SBE Council's "Health Care Policy Cost Index 2012" Ranks the States

The Small Business & Entrepreneurship Council (SBE Council) today released its "Health Care Policy Cost Index 2012." The index ranks the 50 states and District of Columbia according to public policy measures that impact the costs of health care and health insurance coverage.

SBE Council chief economist Raymond J. Keating, author of the report, said: "The employer costs of providing health care coverage and the overall cost of health care just keep rising. A big part of these rising costs have to do with unwise and unwarranted government intervention in the health care marketplace. These government-driven costs don't just come from misguided federal policies, but policies in the states as well."

The "Health Care Policy Cost Index 2012" ties together eight measures, including tax treatment of health savings accounts, various forms of guaranteed issue and community rating regulations, the number of insurance coverage mandates, whether or not states have high-risk pools, and spending on government health programs.

Among the 50 states and District of Columbia, the best 10 states in terms of state health care policies are: 1) South Carolina, 2) Iowa, 3t) Indiana, 3t) South Dakota, 5) Nebraska, 6) Utah, 7) Wyoming, 8) Montana, 9) Alabama, and 10) Wisconsin.

Meanwhile, the 10 worst states are: 42) Oregon, 43) District of Columbia, 44) Connecticut, 45) Washington, 46) New Jersey, 47) Vermont, 48) Rhode Island, 49) Massachusetts, 50) Maine, and 51) New York.

Keating added: "More government programs and spending mean fewer incentives to be concerned about prices and utilization of services. More mandates on insurers inevitably translate into higher insurance costs. And while increased regulation might sound good to many, costs rise as government overrules decisions made in the private, competitive, consumer-centered marketplace. Unfortunately innovation, competition and affordability are all hurt when government overly intrudes."

Keating concluded: "Elected official at the federal and state levels need to move away from more government controls and spending, and towards reforms that expand competition and choice in the private health care marketplace. Of course, this process needs to start with the outright repeal of ObamaCare at the federal level. But there's much that can be done to rein in government-related costs in the states as well."

To see the full rankings and to get a copy of the "Health Care Policy Cost Index 2012," please click here.

Emergency Rooms and Lawsuits

One of the last things that the Obama administration and Democratic leaders in Congress were interested in during the debate over health care reform resulting in passage of ObamaCare was medical tort reform. After all, trial lawyers are big givers to the Democratic Party.

And now we have another report on the impact of lawsuits – and the threat of lawsuits – on how medicine in practiced.

The Associated Press reports:

Fast decisions on life-and-death cases are the bread and butter of hospital emergency rooms. Nowhere do doctors face greater pressures to overtest and overtreat.

The fear of missing something weighs heavily on every doctor's mind. But the stakes are highest in the ER, and that fear often leads to extra blood tests and imaging scans for what may be harmless chest pains, run-of-the-mill head bumps, and non-threatening stomachaches.

Many ER doctors say the No. 1 reason is fear of malpractice lawsuits. "It has everything to do with it," said Dr. Angela Gardner, president of the American College of Emergency Physicians. …

Refusing those demands creates unhappy patients. And concern that unhappy patients will sue remains the elephant in the emergency room.

ER physicians are among the top 10 specialists most likely to be sued for malpractice, according to leading doctor and insurers groups.

The Physicians Insurers Association of America, which represents almost two-thirds of private practice doctors, lists more than 600 lawsuits against ER doctors nationwide between 2006-08. That's about 3 percent of their clients.

Statistics vary by region, and chances of being sued generally are greater for several other specialties, including obstetricians, surgeons and internists.

Read the entire piece here.

So, one of the drivers of increased costs, including the cost of insurance, continues.

Raymond J. Keating
Chief Economist
Small Business & Entrepreneurship Council

Small Biz Health Care Daily: Health Care Costs

On the New York Times “Prescriptions” blog on January 12, David Herszenhorn asks, “Why Does Health Care Cost So Much?”

This is a critical question in the current health care debate, especially given the fact that the cause for rising costs has been badly misdiagnosed by advocates for more government involvement in health care.

While Herszenhorn says that he looks at both sides of the political spectrum for an answer, in reality, he leans heavily on the liberal side in his analysis, and therefore, largely misses key points.

While health care costs certainly go higher with new, improved and expanded health care treatments and services, that’s not a bad thing. That’s a positive.

But in terms of negative costs, Herszenhorn misses three critical points. First, while briefly and vaguely hinted at in his piece, central to the cost problem are third-party payments. That is, when someone else – whether employer-provided coverage or the government – picks up the tab, then consumers and providers have no reason to be concerned with costs. Second, the third-party payer problem grows worse when the third-party payer is the government, as politicians and their appointees are spending other people’s money. The result is runaway costs, with the eventual response being rationing of care. Third, regulations and mandates drive health care coverage costs higher.

Unfortunately, the current direction on health care reform would make each of these problems far worse.

Raymond J. Keating
Chief Economist
Small Business & Entrepreneurship Council