Health Care: Can the GOP Prove it still has a Soul?

With Republicans poised to take control of the House of Representatives, there is little doubt that the recently-passed health care bill is up for, shall we say…”discussion.” The fact that Democrats continue to hold the Senate and White House also means that there is no run-away train here when it comes to passing – or repealing – legislation. A ‘divided’ government means that we can have two years of gridlock...or we can have statesmen from both sides of the aisle who actually work together to address the nation’s ills.

Eric Cantor, set to become the new Republican House Majority leader, has suggested in the last few days that the Republican Party, while looking to repeal “Obamacare,” may also offer revisions and additions to the bill rather than just repealing it and walking away. In this statement, there is the faintest glimmer of hope that America could actually end up with a better law.

Tea Party darling (and complete lunatic) Michele Bachmann (R-MN) has already gone on the offense, stating to the Christian News Service,

“…I think there needs to be an insurrection here in Washington, D.C., against our own [Republican] leadership, because that is the message that's come loud and clear out of this election: a full-scale repudiation and rejection of the federal government takeover of private industry…If we want to replace ["obamacare"] with Obamacare-lite where the government comes in and tries to have interventionist policies, we are going to continue to see failure…”

Bachmann represents everything that has gone wrong with the Republican Party: extremism, ignorance, mean-spiritedness, an elevation of ivory-tower theory over people and reality, and a slash-and-burn, rule-or-ruin style of governance.

For all its flaws, the Democrats got several things very right with the Health Care Bill: A new McClatchy Newspapers/Marist survey found that 68% of respondents favor allowing people under the age of 26 to be covered by their parents' plans, and 60% want to deny insurance companies the right to turn people down for coverage on the basis of pre-existing conditions. Permitting insurers to refuse coverage for pre-existing conditions is a pocket-lining win for corporate insurance at the expense of struggling families.

The entire theory behind insurance is that everyone goes into the ‘pool’, and those at greater risk are subsidized by ratepayers who pay more than they take from the system.

Seven hundred years ago, ship merchants in the Baltic Sea were besieged by Vikings; they got through that period by pooling their risk and cargoes, thus creating the first known insurance pool (The “Hanseatic League”). Those merchants who were set upon by Vikings were not ‘ruined,’ but rather, participated in the profits of the ships that did successfully reach port. That is the theory behind insurance: sharing the risk increases the chances that all will survive horrible mishaps. When Insurers are permitted to cut off newborn babies born with birth defects, or refuse to cover spouses with crippling diseases, they are throwing the ‘bad risks’ overboard; it is no longer an insurance pool, but a cartel of the healthy for the profit of the insurer.

Contrary to Bachmann’s blind quasi-religious belief in the existence of perfect markets in health care, we must acknowledge that there *is* a problem in terms of affordable access to health care for many Americans. With 10% of the Labor Force out of work, an additional 10% “underemployed,” and youth, stay-at-home parents, part-time workers, the disabled, many immigrants, and the homeless not included in those figures, estimates range from 30 to 50 million Americans living without health insurance. That means somewhere between 10% and 15% of Americans living on the edge of ruin or death at the instance of a single serious mishap or disease. The compassion of a civilized society rejects, "hell, tough on them!" as an acceptable response.

Republicans must be convinced to keep these two provisions of the health care bill, as well as an end to lifetime caps, or suffer the consequences at the ballot box two years hence.

In addition, this is an opportunity to make improvements to the existing bill. Those improvements could include the following:

1) Permit non-profit regional or state groups to form for the purpose of buying health insurance. Sounds simple, isn't it? But it's illegal under IRS Rule 501(m). Individuals can *not,* under existing law, form 'groups' whose primary purpose is purchasing group health insurance. (Groups may form for business or fraternal purposes, and then choose to buy insurance as an incidental benefit, but they can not form for no other reason than to buy insurance). End this prohibition, let competition ensue, and there will be no need for the single Federal Government Insurance company the Republicans fear.

2) End State-granted Insurance Monopolies. The Federal Government has the authority to regulate Interstate Commerce, and since people may get sick *anywhere* and request their insurer to cover it, this is clearly federal jurisdiction. Blow open the lid on Insurer Competition across state lines.

