Treating the Symptom Rather than the Cause

Governor Rendell wants to expand health insurance to 767,000 uninsured Pennsylvanians by increasing taxes on employers and tobacco users, to name just a few. The full costs have yet to be quantified, but they are sure to be underestimated from the get-go, like all other government-run healthcare programs.

Setting aside the multi-billion dollar price tag that will accompany “Cover All Pennsylvanians,” expanding taxpayer-subsidized healthcare insurance fails to address the reasons why people don’t have insurance coverage in the first place. First, according to the U.S. Census Bureau, about 517,000 uninsured Pennsylvanians are between ages 18-34. Understandably, this relatively healthy demographic is neither interested nor willing to pay for an expensive insurance program that they do not intend to utilize.

Second, the reason health insurance is so pricey is because healthcare itself is expensive. But the high cost of healthcare is primarily due to the health insurance model of how we pay for healthcare. Indeed, the health insurance system bears much of the responsibility for helping create a healthcare system that is expensive, inefficient, bureaucratic, and error-prone.

Unfortunately for both healthcare consumers and taxpayers in Pennsylvania, Governor Rendell’s solution to the problem—subsidizing and ultimately mandating health insurance coverage—is not a solution at all. Indeed, such a scheme will only serve to exacerbate the problems in our healthcare system.

So what is the solution? First, we need to rethink the role of health insurance. Instead of being a pre-payment plan for future healthcare services we may or may not use, health insurance coverage should be restored to the same function in our lives as home or auto insurance. We should utilize health insurance for catastrophic purposes, not daily maintenance.

Think about it. We don’t purchase auto insurance to cover our oil changes or adding washer fluid. We buy it to protect us from major, unintended and unforeseen accidents. Auto owners pay for the regular upkeep and maintenance of their cars. We don’t fill up with gas and send an invoice to GEICO or Progressive…or the taxpayers. If we did, we wouldn’t care about how much a tank of gas costs. Herein lies the problem.

The fact that our auto insurance doesn’t operate like our health insurance is what keeps prices competitive and relatively low for basic services. It also keeps premiums for catastrophic coverage reasonable because they are adjusted to our expected claims. If you’re a good driver, you get price breaks. If you’re a habitual speeder, you pay more. For the most part, unlike your health insurance, your auto insurance premium is not affected by how bad of a driver your neighbor is.

Health insurance should be designed and utilized in the same manner. But it’s not. Our health insurance operates like a pre-payment plan for the medical equivalent of filling up with gas or purchasing new tires, as well as when we ruin our car in an accident. The result is that we don’t pay much attention to the price of medical services. Nor do we care. Yet this is precisely what has caused the hyper-inflation of healthcare costs, and by extension, the expensive nature of basic health insurance…and why many people choose to go without.

If lawmakers allowed health insurance to operate in a manner similar to auto insurance (currently it can’t because of government regulations, restrictions, and myriad other interventions in the healthcare marketplace), we would put Pennsylvanians back in the driver seat. As a direct consumer of healthcare, we would better control costs by better managing our basic services because we—not some third-party payer, either an insurance company or taxpayers—would pay for our simple healthcare expenses. We need to think in terms of personal responsibilities when considering health insurance matters.

Governor Rendell’s proposal does nothing to interject these necessary incentives into our current healthcare system. Under his scheme, consumers would continue to have little concern about the actual costs of medical services. And why should they? They won’t have to pay the bills; someone else will.

This is why the governor’s “Prescription for Pennsylvania” will fail: He is prescribing treatment for the symptom rather than the cause. Expanding insurance coverage at taxpayers’ expense without first addressing the factors that are driving up healthcare costs will only exacerbate our healthcare problems. Under the governor’s scheme, neither the cost of healthcare nor the cost of insurance will ever become reasonably priced for the average Pennsylvanian.

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Matthew J. Brouillette is president and CEO of the Commonwealth Foundation (, a public policy research and educational institute located in Harrisburg.