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Another Complicated Mistake: New Jerseys Proposed Health Plan to Cover All

Posted Mar 03 2009 2:51pm

Stanley Feld M.D.,FACP,MACE

It is refreshing to know that state politicians are becoming aware of the need to do something to help the uninsured. Most states are going about it the wrong way. They are funding a healthcare insurance model that has failed. This healthcare insurance model has caused states, the federal government and businesses to have huge deficits and unaffordable healthcare costs.

The model encourages patients to be passive about their health and dependent on a third party payer for their healthcare. Patients have to have incentives to be proactive and responsible for their health and healthcare. If consumers owned their healthcare dollar they would have an incentive to improve their health and spend their healthcare dollar wisely.

New Jersey is a state attempting to adopt mandatory universal healthcare coverage even though the state is in serious financial difficulty.

A bipartisan group of legislators unveiled a proposal on Monday that would require all residents to have health care coverage within three years. New Jersey is reeling from financial problems. The country appears headed toward a recession. The plan would avoid adding to the budget. It would instead try to redistribute federal and state dollars in a more efficient way.”

It would be a nice trick if they could do it. This is pie in the sky thinking. You will recall Massachusetts healthcare budget experienced an 85% increase in one year from the baseline budget after passage.

“About 1.4 million of New Jersey’s residents — or nearly 1 in 5 (20%) — do not have health insurance. To bridge that gap, State Senator Joseph F. Vitale, a Democrat from Middlesex County who is chairman of the health committee, recommended that the state focus first on enrolling more children in the existing NJ Family Care program for families who earn as much as 350 percent of the federal poverty level, or about $74,200 for a family of four.”

The fact that states are beginning to recognize that hard working people earning over the federally defined poverty level of $20,000 a year can not afford healthcare insurance and are not eligible for federal or state aid is encouraging. Everyone should review Moises’ story and his ineligibility for Medicaid in Texas.

“Then, Mr. Vitale said, the state would focus on cutting costs while establishing a self-financed plan, run by the state, to provide individuals with health insurance at affordable rates on a sliding scale.”

New Jersey’s has a very large budget deficit. The sliding scale concept is important. However the state does not plan to change the healthcare insurance system of outsourcing healthcare insurance to the healthcare insurance industry for administrative services. New Jersey is making the same mistake that Massachusetts made.

“Thrusting New Jersey again into the vanguard of social change, If adopted, New Jersey would become the fourth state to require universal health coverage, following Massachusetts, Maine and Vermont.”

Every state wants to be a vanguard of social change. No one state has had the vision to change the structure of healthcare insurance. New Jersey’s “new” plan is destined to fail.

The need for social change is valid. The method of change does not represent change at all. It represents an increase in an entitlement without a change in patients’ responsibility for their healthcare or healthcare dollar. It also represents an impending increase in the New Jersey budget deficit.

“The insurance would be required, not an option: Residents would need to prove they have health insurance, similar to the way drivers must obtain auto insurance.”

This is a good idea that will be difficult to enforce. Check points in various neighborhoods would have to be constructed and manned to enforce the mandate.

The healthcare insurance program would be financed, Mr. Vitale said, by using small surpluses in NJ Family Care and Medicaid and revamping the costly and much-maligned system of Charity Care, under which the state reimburses hospitals for costs associated with caring for the poor, often in emergency rooms.

The plan looks like President Obama’s 100 billion dollar stimulus package for Medicaid. The stimulus money will be wasted.

Gov. Jon S. Corzine, a Democrat, has said he favors universal health care. Given the state’s fiscal difficulties, he offered a guarded assessment of the legislators’ proposal.

“The public is well aware that there is nothing closer to my own agenda than providing universal health care, I’m a realist, and I understand that the current budget circumstances may inhibit our ability today to reach that common goal.”

David L. Knowlton president of the New Jersey Health Care Quality Institute thinks New Jersey’s plan is better than the faulty Massachusetts plan. In my view it does not matter whether you have one administrative service organization or several.

There will be cost overruns because the administrative services organization’s incentive is to have cost overruns. The state cannot control these overruns because the state does not have control over the healthcare dollars.

“Unlike Massachusetts, New Jersey would use a single plan administered by the state rather than requiring individuals to buy such a plan in the private market, which David L. Knowlton, said drove costs higher.

The New Jersey plan is no different than the Massachusetts plan or President Obama’s plan. The cost will be driven up not down. The end result will be the government will say it has no choice but to nationalize the healthcare system.

We only have to look at Medicare to see all the problems and cost overruns that have occurred to know we need a different healthcare system. We need a healthcare system in which the consumers are in charge of their health and healthcare dollar. We need a healthcare system in which consumers are effectively taught to be the” professor of their chronic disease” so they can avoid the complications of chronic disease. Only then will we solve our healthcare systems escalating costs.

“New Jersey’s plan would be similar in that the responsibility for obtaining the insurance would rest with residents and would expand existing state and federal health insurance programs. “

States are all jumping on a bandwagon guaranteed to fail because it has been proven to fail. California is next. Some one has to wake up in America.


The opinions expressed in the blog “Repairing The Healthcare System” are, mine and mine alone.

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