In health care, economics does matter: a lesson from Hawaii

I know that it comes as a surprise to some, but if you give people a choice of paying for something and having others pay for it, they will choose the later. Pretty simple economics, but apparently the officials in Hawaii were surprised by the result:

Hawaii is dropping the only state universal child health care program in the country just seven months after it launched.
Gov. Linda Lingle's administration cited budget shortfalls and other available health care options for eliminating funding for the program. A state official said families were dropping private coverage so their children would be eligible for the subsidized plan.

"People who were already able to afford health care began to stop paying for it so they could get it for free," said Dr. Kenny Fink, the administrator for Med-QUEST at the Department of Human Services. "I don't believe that was the intent of the program."

State officials said Thursday they will stop giving health coverage to the 2,000 children enrolled by Nov. 1, but private partner Hawaii Medical Service Association will pay to extend their coverage through the end of the year without government support.

"We're very disappointed in the state's decision, and it came as a complete surprise to us," said Jennifer Diesman, a spokeswoman for HMSA, the state's largest health care provider. "We believe the program is working, and given Hawaii's economic uncertainty, we don't think now is the time to cut all funding for this kind of program."

Hawaii lawmakers approved the health plan in 2007 as a way to ensure every child can get basic medical help. The Keiki (child) Care program aimed to cover every child from birth to 18 years old who didn't already have health insurance—mostly immigrants and members of lower-income families. . . .

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Anonymous Anonymous said...

In order to make this little piece of socialism work, those 'other available health care options' must be eliminated.
In Philadelphia, a bridge was opened in 1928. Toll was 25 cents. It was almost unused for the first 2 years because there were 28 competing ferry services which only cost 5 cents.
There are no ferries anymore and the bridge toll is now $4.00

10/19/2008 10:45 AM  
Anonymous Anonymous said...

"if you give people a choice of paying for something and having others pay for it, they will choose the later". That is true if you assume that the quality of the service delivered for 'free' or paid for is the same. Usually what happens when government runs health care (or any other service) is that the quality of the service goes down so much that many end up paying for private care. Those who choose to buy private are actually paying twice: in taxes and out of pocket. But the quality of the government service can be so bad that many see no choice. In the U.S. we see that sort of stuff in education, where some public schools are a disaster. In countries where the government is more involved in health care--and thus the quality of public health care is low--we see vast numbers of people paying for private care. In the third world especially, where governments love to run everything, the entire middle class pays for private care because public health care is a disaster. They have health care for "free", but in reality ends up quite expensive because, like I said, people pay twice: to the government and to private insurance.

10/20/2008 8:52 AM  

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