There is still a chance that, despite themselves, Congress will do right by the American people by enacting meaningful health insurance reform before this legislative session is over in Washington.
One bill currently before Congress has the potential to open a whole new universe of insurance options for all Americans. HR 2355, the Health Care Choice Act, would allow individuals to buy health plans in states other than their state of residence.
As the health insurance system in America currently works, we can buy health insurance only from licensed entities within our state of residency. This may not seem like an issue until we look at how insurance policies work — or more importantly, who decides how insurance works.
Health insurance is not designed by insurance companies but, rather, by state governments and the laws they set forth. Each state mandates the terms under which health insurance providers within their borders must operate. Each state mandates what options and coverage must be included in insurance plans sold in their state. This lends to a stark inequality in insurance options available from state to state. And it limits every state resident to choosefrom insurance plans that may either cost far too much and provide unnecessary coverage, or costly plans that offer little coverage compared to their medical needs and budget.
Fewer and fewer Americans are willing to, or can afford to, buy these state government-designed policies, so the number of uninsured in America has continued to rise to what is now a record high of 45.8 million.
Under immense social and political pressure to resolve the insurance crisis in America, more state legislators are requiring health insurance coverage for all state residents through new insurance laws — mandating, rather than liberating — health insurance policy.
A recent example is the Massachusetts health plan touted by Gov. Mitt Romney and his Democratic legislature. This package of government-imposed sticks and carrots ignores the reasons people aren’t buying insurance and forces them to buy it anyway. Vermont recently passed a similar bill.
What the United States health insurance system needs, rather than state-by-state pseudo-reform, is a national policy shake-up. That’s what the Health Care Choice Act promises. Allowing individuals to buy health plans in different states creates an open market in health insurance that would be forced to operate as any other free market in the U.S. — more responsive to the needs and demands of the consumer.
The catch — Respecting Federalism. Insurance companies would still have to meet some regulatory standards in their home states, and they would also have to register in any other state where they conduct business. State insurance commissioners would have to verify the company’s financially viability.
Some vocal opponents, including the American Cancer Society, American Diabetes Association, and the National Mental Health Association are fighting The Health Care Choice Act. Such patient advocacy groups fear that the erosion of state power to impose mandates on health insurance will leave vulnerable patients — those with chronic conditions — exposed to the capitalist nature of business in America.
The American Diabetes Association, for example, argues that without state mandates, insurance companies will slowly slim down their insurance plans to provide only the basic health benefits. This, they claim, would limit access to preventive medical screenings and treatments, thereby causing a rise in hospitalizations and expensive diabetes-related complications such as blindness, heart disease, kidney failure, and even amputations.
Fervent supporters of the current heavy-handed state mandating fail to consider that these mandates are at the center of the problem of skyrocketing health insurance costs. For every mandate, there is a compliance action that must be taken by the insurance company or other appropriate entity, and these compliance procedures cost money. This translates to higher insurance premiums and costs for medical treatment.
Research also contradicts the assertion that insurance companies would reduce plans to minimum coverage, revealing that in a free-market model, insurance companies would realize the business advantage of offering coverage for valuable medical treatments and screenings. And in any scenario that makes affordable insurance available to more Americans, the burden of treating the uninsured is significantly less on the insured.
The Health Care Choice Act isn’t mandate-free, but it pre-empts, rather than promotes, more government intervention. Congress is finally taking it seriously, against tough resistance. Legislators of all stripes should understand that when it comes to health care, expanded choice works better than government control.
Diana Ernst is a Health Care Policy Fellow at the Pacific Research Institute in San Francisco.
