THE LIBERTARIAN PARTY OF HAWAII

625 Keawe St, Honolulu, HI 96813 (808) 537-3078

TESTIMONY HB2638 HD2

Bill scheduled to be heard by HHS/CPH on 03-13-02 at 9:00 am in conference room 016.

Bill Status, Text, and Committee Reports

RELATING TO THE HAWAII LONG-TERM CARE FINANCING ACT.

Long-Term Care; Mandatory Premium Assessment ($)

Enacts the Hawaii long-term care financing Act; creates a blue ribbon panel to administer the long-term care program; creates a mandatory assessment system to collect premiums from employee paychecks; establishes an initial premium amount of $10 per month and an initial benefit payment of $70 per day for 365 days; creates the Hawaii Long-Term Care Benefits Fund to hold the premiums and to pay benefits. (HB2638 HD2)

Dear Committee Members:

We oppose HB2638 HD2

We immediately note that the summary fails to mention that you must pay into the fund for 10 years before you are eligible to receive the full benefit which falsely leads the elderly to believe that they can get something for nothing.

This bill for long term care is worse than the plight of the elderly and infirm.. This plan would increase costs, destroy jobs, impose broad new taxes on the Great People of Hawaii, and lead to the rationing of care.

The only health care reforms that are likely to have a significant impact on Hawaii's health care problems are those that draw on the strength of the free market. The Libertarian Party has developed a comprehensive proposal for health care reform that will reduce long term care costs, while extending access to care.

The Libertarian Party believes there is a better way.

Establish Medical Savings Accounts. One key to controlling health care costs is strengthening the role of the individual health care consumer. As part of this process, an individual should be exempted from taxes on money deposited in a Medical Savings Account (MSA), in the same way that he currently pays no taxes on deposits to an IRA. Money could be withdrawn from an MSA without penalty to pay medical expenses. This would increase consumer responsibility, while increasing access and controlling costs.
Restructure tax policy. As a second consumer-based reform, taxes should be restructured to establish equity in the treatment of long term health insurance, individually purchased health insurance, and out-of-pocket medical expenses. All health care expenditures should be 100% tax deductible. This will add a measure of fairness to current tax policies that penalize the self-employed, part-time workers, and employees of small businesses, while subsidizing health care for the most affluent in our society.
Deregulate the health care industry. There should be a thorough examination of the extent to which government policies are responsible for rising health costs and the unavailability of health care services. Hawaii can help lower health care costs and expand health care access by taking immediate steps to deregulate the health care industry, including elimination of mandated benefits, repeal of the Certificate-of-Need program, and expansion of the scope of practice for non-physician health professionals.

Such a heavy new tax burden would also substantially harm the economy, slashing economic growth and stifling job opportunities, which would again most hurt those with less in resources.

Such a program would cause substantial unnecessary utilization, produce massive displacement of private care givers, eliminate incentives to control costs, send prices for long-term care soaring, and expose the government to uncontrollable abuse. Adopting such a huge new entitlement obligation to the elderly in the face of the pending retirement of the baby-boom generation, and the immense short and long-term fiscal problems that already exist, would be foolhardy.

With the government providing for those who do not have the resources to pay for their own care, there is no sound rationale for a long-term-care entitlement program for everyone. Those who want to protect their substantial life savings from the costs of long-term care can and should do so by using part of their accumulated savings to purchase private insurance to protect the rest. Newly developing private coverage alternatives should be attractive and accessible even to those with more modest savings. With respect to single elderly individuals who do not obtain such private coverage, it is not too much to ask of those who do have some modest savings to contribute the funds to the cost of their own care before the taxpayers are asked to pay the bill. With respect to couples, substantial resources will now be protected for the non-institutionalized spouse in any event.

The sound role for government policy is to facilitate the development of private coverage mechanisms, primarily by removing its own unnecessary tax and regulatory barriers. Ultimately, policy reforms can promote the development of additional retirement resources that would be available to take advantage of private coverage mechanisms and sharply reduce dependence on government.

Please oppose HB2638 HD2 and allow the great people of Hawaii to retain their right to responsibly manage their own money and health.

Sincerely:

John Orendt