You Shouldn't Have to Pay for the Hairpiece Mandate
The San Francisco Chronicle published an interesting op-ed yesterday about how to provide health insurance to the 45 million or so Americans who currently lack it.
The author of the piece, policy wonk Devon Herrick, says there is a third option that health care reform partisans have overlooked. Instead of promoting an employer-based scheme or a socialized system like Canada's--two opposing and commonly held positions in the health care debate--Herrick proscribes increased doses of competition to cure the ailing system.
He advocates increasing competition by allowing health insurance consumers to purchase policies from other states.
Herrick:
Under current law, each state has the right to regulate health plans sold within their borders, which means 50 different states have 50 different sets of regulations. Because each state insurance market is protected from interstate competition, legislators can and do mandate insurers to cover services that drive up premiums. Proponents often claim a given mandate costs very little -- but they add up. Some estimates suggest these mandates have priced as many as one-quarter of the uninsured out of the market.
Herrick says many people lack insurance not because they can't afford it, but because they live in a state where there are few attractive policy options luring them to buy.
Some bigger states, like Herrick's California, offer scores of health insurance products at reasonable rates. Residents in many smaller states, however, are forced to choose among a tiny pool of expensive plans.
As it happens, he isn't the only one promoting such a scheme. Two U.S. congressmen hope to enact The Health Care Choice Act, which would enable insurance shoppers to cherry pick policies from any carrier in any state.
"The Health Care Choice Act would allow consumers to shop for individual insurance on the Internet, over the telephone or through a local agent," Herrick writes. "Residents of any state would be free to choose among policies from any insurer that offers them ... Thus, if consumers do not want expensive "Cadillac" health plans that pay for acupuncture, fertility treatments or hairpieces, they could buy from insurers in states that do not mandate such benefits. Consumers would be more likely to find a policy that fits their budget -- giving more people access to affordable insurance."
It's an insightful article. The solution, just add competition, is elegant in its simplicity. And, in general, greater competition brings lower prices. But I'm fairly certain there are some snags--because things can't be that simple, can they?
I'll be on the lookout for an opposing view point. Stay tuned.
Comments
Often the best solution is surprisingly simple. I hope that this idea finds its way to fruition.
Posted by: Peter | July 14, 2006 10:50 AM
I'd really like to see this on an upcoming ballot, too. I suppose we should write our congressman.
Posted by: Mike | July 18, 2006 10:45 AM
I don't think it will fly. It is the states that govern insurance for their residents. For example, one state may require that companies include maternity benefits as part of their standard health plan. Another state may give the carrier the choice of making maternity coverage an optional benefit. Unless states can agree on the minimum factors to be included in all policies, you will never be able to sell across state lines. Personally, I'd rather see all insurance administered on a federal rather than state level as there seems to be a lot of unnecessary bureaucracy in each state doing similar functions of insurance administration.
Posted by: Tim McTavish | July 18, 2006 01:34 PM