Today, the WSJ proposes a cure for the health insurance sickness, one that should be familiar to anyone following politics over the past year:
It is no secret that this page is all for competition in the marketplace. If indeed that's the goal, allow us to suggest a path to it that will be a lot easier than erecting the impossible dream of a public option: Let insurance companies sell health-care policies across state lines....
Affordability would improve if consumers could escape states where each policy is loaded with mandates. "If consumers do not want expensive 'Cadillac' health plans that pay for acupuncture, fertility treatments or hairpieces, they could buy from insurers in a state that does not mandate such benefits," Mr. Herrick has written.
A 2008 publication "Consumer Response to a National Marketplace in Individual Insurance," (Parente et al., University of Minnesota) estimated that if individuals in New Jersey could buy health insurance in a national market, 49% more New Jerseyans in the individual and small-group market would have coverage. Competition among states would produce a more rational regulatory environment in all states.
Sounds so innocuous, doesn't it? Yeah, hey! Why can't I buy that cheap other-state plan?
Jesse Taylor:
A "more rational regulatory environment" is a synonym for a much smaller regulatory environment. If I were in charge of a state with a dying city (say, Michigan), the first thing I would do is get rid of every single restriction on health insurance in state law, and then encourage tax abatements or even permanent tax restructuring for health insurance companies who wanted to locate in Detroit. Within ten years, every major insurer in the nation would be located on Woodward Avenue, and Detroit would be the Wilmington, Delaware of the health insurance industry.
I mean, there are some little downsides. Virtually every base-level insurance plan in the country would become a high-deductible plan with high coinsurance rates. So-called "Cadillac" plans (you know, the ones that cover you when your neighbor decides to play "Elvis Watches The Teevee" but misses because of his undiagnosed glaucoma) would invariably become more expensive as the lack of any regulatory structure allowed pool-splitting. If you hate insurance company bureaucracy today, imagine what happens tomorrow when massive call centers are handling policies from all over the country. Guaranteed issue rules would die, meaning that when you bought into the cheapest insurance and got any of the conditions that it didn't cover - for instance, sickness - you would now likely be barred from ever being insured by a private insurer for those conditions....
To wit: Senate Bill 234, which mandates insurance coverage for children with autism. If the WSJ had its way, healthy Montanans could buy insurance policies from other states that didn't mandate coverage of autistic kids - and every other "niche" illness you could name - and insurance companies operating in the state would either wither and die, or move to a less regulatory "environment." And autistic kids would no longer be able to find coverage.
We know this would happen, because we've already got a model: the credit-card industry's move to Delaware to take advantage of its laws:
These powers include the ability to charge interest rates not subject to any legal ceiling, to raise interest rates retroactively, to charge variable interest rates, to levy unlimited fees for credit card usage and to foreclose on a home in the event of default for credit card debts.
Worked great! Not for the consumer, mind you, but for the credit card industry!
In short, allowing consumers to buy insurance across state lines would likely result in lower insurance rates - for only those that qualify for insurance, of course, a necessarily smaller number than those that do today. But it would also likely result in higher out-of-pocket expenses for those that do have insurance, more declined claims, and no brake on escalating health care costs.
In short, it would only make the status quo worse.
Which reminds me of Paul Krugman's column yesterday on Washington's odd enthrallment to an unworkable economic policy - Reaganomics ("an ideology that says government intervention is always bad, and leaving the private sector to its own devices is always good") - which, in practice, increased wealth for the ueber-wealthy and stagnated - or worse - growth for everyone else. And which brought on the "worst recession since the 1930s."
The debate over the public option has, as I said, been depressing in its inanity. Opponents of the option - not just Republicans, but Democrats like Senator Kent Conrad and Senator Ben Nelson - have offered no coherent arguments against it. Mr. Nelson has warned ominously that if the option were available, Americans would choose it over private insurance - which he treats as a self-evidently bad thing, rather than as what should happen if the government plan was, in fact, better than what private insurers offer.
But it's much the same on other fronts. Efforts to strengthen bank regulation appear to be losing steam, as opponents of reform declare that more regulation would lead to less financial innovation - this just months after the wonders of innovation brought our financial system to the edge of collapse, a collapse that was averted only with huge infusions of taxpayer funds.
So why won't these zombie ideas die?
Krugman blames industry contributions engineered to maintain the status quo and president Obama's reluctance to use his office to challenge financial "government-is-bad fundamentalism." I'd argue, though, that he overlooks the role of the traditional media, which, in its glaring sycophancy, still sucks up to the power elite in DC, and also operates in fear of being out of touch with "ordinary" Americans (explaining its reluctance to challenge Tea Baggerism, for one).
Can't expect change without a change in discourse. |
