First, Do No Harm: Improving Health Care

Health care reform is Gov. Bill Richardson’s top agenda item in the 2008 legislative session. And, with his campaign for the White House concluded, it looks like the governor may be able to give the issue his full attention. Unfortunately, while focusing on expanding coverage, Richardson’s plan relies heavily on government power to achieve its goals.

There are many problems with Richardson’s plan, but the tremendous power given to an entity called the New Mexico Health Care Authority is the biggest. This entity would be in charge of implementing the plan and regulating nearly every health care-related activity in the state including doctor pay. New Mexico already struggles to keep doctors practicing in rural areas throughout the state. Allowing an all-powerful new bureaucracy to cut costs on the backs of doctors as Medicare and Medicaid do will exacerbate the problem.

If large numbers of doctors leave the state, New Mexicans will quickly learn that having insurance and receiving quality health care in a reasonable amount of time are not the same thing.

Rather than adding more government mandates and bureaucracy on top of an already overregulated and over-taxed area of the economy, policy makers should first explore ways to undo the harm done by existing policies.

Health care reform in New Mexico must start by ending the taxation of co-payments, deductibles, fee-for-service health care (including dentists), and over-the-counter medicine under New Mexico’s Gross Receipts Tax. Most health care plans now ask patients to pay part of their bill in the form of co-payments and deductibles; there is no reason to demand New Mexicans pay up to nearly 8 percent in taxes to the state on top of those burdens.

While state and local governments would see revenues reduced by $14.7 million for ending the tax on dental care alone, this is a drop in the bucket when compared to Richardson’s health care plan, the real costs of which are unknown and impossible to accurately calculate.

Almost no other state in the nation and none of New Mexico’s neighbors taxes the range of everyday health care costs that are taxed here. Wouldn’t it make more sense to cut health care costs by as much as 8 percent right away than to embark on a convoluted and bureaucratic proposal that has never actually succeeded in states where similar plans have been implemented (Massachusetts being the most recent example)?

Taxes are only one way in which health care prices in New Mexico are artificially inflated, but they are by no means the only one. Regulations also distort the health care market. For example, New Mexico now mandates that all insurance plans sold in the state cover 49 specific treatments. All states mandate some treatments, but most states have far fewer mandates.

Unfortunately, healthy New Mexicans, many of whom are young and healthy and would prefer a bare-bones insurance policy, cannot access such a policy in this state. While reducing the number of mandates would be politically difficult, New Mexico should allow health care companies to sell policies here under the regulatory regimes of other states. Simply put, regulations should be set up for the benefit of New Mexicans rather than as a means of stifling their choices. Maine is currently considering a similar reform.

While advocates of single-payer health care often claim the mantle of efficiency, history has shown that no government-run bureaucracy can ever be as efficient as allowing individuals to operate in the marketplace free of unnecessary government intervention.

If Gov. Richardson’s Health Solutions New Mexico plan is adopted, the state will ultimately lose doctors and see the quality of health care reduced as price controls take hold. The ideals of the Hippocratic Oath taken by all doctors are “Do no Harm.” The Legislature should consider that in its discussions of health care reform this year.

Paul Gessing is the president of New Mexico’s Rio Grande Foundation, an independent, non-partisan, tax-exempt research and educational organization.