Why not drop restrictions that prevent individuals from purchasing health insurance across state lines?

Its no wonder that insurance markets are especially concentrated in some, typically small states. From an insurance company's perspective, the more people you cover, the lower your costs will be. As a result, its hard for a large number of insurance companies to stay in business in a single state because they would be slicing the population too thin to be profitable.

I don't see why we need more government to improve competition by offering a public option. Its kind of the government's fault that competition is so restricted now.

At least that's the way I see it. Let me know if I got something wrong.

6/26/2009 10:15:45 AM

^
Exactly, duh. What you're missing is that this has been the plan all along... The socialists know what they're doing:
1) create bad policy over decades that tampers with the free market and results in high insurance and doctor costs.
2) Blame it on the free market, or capitalism in general.
3) Obtain a democratic-party-controlled white house and congress.
4) Convince all the "free-lunch" idiots that a government-based health-care plan is the way to go.
5) Get the votes in congress.
6) Enact the public plan.
7) Slowing expand the program over the next 10 or 20 years and then get rid of all private health care.
8) Pursue further private-sector takeovers until a popular socialist coup takes DC and burns the constitution.
9) Viva la Socialism! Hooray for the USSA!

6/26/2009 11:11:36 AM

If that were allowed, wouldn't all insurance companies movie to whatever state offered them the most protections and the least restrictions, kind of like how all credit card companies are based in Delaware?

6/26/2009 11:14:00 AM

^ I would not be surprised if that happened to a large extent.

Though most restrictions come in the form of what plans must offer in a given state (at least as i understand it). I think we would definitely some companies move to states where they were able to offer plans that did not cover as much for a cheaper price. And I don't think that's a bad thing.

But if you are really really worried about a race to the bottom and are unconvinced by arguments to the contrary, wouldn't it make more sense to just have the federal government decide what protections and restrictions should be in place at a national level??? You know, rather than get the government in the health insurance business?

I am personally much more comfortable with that approach than with the public option every Dem keeps floating. Not because I'm afraid of creeping socialism. But because I think it spells much less trouble down the road in terms of fiscal solvency. I just don't buy arguments that a public option will be able to substantially reduce health care costs. And that means a public option only makes future debt problems worse.

[Edited on June 26, 2009 at 11:42 AM. Reason : ``]

6/26/2009 11:40:51 AM

That's why if you were to allow health insurance companies to sell policies across state lines, you'd have to hit them with the Interstate Commerce Clause and regulate them from Washington.

While I like the idea, I can see some headaches in implementing it. Right now, we have a really complex patchwork of health insurance regulations, and I don't know if states are going to be willing to give up the control they have. Even if they were willing, would they be okay with it if it means that they'd lose some of the state-specific protections?

6/26/2009 12:03:12 PM

Big problem with this idea:

Some states only mandate coverage for 3 items, where as other states have mandated coverage for more than 50 items.

6/26/2009 12:27:01 PM

Maybe instead of letting the state government, federal government, employer, etc. decide what items should be covered, maybe we let... oh, I don't know...

the individual decide?

6/26/2009 12:54:30 PM

^^Firstly, which states? http://www.cahi.org/cahi_contents/resources/pdf/HealthInsuranceMandates2008.pdf


Secondly, this would not be a problem even if it were true The real problem is that states mandate too many benefits - often as a result of lobbying pressure from professional organizations (e.g. American Chiropractor Organization). With each mandate, premiums must rise to fund it. More perversely, adding additional coverage reduces the out-of-pocket expense for consumers, leading them to demand more services than they would had they had to pay it themselves.



[Edited on June 26, 2009 at 12:57 PM. Reason : s]

6/26/2009 12:56:49 PM

Quote :

" Some states only mandate coverage for 3 items, where as other states have mandated coverage for more than 50 items."

Like I said before I don't know why this would be a problem, unless you think that health insurance comapnies would not offer these items unless the government forced them to (kinda like grocery stores don't offer vegitables unless the government forces to I gues).

But, even if you did believe that and there were no argument that could convince you otherwise, it still seems like a better solution to eliminate state barriers and regulate the market at the national level as opposed to creating a public option alternatives.

The main point of this thread is that if we worried about concentrated health insurance markets, introducing a public plan is not our only option. We could solve that problem without the heavy fiscal weight by simply allowing people to buy insurance across state borders.

