Gavin Newsom set to Socialize San Francisco Health Care. Part I: What is the problem?
The first part of the problem is the question of "why are there so many people without adequate health care." According to the NCHC, 38% of people in America are employed by smaller businesses. Less than two-thirds of these businesses provide any health care, whereas on the national average, only one-third of companies do not provide health care. That means that small businesses are more than twice as likely to not provide health benefits to their employees. This is somewhat expected; small businesses often struggle to grow or just to stay afloat and can't afford to provide health care. Yet, aside from the simple nature of small businesses, government involvement can prevent them from providing coverage.
Most states have minimum coverage requirements for health care, if health care is provided. For example, in Oregon if an employer wishes to provide health care for his or her employees, the coverage must also include treatment for chemical dependence (including alcoholism) and psychological care. While some employers may wish to at least be able to provide coverage should their employees need a cavity filled or some antibiotics, the company must, by state law, also treat them if they are a meth addict or a schizophrenic. These minimum coverage requirements raise the minimum cost of an insurance policy, resulting in fewer businesses being able to afford the policy. Instead of adequate health coverage, the employees receive none.
These laws exist in virtually every state, so it is of no surprise that small businesses have such a low incidence of health care coverage for their employees. Yet, some people think health coverage minimums are a great idea, even comparing them to a minimum wage.
"...without these mandates, companies that provide health care to their workers are at a competitive disadvantage with companies that don't. That creates a race to the bottom, allowing our economy to reward companies that shaft their workers. These mandates are pro-business because they erases that competitive disadvantage by forcing responsible business's competitors to also provide health care"While this seems like a great cause, it is incorrect. An employer that does not provide health care may save some costs, but it is at a competitive disadvantage when it comes to hiring employees (this is the origin of employer-provided health care). If the race to the bottom were applied to wages, low-paying employers would not be able to find employees. Eventually, the market would determine a fair price for the labor. This is why in San Francisco, New York, and other expensive cities, even working at McDonald's pays above the state minimum wage. Thus, I would argue that removing such minimums would increase the number of people with coverage from their employer.
Government mandated minimum coverages are not the only reason for a rise in health care costs. The increasing incidence of lawsuits and the bureaucracy of health care have both contributed to inflating prices.
Tort reform is a hot topic in politics these days. President Bush addressed the issue in Sen. Edwards' home state during the 2004 election campaign, and has continued to lobby for it. The issue stems from frivolous lawsuits against doctors. While a malpracticing doctor should be held to task, the fear of a lawsuit causes many doctors to take unnecessary steps. For example, a doctor fearful of being sued is likely to order unnecessary test simply to cover all bases and to cover his liability. These tests are forwarded on to the patient and/or the insurace agency, causing a rise in health care costs. Furthermore, a doctor must increase his rate simply to counterbalance his liability from lawsuits. Limiting liability for doctors means a decrease in health care costs, and more effective care.