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For health-care, look to states for data

BY DANIEL TAIBLESON | FEBRUARY 13, 2012 6:30 AM

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If we as Americans truly believe that the states serve as laboratories of democracy and leaders in policy innovation, we must be willing to accept the lessons learned from state-policy experiments. This is especially true in the debate surrounding the Patient Protection and Affordable Care Act.

Embracing a platform of repealing and replacing the health act, Republicans stormed into the majority in the House of Representatives in 2010. Yet, since that time, Republicans have failed to construct a comprehensive health-care policy — making it difficult to gauge the merits of a possible Republican alternative to the health act. Luckily, thanks to the initiative of some states, it is still possible to explore the merits of some of the Republican's favored instruments for solving America's growing health-care crisis.

The first, and likely most familiar, is medical tort reform — i.e., limiting the compensation a patient can receive from a medical-malpractice suit. The second is a little more arcane and involves providing tax breaks for contributing to health-savings accounts tied to high-deductible plans.

Based on the rhetoric of Republicans in Congress and on the campaign trail, it would appear that these things would likely serve as central components of a foreseeable Republican health-care policy. And thanks to the states, both have been put to the test.

In 2003, Texas Gov. Rick Perry oversaw the implementation of a medical-tort-reform law that "limited non-economic damages to $250,000 in cases brought against individual physicians." In theory, this would reduce the burden of purchasing malpractice insurance — lowering medical costs and creating a friendlier employment market for doctors. More talented young people would become doctors because they would have to worry less about being liable for astronomical punitive damages.

However, 2003 marked the end of the seventh year of consecutive growth in Texas's physician-to-population ratio. Moreover, on the cost side, the Kaiser Foundation found that the cost of providing medical care in Texas has since greatly outpaced the national average. Medical-cost inflation for the country on average for the last year data were available was 6.7 percent. Cost inflation in Texas was 7.4 percent. Perhaps that cost inflation would have been greater if not for tort reform, but Texans have not enjoyed the plummeting health-care costs they were promised.

So, medical tort reform appears to have failed to deliver on both counts. This brings me to subsidized health-savings accounts. For this I point to Georgia, the former home state of former House Speaker Newt Gingrich.

In 2008, Georgia introduced a plan that provided tax-breaks for individuals who purchase, and businesses that offer employees, health-savings accounts tied to high-deductible plans. The hope was that these tax-breaks would help expand coverage in the state by providing a cheap alternative to standard health-insurance plans.

Much like tort reform in Texas, however, the Georgia plan also failed to work as intended. According to the Center for Budget and Policy Priorities, since 2008, the number of uninsured Georgians jumped 2.7 percent — an increase 3 times larger than the rest of the South has experienced.

In dramatic contrast to the above, since implementation of the health law, 168,000 children in Iowa with pre-existing conditions can no longer be denied coverage. Additionally, 530,000 Iowans on Medicare now have access to preventive care. Thousands of college-age students remained insured on their parents' plans. And countless thousands of Iowans will now pay less for medical care thanks to caps on out-of-pocket expenses.

State-level experience is significant, particularly when there is little national precedent. In the case of health-care policy, the states' experience shows that states such as Iowa stand to lose far more than they would gain if the health law were repealed and replaced with plans similar to those tested in Texas and Georgia.


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