3) Enact Tort and Medical Malpractice Reform. It was reported 6 years ago that an OB-GYN doctor in Massachusetts has to deliver EIGHTY-FIVE babies just to cover malpractice insurance premiums for a year. Worse, 5% of doctors are responsible for 95% of malpractice claims, raising all doctor's and hospital's premiums. Limit Malpractice Awards, raise the negligence standards (so hospitals don’t need to run costly and unnecessary tests), and relieve the 95% of decent doctors from paying the premiums of the 5% convicted of malpractice.

4) Eliminate the FDA's Efficacy test, especially for terminal patients. Currently, the FDA requires that pharmaceutical companies prove that their drugs meet two tests: they must prove safe, and they must be 'efficacious,' that is, they must be proven to cure the condition they claim to address in virtually 100% of patients. This is a costly and inconclusive standard: people react differently to different substances. The peanut butter that fed me through high school will kill someone with an allergy; let *Doctors* decide what to prescribe, with the understanding that the idiosyncrasies of individual patients means that results WILL be different with different drugs. And while we’re at it, permit the medical production, possession, and use of cannabis.

5) Engage in Multi-national agreements with other nations to accept their pharmaceuticals and increase competition. The refusal of the US FDA to permit the importation of Canadian pharmaceuticals is insane. An individual can come to the US from France, or Britain, or Mali, or India, and providing only a driver's license from their own nation, get behind the wheel of a 6,000 pound rental car and take off minutes after landing - even if they don't speak English or have never driven on the right side of the road. And yet, if a pharmaceutical company goes through hundreds of thousands of test subjects in Germany, or Britain, or Canada, the results are not considered 'valid' in the US. Now, realistically, which is more dangerous: the driver, or a drug produced in Canada?

6) Permit every American to have a Medical Savings Account. Currently, Government workers and some self-employed people can utilize a Medical Savings Account which permits them to cover medical costs using a credit-card-like card. These citizens have a certain amount of money deducted from their paychecks, and go into an account for medical expenses: prescription drugs, eyeglasses, dental work, and even over the counter remedies. These deductions are pre-tax, meaning it lowers the person's gross income, lowering their tax and even possibly dropping them into a lower tax bracket. Better yet, these workers can 'borrow' against future deductions if they incur expenses early in the year at no interest expense. If government workers are allowed these accounts, why not ALL Americans?

7) Repeal DOMA and the Internal Revenue Service Imputed Income provisions. The Internal Revenue Service requires that employers report the value of health insurance benefits provided to non-traditional partners: registered domestic partnerships, civil unions, and some marriages. The value of this 'benefit' results in greater employee taxes - often as much as $3,000 annually. This creates a disincentive for employees in the majority of states where thee benefits exist to actually cover their partners...who then go uninsured, or who qualify for taxpayer funded low-income health programs in the states. ALL of these partners can be better served, with better insurance, at no taxpayer expense, if the IRS would stop punishing otherwise economically viable households based on their formal definition of 'federal marital status.'

The Whole Foods Alternative to Obamacare: A Guest Blogpost

[With credit to the Wall Street Journal....you'll notice Mr Mackey is echoing some of the proposals we've suggested in this blog before]

By JOHN MACKEY
“The problem with socialism is that eventually you run out
of other people’s money.”

—Margaret Thatcher


With a projected $1.8 trillion deficit for 2009, several trillions more in deficits projected over the next decade, and with both Medicare and Social Security entitlement spending about to ratchet up several notches over the next 15 years as Baby Boomers become eligible for both, we are rapidly running out of other people’s money. These deficits are simply not sustainable. They are either going to result in unprecedented new taxes and inflation, or they will bankrupt us.

While we clearly need health-care reform, the last thing our country needs is a massive new health-care entitlement that will create hundreds of billions of dollars of new unfunded deficits and move us much closer to a government takeover of our health-care system. Instead, we should be trying to achieve reforms by moving in the opposite direction—toward less government control and more individual empowerment. Here are eight reforms that would greatly lower the cost of health care for everyone:

• Remove the legal obstacles that slow the creation of high-deductible health insurance plans and health savings accounts (HSAs). The combination of high-deductible health insurance and HSAs is one solution that could solve many of our health-care problems. For example, Whole Foods Market pays 100% of the premiums for all our team members who work 30 hours or more per week (about 89% of all team members) for our high-deductible health-insurance plan. We also provide up to $1,800 per year in additional health-care dollars through deposits into employees’ Personal Wellness Accounts to spend as they choose on their own health and wellness.

