Friday, August 17, 2007

Health insurance blues: Give choice a chance

The nation’s largest health insurer, UnitedHealth Group, wants to buy up Sierra Health Services in Nevada. The merger would give the new company a virtual monopoly over health insurance in the Silver State, reducing competition, which usually means increasing costs. Supporters, however, say the merger will actually reduce costs and improve service due to the efficiencies of scale the giant conglomerate will enjoy. Hmm. That doesn’t exactly seem to be the case when it comes to the publik skools now, does it?

Nevertheless, being a free-market kinda guy I haven’t yet heard any compelling reason for the government to block this merger of two private companies. And the fact that the self-serving Culinary Union is now in open opposition to the takeover tends to weather-vane me in the opposite direction.

No, the answer to legitimate concerns about giving UnitedHealth a virtual monopoly over the health insurance market in Nevada isn’t to block the takeover of Sierra Health Services, but to open Nevada’s market to interstate competition. In this age of Amazon and eBay, it makes no sense whatsoever that Nevadans are prohibited from buying health insurance from a company located in another state.

And yet, thanks to an anachronistic law passed in 1945, the McCarran-Ferguson Act, combined with the lobbying power of Big Insurance, there is no competitive interstate insurance market similar to the highly competitive interstate banking market. For example, Nevadans can deal with a relatively small local bank or choose to deal with a big interstate bank such as Bank of America or Wells Fargo. Both entities thrive in Nevada and consumers, armed with market choice, benefit greatly.

Not so when it comes to health insurance companies. Why not? Because state legislators want to retain the ability to force insurance companies to foot the bill and cover expensive benefits which they don’t have the guts to sock directly to taxpayers. These are called “mandates” - as in, the legislature makes it mandatory that the insurance company cover them or the insurance company doesn’t get to operate in Nevada. Yes, legal extortion.

Around the country, many states force insurance companies to cover benefits ranging from acupuncture to marriage counseling; from contraceptives to hearing aids to hairpieces; from podiatry to osteopathy; from chiropractors to even massage therapy. All in all, there are over 1,800 such mandates found across the country. And these mandates jack up the cost of insurance, creating a huge difference in premium costs between some states. For example, a recent study showed that a healthy 25-year-old male could pick up a basic health insurance policy in Kentucky for $960 a year. That same policy in New Jersey, however, would set the lad back a staggering $5,880 a year.

And the Wall Street Journal noted that the same study “found that a typical insurance policy - $2,000 deductible, 20% co-insurance – for a family of four could be had for as little as $172 per month in a reasonably regulated locality like Kansas City, Missouri. But in New York that family’s only option – managed care – would run $840 per month, and in New Jersey family policies run a whopping $1,200-plus.” Why shouldn’t a family in New York be able to purchase that far less expensive policy from the Missouri company?

If you want to shrink the ranks of the uninsured, perhaps it’s time to open the market and reduce the cost so that average people can afford basic coverage without all the government mandated frills. Instead of blocking the mergers of health insurance companies in one state, perhaps it’s time to open up the competition among all 50 states?

Rep. John Shadegg, Arizona Republican, has proposed just such legislation in Congress; however, Congress in the hands of pro-union/anti-free market Democrats and is unlikely to act favorably on such a common-sense, cost-free solution to the health care insurance problem. Which is why state legislatures should take the lead and open up their own markets without waiting for the feds. Let’s give choice a chance.


Filthy NHS kitchens

Nearly half of all hospital kitchens and canteens in England could be failing to meet basic standards of cleanliness and hygiene, according to official inspection reports. Cockroaches, medical waste on food-handling equipment, mouse droppings and poor hygiene among catering staff were all cited as problems.

The findings were revealed after a freedom of information request for health inspection reports from a quarter of all local authorities.Of the 377 hospitals included, 173 displayed poor cleanliness and 68 fell below the legal requirements for food storage. A total of 107 did not have correct food safety documentation, 66 stored food at incorrect temperatures, 25 had inadequate staff training and 57 had staff with poor personal hygiene.

Norman Lamb, the Liberal Democrats' Shadow Health Secretary, who collected the findings, said that they painted a shocking picture. "It is simply unacceptable that such terrible practices are taking place in an environment where hygiene and safety should be paramount," he said."The worst performers should be named and shamed - while those doing well would stand as an example to drive up standards."

In six hospitals, inspections high-lighted five or more areas of concern. The institutions were: Farnham Road Hospital in Guildford; Churchill Hospital in Oxford; Blackpool Victoria Hospital; Derby City General Hospital; Ipswich Hospital and Norfolk and Norwich University Hospital in Norwich. At the William Harvey Hospital in Ashford, "full-grown adult" cockroaches were found in kitchens according to the 2006 report. The 2007 report stated that there had been "regular reports of an infestation of oriental cockroaches in the kitchen". At the Countess of Chester Hospital in Chester, milk was found stored in the drug freezer in the radiology department and inspectors found a syringe on a supper tray at the May-day University Hospital in Croydon.

An official from the Department of Health said: "Failure to meet hygiene standards is unacceptable and where there are problems we expect the local authorities responsible for inspecting and enforcing food hygiene regulations to take action." The trust that runs Derby City General defended its hygiene regime, suggesting the report may have been based on out-of-date results. Julie Acred, chief executive, said: "Based on the report we have had most recently we don't have any significant cleanliness issues in the hospital."


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