ORIGINALLY WRITTEN TOM STOPPEL
What has a cost spiraling ever higher, is something you shouldn’t live without and yet hope you never have to use?
The answer: insurance.
Eric Carter, State Rep. Eric Carter of Overland Park and a candidate for Kansas insurance commissioner, told the Hillsboro Kiwanis Club last Tuesday that the Sunflower state is facing an insurance crisis.
“Health care is actually the expenditure that does the best job of explaining the financial crisis many businesses are facing in this country, and even a lot of school districts,” Carter said. “It is a budget-busting item.”
In his presentation to the Kiwanis Club, Carter focused on health care issues, but said the problem is much broader that that.
“It’s more of a systemic problem,” he said. “Unfortunately, it’s in all areas of insurance.”
Carter is on the campaign trail hoping to convince voters to cast their ballot for him in the Aug. 1 Republican primary as he battles the incumbent insurance commissioner, Sandy Praeger.
“The office of insurance commissioner impacts your life dramatically,” Carter said. “In other words, this race impacts your life more than any other race you’ll cast a ballot for.
“Yet most people can’t even name their insurance commissioner-that’s both a scary and a frustrating problem.”
The state insurance commissioner is responsible for the regulation of all forms of insurance sold in the state.
While regulation is the principle function of the office, in recent years the role of commissioner has gained more prominence as the legislature deals with the management of health-care costs for employees, businesses and individuals.
“The problem is the regulatory environment,” Carter said of the state’s insurance plight. “It’s not the insurance company versus consumer; it’s basically insurance company versus bureaucrat. Insurance companies just don’t want to do business in Kansas.”
Carter said in the last 11 years, Kansas has lost 12 health-care insurance carriers. As a result, one carrier-Blue Cross / Blue Shield-has acquired more than two-thirds of the market in Kansas.
Competition, Carter said, is the great cost equalizer.
“When insurance companies are competing for your business, everyone wins,” he said.
Because of the lack of competition, insurance costs in general-and health-care costs in particular-are reaching critical levels in Kansas.
“The subject of health care plays a role in everybody’s life,” Carter said. “But health care is sort of like taxes-we all like to complain about it, but (legislators) really don’t want to embrace the internal struggle to think through how the problem got as bad as it is and what we need to do to change it.”
According to Carter, Kansans paid an average of $2,800 per person for health care in 1990. By 2004, that amount had skyrocketed to $6,280 per person-a 224 percent increased.
“What you’re finding is it’s replacing other budgetary items as a big cost in family and businesses,” Carter said.
Compared to other states, Kansas has 11th highest rate an employee pays for typical family health-care coverage. The rate that same employee would pay for single coverage is the sixth-highest nationally.
For the most common situation-single, plus one dependent-Kansans pay the third-highest rate in the country.
And it doesn’t end there. Homeowner insurance is equally oppressive, Carter said.
“Kansans pay the sixth-highest premium in the nation,” Carter said. “The question is why? Is it all the earthquakes and hurricanes we have in Kansas? No and no.”
The problem, Carter claimed, is regulatory.
“I’m an attorney by training, and I started off doing health law and insurance regulatory work,” Carter said. “But the last three insurance companies I helped form on behalf of other clients, I didn’t locate in Kansas.
“When you think about that, I’m a state representative running for insurance commissioner and I chose to put them in other states,” he said. “Frankly, (placing them in Kansas) would have been malpractice because our regulatory environment is that bad.”
The Kansas Legislature, Carter said, works with a budget of $12 billion, which includes all federal money.
“Of that, about $2.2 billion is just Medicaid,” he said. “It’s by far the fastest-growing part of our budget.”
That number will grow to $3.3 billion in the next five years.
“Nobody knows where that extra money will come from, but it’s a good bet it’ll come from you in taxes or Medicaid cuts in the current program,” he added.
“The more people we put in Medicaid who don’t really need it, and who can go get a job to pay for their own health care, the more we threaten the financial integrity of the program.”
Carter said Gov. Kathleen Sebelius and Praeger are misleading people when they say nearly 300,000 Kansans are uninsured.
“Of those, 72,000 are already eligible for Medicaid, 97,000 make in excess of $50,000 per year and are young and healthy enough so they basically choose not to buy insurance, and one-sixth of those are temporarily uninsured because they’re changing jobs, school or whatever,” he said.
“About the final 78,000 are chronically uninsured. That’s the real number.”
Carter’s solution emphasizes affordability, competition and tort reform.
“Economists estimate that as much as 30 percent of our health-care costs are due to defensive medicine-the threat of frivolous litigation,” he said. “About 30 percent of our costs are going out the door merely because of wasteful procedures.”
Carter said he hopes to resuscitate the Kansas market and produce affordable insurance rates, restore competition and hold down unnecessary litigation costs incurred due to frivolous lawsuits.
“Kansas is one of only 12 states that elect their insurance commissioner,” he said. “The policies from there have to be good, sound policies that embrace reality and free-market principles that work.”