Money not spent in one year rolls over to the next and grows over time. Our team members therefore spend their own health-care dollars until the annual deductible is covered (about $2,500) and the insurance plan kicks in. This creates incentives to spend the first $2,500 more carefully. Our plan’s costs are much lower than typical health insurance, while providing a very high degree of worker satisfaction.

• Equalize the tax laws so that that employer-provided health insurance and individually owned health insurance have the same tax benefits. Now employer health insurance benefits are fully tax deductible, but individual health insurance is not. This is unfair.

• Repeal all state laws which prevent insurance companies from competing across state lines. We should all have the legal right to purchase health insurance from any insurance company in any state and we should be able use that insurance wherever we live. Health insurance should be portable.

• Repeal government mandates regarding what insurance companies must cover. These mandates have increased the cost of health insurance by billions of dollars. What is insured and what is not insured should be determined by individual customer preferences and not through special-interest lobbying.

• Enact tort reform to end the ruinous lawsuits that force doctors to pay insurance costs of hundreds of thousands of dollars per year. These costs are passed back to us through much higher prices for health care.

• Make costs transparent so that consumers understand what health-care treatments cost. How many people know the total cost of their last doctor’s visit and how that total breaks down? What other goods or services do we buy without knowing how much they will cost us?

• Enact Medicare reform. We need to face up to the actuarial fact that Medicare is heading towards bankruptcy and enact reforms that create greater patient empowerment, choice and responsibility.

• Finally, revise tax forms to make it easier for individuals to make a voluntary, tax-deductible donation to help the millions of people who have no insurance and aren’t covered by Medicare, Medicaid or the State Children’s Health Insurance Program.

Many promoters of health-care reform believe that people have an intrinsic ethical right to health care—to equal access to doctors, medicines and hospitals. While all of us empathize with those who are sick, how can we say that all people have more of an intrinsic right to health care than they have to food or shelter?

Health care is a service that we all need, but just like food and shelter it is best provided through voluntary and mutually beneficial market exchanges. A careful reading of both the Declaration of Independence and the Constitution will not reveal any intrinsic right to health care, food or shelter. That’s because there isn’t any. This “right” has never existed in America

Even in countries like Canada and the U.K., there is no intrinsic right to health care. Rather, citizens in these countries are told by government bureaucrats what health-care treatments they are eligible to receive and when they can receive them. All countries with socialized medicine ration health care by forcing their citizens to wait in lines to receive scarce treatments.

Although Canada has a population smaller than California, 830,000 Canadians are currently waiting to be admitted to a hospital or to get treatment, according to a report last month in Investor’s Business Daily. In England, the waiting list is 1.8 million.

At Whole Foods we allow our team members to vote on what benefits they most want the company to fund. Our Canadian and British employees express their benefit preferences very clearly—they want supplemental health-care dollars that they can control and spend themselves without permission from their governments. Why would they want such additional health-care benefit dollars if they already have an “intrinsic right to health care”? The answer is clear—no such right truly exists in either Canada or the U.K.—or in any other country.

Rather than increase government spending and control, we need to address the root causes of poor health. This begins with the realization that every American adult is responsible for his or her own health.

Unfortunately many of our health-care problems are self-inflicted: two-thirds of Americans are now overweight and one-third are obese. Most of the diseases that kill us and account for about 70% of all health-care spending—heart disease, cancer, stroke, diabetes and obesity—are mostly preventable through proper diet, exercise, not smoking, minimal alcohol consumption and other healthy lifestyle choices.


Recent scientific and medical evidence shows that a diet consisting of foods that are plant-based, nutrient dense and low-fat will help prevent and often reverse most degenerative diseases that kill us and are expensive to treat. We should be able to live largely disease-free lives until we are well into our 90s and even past 100 years of age.

Health-care reform is very important. Whatever reforms are enacted it is essential that they be financially responsible, and that we have the freedom to choose doctors and the health-care services that best suit our own unique set of lifestyle choices. We are all responsible for our own lives and our own health. We should take that responsibility very seriously and use our freedom to make wise lifestyle choices that will protect our health. Doing so will enrich our lives and will help create a vibrant and sustainable American society.

—Mr. Mackey is co-founder and CEO of Whole Foods Market Inc.