6/26/2009 2:22:23 PM

Harvard economist, Greg Mankiw, on the public option:

Quote :

"IN the debate over health care reform, one issue looms large: whether to have a public option. Should all Americans have the opportunity to sign up for government-run health insurance? President Obama has made his own preferences clear. In a letter to Senators Edward M. Kennedy of Massachusetts and Max Baucus of Montana, the chairmen of two key Senate committees, he wrote: “I strongly believe that Americans should have the choice of a public health insurance option operating alongside private plans. This will give them a better range of choices, make the health care market more competitive, and keep insurance companies honest.” Even if one accepts the president’s broader goals of wider access to health care and cost containment, his economic logic regarding the public option is hard to follow. Consumer choice and honest competition are indeed the foundation of a successful market system, but they are usually achieved without a public provider. We don’t need government-run grocery stores or government-run gas stations to ensure that Americans can buy food and fuel at reasonable prices. An important question about any public provider of health insurance is whether it would have access to taxpayer funds. If not, the public plan would have to stand on its own financially, as private plans do, covering all expenses with premiums from those who signed up for it. But if such a plan were desirable and feasible, nothing would stop someone from setting it up right now. In essence, a public plan without taxpayer support would be yet another nonprofit company offering health insurance. The fundamental viability of the enterprise does not depend on whether the employees are called “nonprofit administrators” or “civil servants.” In practice, however, if a public option is available, it will probably enjoy taxpayer subsidies. Indeed, even if the initial legislation rejected them, such subsidies would be hard to avoid in the long run. Fannie Mae and Freddie Mac, the mortgage giants created by federal law, were once private companies. Yet many investors believed — correctly, as it turned out — that the federal government would stand behind Fannie’s and Freddie’s debts, and this perception gave these companies access to cheap credit. Similarly, a public health insurance plan would enjoy the presumption of a government backstop. Such explicit or implicit subsidies would prevent a public plan from providing honest competition for private suppliers of health insurance. Instead, the public plan would likely undercut private firms and get an undue share of the market. President Obama might not be disappointed if that turned out to be the case. During the presidential campaign, he said, “If I were designing a system from scratch, I would probably go ahead with a single-payer system.” Of course, we are not starting from scratch. Because many Americans are happy with their current health care, moving immediately to a single-payer system is too radical a change to be politically tenable. But for those who see single-payer as the ideal, a public option that uses taxpayer funds to tilt the playing field may be an attractive second best. If the subsidies are big enough, over time more and more consumers will be induced to switch. Which raises the question: Would the existence of a dominant government provider of health insurance be good or bad? It is natural to be skeptical. The largest existing public health programs — Medicare and Medicaid — are the main reason that the government’s long-term finances are in shambles. True, Medicare’s administrative costs are low, but it is easy to keep those costs contained when a system merely writes checks without expending the resources to control wasteful medical spending. A dominant government insurer, however, could potentially keep costs down by squeezing the suppliers of health care. This cost control works not by fostering honest competition but by thwarting it. Recall a basic lesson of economics: A market participant with a dominant position can influence prices in a way that a small, competitive player cannot. A monopoly — a seller without competitors — can profitably raise the price of its product above the competitive level by reducing the quantity it supplies to the market. Similarly, a monopsony — a buyer without competitors — can reduce the price it pays below the competitive level by reducing the quantity it demands. This lesson applies directly to the market for health care. If the government has a dominant role in buying the services of doctors and other health care providers, it can force prices down. Once the government is virtually the only game in town, health care providers will have little choice but to take whatever they can get. It is no wonder that the American Medical Association opposes the public option. To be sure, squeezing suppliers would have unpleasant side effects. Over time, society would end up with fewer doctors and other health care workers. The reduced quantity of services would somehow need to be rationed among competing demands. Such rationing is unlikely to work well. FAIRNESS is in the eye of the beholder, but nothing about a government-run health care system strikes me as fair. Squeezing providers would save the rest of us money, but so would a special tax levied only on health care workers, and that is manifestly inequitable. In the end, it would be a mistake to expect too much from health insurance reform. A competitive system of private insurers, lightly regulated to ensure that the market works well, would offer Americans the best health care at the best prices. The health care of the future won’t come cheap, but a public option won’t make it better. "

http://www.nytimes.com/2009/06/28/business/economy/28view.html

[Edited on June 27, 2009 at 10:33 PM. Reason : ,]

6/27/2009 10:33:31 PM

^ I gotta say, I agree with Mankiw.

6/28/2009 11:43:43 PM

What would it take for multi-state insurance? The simple agreement among states to mandate the same coverage?

7/1/2009 1:16:31 PM