 per parcel to $4 — leave him hanging:

Rasmussen said actual per-parcel, assessment-maintenance expenses amount to $28.48. Assessment maintenance includes the actual assessment, pricing new construction projects, assessing all personal property in the mobile-home count and keeping parcel ownerships current.

I have proposed a perfectly reasonable method of residential assessment, based on very common real estate property indices, that would substantially lower the cost of doing assessments. It would also make the job of the Phelps County assessor easier, and thereby less expensive, if they adopted the certificate of value method, like in St. Louis, but we all know that won’t happen. If the residents of rural Missouri don’t want certificates of value to be filed when homes are sold, that is fine with me, but they have to realize their rejection of that method might increase the local taxes they have to pay for their assessments.

But why do we have to do the assessments? I see no problem with amending the state law to allow for reassessment every three years instead of every two, allowing for some caveats, because you probably do want to do a reassessment after each census when you have the most accurate information available. I really doubt anyone would complain if, after 2011, the next assessment does not take place until 2014. I certainly wouldn’t.

SMI Articles on Property Taxes

Today, the Missouri Record carried my article on commercial property tax surcharges in Jackson County / Kansas City. Last week, the St. Louis Business-Journal carried the St. Louis version of the same idea. (The Business-Journal website only shows the first half of the piece unless you are a subscriber.) I want to thank both publications for running and hosting the op-eds.

This was a fun article to write (it was one basic article tailored to two different geographic regions). First of all, it required some real research because the issue at hand is so rarely discussed. Second, it is a pretty clear example of something that was a good idea when it began, but over a period of years has become a problem that needs to be addressed. Why was it a good idea when it was introduced? Because, in general, it involved tax simplification — always a good thing — while not increasing taxes. In the short run, that is how it worked, but over time, though, taxes have certainly increased. That is why both elected officials and voters need to be able to lower the rate and why, most obviously, the surcharge rate should fall as assessments go up. Currently, the rate always remains the same and only voters can approve a rate decrease, which has never happened.

I hope to be a part of making this change to improve Missouri’s economic climate.

Florissant, Pay Cuts, and Golf Courses

The St. Louis Post-Dispatch is reporting on the budget troubles in Florissant, the largest city in St. Louis County. Not surprisingly, the police officers there are objecting to a proposed 3-percent pay cut. Now, I don’t ordinarily sympathize much with government employees, but the ones in uniforms generally deserve a little more compensation than some politically hired clerk. Even more importantly, there is a very reasonable solution, at least for the short term, that is being proposed by one of the councilmembers.

He says they should close the municipal golf course. I agree, but first they should try to sell it.

Podleski ran unsuccessfully against Lowery in April 2007 and continues to be the chief critic of the city budget. After the Monday’s meeting, he suggested the city close its golf course. The budget predicts the golf course would lose nearly $164,000 in the next fiscal year, he noted. When the city is cutting pay, “can it afford a golf course?” he asked.

No, it can’t afford a golf course, but privatization is better than closure. Even if the course only fetches a reduced amount in this economy, at least it then goes back onto the tax rolls as private property. This really is a no-brainer for Florissant. Other think tanks have done a lot of work on the issue of government golf privatizationespecially Reason. I can’t think of any item that is less necessary for the government to provide than a golf course. A budget crisis might make the issue more immediate, but even if it were flush with cash, Florissant should privatize its golf course.

Gulag Demonstration at Washington University

Gulag Demonstration at Washington UniversityYesterday was the 20th anniversary of the fall of the Berlin Wall! To celebrate the historic event, the Washington University branch of Young Americans for Liberty constructed a Gulag on their campus. Josh Smith, Caitlin Hartsell, and I trekked over to the event and talked with students about liberty.

The organization’s message was that Americans shouldn’t forget the lessons learned from a divided Germany, and that we should be wary as our government expands in size and scope.

Show-Me Institute intern Caitlin Hartsell was interviewed on KMOX (link via Combest):

“I mean it’s out there and it’s really out of the box,” said graduate student [Caitlin] Hartsell, “But I think it’s good that it really gets people thinking about what the actual implications of what socialism and communism mean.”

Ultimately, the university shut down the gulag because it was “too offensive.” Jim Hoft at Gateway Pundit reports more on this subject.

Government Transparency Done Right

On Friday, the state of Missouri surprised me. I’m used to long waits, unreturned phone calls, and copying fees whenever I ask a local or state official for public records. So, when I called the folks at the Missouri Accountability Portal (MAP), a state government website devoted to making state spending and revenues transparent, I expected the same. Even though, you know, the point of MAP is easy and quick access to information.

While MAP had readily searchable tables of employee salaries, state spending, tax revenues, and tax credits, the large databases behind those tables weren’t available for download as a whole; instead, they were exportable only in bite-sized tables. This made analyzing, say, state expenditures during the past decade impossible.

I left a voicemail; they left a voicemail. I left another voicemail. And then, on Friday, I was told that the web page was up.

That’s right, not only did the folks at MAP fulfill my request, but they thought they might as well fix this problem for everyone. Here’s the link: http://mapyourtaxes.mo.gov/MAP/Download/Default.aspx. On this page, you can download: state expenditures for the past decade, either by year or as a gigantic database; stimulus revenues and expenditures; a database of employee salaries for the past three years; and the amounts that the state has given away in tax credits during the past decade. Oh, and the spreadsheets for this year are updated each night — so you don’t get stale data.

I have never had such an experience of helpfulness and ease when requesting public information. I want to thank the folks at MAP for being so forthcoming and for working to make the website that much more useful for everyone.

Missouri’s Homeschooling Laws Are Fantastic

I knew homeschoolers in Tennessee faced some restrictions, but I wasn’t aware that parents need a bachelor’s degree or their superintendent’s permission to homeschool high school–aged students. (Parents of younger children need only a high school diploma or GED.)

There are many happy homeschooling families in Tennessee, and I haven’t heard of widespread protests over the degree requirements. My guess is that many homeschooling parents in Tennessee earned these credentials before they had children. Or, if they don’t have the degrees they need, they could enroll their children in an online school or a correspondence school and combine its structured program with their homeschooling. It’s also possible that superintendents readily grant exemptions, either because they personally know the homeschooling families in their districts, or because they want to avoid the hassle of a bunch of homeschoolers demanding appeals.

If Tennesseans want to improve their homeschooling laws, they need look no further than Missouri for an excellent model. Missouri doesn’t set any rules about credentials or impose other prerequisites. Homeschoolers have to keep a log of the hours they spend on certain subjects, but no one looks at the logs unless there’s a problem. Missouri parents don’t need to get permission or prove anything before they can homeschool.

Homeschooling laws like Missouri’s are of course desirable from the point of view of homeschooling parents. And their effects extend further. Free homeschooling laws contribute to a free education market in general; any district can potentially face competition from homeschooling. No one in a public district can say, “We don’t need to satisfy these parents. They couldn’t pull their kids out to homeschool, because they don’t meet the requirements.”

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