Comedian Stephen Colbert is fond of calling Oregon “California’s Canada”.  That characterization will take on a whole new meaning if Democrats in the Oregon Legislature get their way and pass House Bill 3510.  This law would create the first completely socialized healthcare system in the United States.  In fact, the proposed “Affordable Health Care for All Oregon” (AHCAO) is so radical that “California’s Cuba” might be a more accurate label.

In an era when taxpayer-funded health plans like Medicare and Medicaid are facing bankruptcy and long-term deficits in the trillions, there is no question that the AHCAO plan is bold.  Private health insurance would be largely banned and replaced by comprehensive health insurance provided free of charge by the state.  Everyone living–or even just working–in the state would be fully covered, along with all immediate family members.  Care would be completely free, with no insurance premiums, deductibles or co-pays allowed.  Providers would be required to accept whatever reimbursement the plan might decide to give them as payment in full; balance billing would be prohibited.  Even drugs would be free as long as they’re on the AHCAO formulary.  And while there is no requirement that the benefits be gold-plated, they must include “comparable benefits” for those “who rely on spiritual means of healing”.

Socialism typically relies on central planning, and the AHCAO’s proposed healthcare revolution is no exception.  All decisions about coverage, eligibility, certificates of need, quality-of-care standards, contracting, ethical standards and everything else are to be made or approved by an unelected Board appointed by the governor.  Its decisions will be implemented by a brand-new state bureaucracy called The Oregon Health Authority (OHA).  The OHA is to be the state’s version of the Department of Health and Human Services, complete with its own insurance administrators, formularies, all-claims all-payers databases, guidelines of care and even its own version of the Agency for Healthcare Research and Quality.  That’s a tall order for a state of only 3.8 million people and a mixed record when it comes to managing complex healthcare programs.

Who will foot the bill for all of this?  The taxpayers of course, but not necessarily all taxpayers.  You might think that a state with no sales tax, the nation’s highest income and capital gains taxes, one of the highest unemployment rates, few large companies and a projected $3.5 billion budget shortfall would think twice about going back to the same few businesses and individuals to fund a huge new entitlement, but you’d be wrong.  One of the first duties of the AHCAO Board is to develop recommendations for a “system of dedicated, progressive taxes that are based on…ability to pay”.  It is to consider a progressive payroll tax, an even higher personal income tax, transaction taxes on stocks, bonds and other unearned income, a progressive surtax on those in higher income brackets and a progressive tax on gross business receipts divided by the number of full-time employees.  With financing like this, Oregon may need its own Mariel boatlift to ferry fleeing capital and businesses out of the state..

But the most remarkable thing about this initiative is not its considerable hubris or enormous scope, but how it manages to fly in the face of everything we’ve learned, or should have learned, about healthcare economics over the past fifty years.  Price controls implemented by Medicare and Medicaid have done nothing to control spending; but they have shifted costs to the private sector and reduced the number of providers who are willing and able to accept poor and elderly patients.  Completely isolating patients from the cost of their care invariably leads to overutilization.  And centralized “cost control” systems that place medical decision-making in the hands of insurers and bureaucrats now consume one-third of our healthcare dollars in the form of administrative overhead.  Ironically, a real healthcare revolution would denounce this dismal record and bury medical socialism once and for all.  Innovative use of free-market forces and widespread administrative simplification could easily save over $500 billion in healthcare costs each year; savings that could be used to pay down our debt, improve care or provide universal medical coverage.  Malpractice reform and re-thinking our expensive, counterproductive “top down” approach to medical information systems would save billions more.  Neither ObamaCare nor HB 3510 do any of these things.

Even in Left Coast Oregon, this particular legislation may not go very far this year.  Despite a Democratic governor and majority in the state senate, the election of 2010 saw Republicans picked up six new seats in the Oregon House to achieve a 30:30 tie.  But its mere introduction and initial hearing this month serves as a reminder that, no matter how badly managed the healthcare system is now, it’s always possible for well-meaning politicians, misguided laws and inept administration to make it even worse.


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