Memo to Gov. Baldacci: Health Insurance on the Web
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Wall Street Journal
May 28, 2003 REVIEW & OUTLOOK
Health Insurance on the WebWashington is in the throes of one of its periodic preoccupations with the health-care uninsured. But before it falls for Dick Gephardt's mega-tax hike for "universal" coverage, we'd like to suggest a better idea: Allow insurers to sell policies online, to anyone in the country.America's 41.2 million uninsured are a worry, but the causes aren't poverty or a lack of compassion. The main problem is the structure of the insurance market, especially the state government regulations that make health insurance prohibitively expensive to buy.New Jersey's regulators, for example, have the power to tell insurers what kind of policies they must offer, and its regulators can enforce those restrictions on companies from other states trying to sell policies to New Jersey residents. That's why you can buy a mortgage or an automobile on the Internet from anywhere in the country, but you still can't shop around for a family health policy.Over the past 40 years, state legislatures have passed more than 1,500 mandates that direct health insurers to cover specific diseases or medical procedures -- from acupuncture to fertility treatments to chiropractors. Insurers must raise premiums to pay for this, making coverage too expensive for many small businesses and the self-employed. The insurance industry says that nearly one in four Americans has no health coverage because of the cost of state mandates.States like New Jersey also dictate how companies set rates. Under "community rating," regulators make insurers charge everyone the same amount -- whether the policy buyer is 22 years old and thinks he'll live forever or is 64 and needs a hip transplant. Because insurers must assume worst-case scenarios, everyone is charged a higher amount.Then there are "guaranteed issue" rules that require insurers to accept everyone who applies, no matter how sick. This sounds great. But if people know they can get insured when they're sick, they're less inclined to buy insurance when they're healthy. This shrinks the overall insurance pool, raising prices again. States like New Hampshire and Kentucky repealed guaranteed issue after it nearly wrecked their insurance markets.The Congressional Budget Office estimates that for every 1% increase in the cost of health insurance, 200,000 to 300,000 Americans drop from the insurance rolls. The numbers clearly show that states with onerous regulations have higher premiums, and higher growth in their uninsured population.Which is where the Internet comes in. Happily, many states have shunned feel-good regulations and let competition thrive. While a waitress could pay from $370 to $1,627 a month for a family policy in wacky New Jersey (which has both guaranteed issue and community rating), across the border in sober Pennsylvania she'd pay as little as $100. All that stands in her way are regulators who say she can't.A bill allowing Americans to buy insurance from whatever company in the nation offers the best deal would make policies affordable to millions of uninsured; it would also put pressure on all states to make their markets competitive. Any states' rights concerns are trumped by the Constitution's commerce clause. Critics will argue that cross-state buying will make it impossible for victims of insurance fraud to sue. But all the legislation needs is a provision giving consumers the right to seek legal redress in their home states, no matter where the insurer is located.Congress may even be catching on. We're told that House Speaker Dennis Hastert was turned on to the idea by eBay CEO Meg Whitman, and that House Republicans are considering legislation. What are they waiting for?URL for this article:
http://online.wsj.com/article/0,,SB105408207813561100,00.htmlCopyright 2003 Dow Jones & Company, Inc. All Rights ReservedFor information about subscribing go to http://www.wsj.com
I'd love to see federal legislation that would allow me to contract with another person or corporation PRIVATELY without the consent of my state legislature!
Hey Pachyderm,Maybe you would like the AHP (Association Health Plan) proposal.It's coming out of DC and allows membership in an association to qualify you for a national health insurance group.I think it works on the regs of the state in which it was originally written.
Hey Melvin,It takes a big person to say "I screwed up. We were wrong. We created the problem, and now we've got to undo it."They screwed up, they were wrong, now we've got to undo it.Who are they, the legislature of 1993....a decade ago. The committee then called Banking and Insurance. They enacted "Guaranteed Issue" and "Community Rating", the Mother of all Mandates.I got a call responding to an editorial in the Sun Journal from an agent who was shouted down for opposing the measures by a legislator who later became speaker of the house.But it will never, never, ever be to admit that they have met the enemy, and it is them.I see "them" every day, unfortunately we lose a lot of votes, and when we win one, JR immediately tables it.Conversely, I'm proud to say I sit to the immediate right of Henry Joy and am a charter member of the "Brake light Brigade".Look for some action from TAP.
I hear that the hospitals and the insurers are about to cut a deal with the administration. If that happens, this train wreck will be law by this time next week.I hope on this one the Republicans in the Legislature don't compromise. This so-called plan is flawed. If it works, which I think is unlikely, the Democrats will get the credit anyway. It is best for Republicans to oppose the bill so it will be clear who is to blame when the wheels come off.
George - Rather than just "opposing" Baldacci's health plan, the GOP should propose and support viable alternatives. In other words, the GOP needs to stand for something on this issue. And theirs must be a principled stand.As for hospitals and insurers compromising on this health plan? Unless the compromise is radical - beginning with the tabling of this measure until it's had a thorough public rinsing - I hope the hospitals and insurers stand firm. Especially the hospitals. Insurers can always leave Maine and do business elsewhere. Maine hospitals don't have that luxury. I heard a few hospital administrators at a public hearing remind us that, once destroyed, it's impossible to reconstruct a hospital and its impact on the community.skf
quote:Originally posted by Editor:
George - Rather than just "opposing" Baldacci's health plan, the GOP should propose and support viable alternatives. In other words, the GOP needs to stand for something on this issue. And theirs must be a principled stand.
I agree. I understand Rep. Glynn is working on a Republican alternative.
How about this for a viable alternative.www.simplecare.com[ 05-29-2003: Message edited by: hatchcar ]
On MaineWatch tonight, Trish Riley said that a deal has been struck with the hospitals and the insurers for their support. The global budget is out of the plan. The 4.1% tax on insurance premiums will be delayed until people are actually enrolled in the plan and the tax may be passed along to consumers under certain circumstances.
Then, what is the point of this plan? If they can't control costs, then how are they going to pay for all of the free care? This is spinning out of control.[ 05-29-2003: Message edited by: threeputt ]
quote:Originally posted by threeputt:
Then, what is the point of this plan? If they can't control costs, then how are they going to pay for all of the free care? This is spinning out of control.
Riley says that much of the cost control remains in the plan. We'll see.As for the free care: you have to realize that the state is already providing free care to thousands of people. The 4.1% tax and the new federal matching funds that will come will amount to a large amount of money to provide care to more people and the plan assumes that many of those people and their employers will pay part of the bill. What happens if the cost is higher than the revenue is the big open question.
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It takes a big person to say "I screwed up. We were wrong. We created the problem, and now we've got to undo it."The closest any politician will ever come to saying that is "I'm not perfect. I've made some mistakes in my life." And it will usually refer to being caught in a personal indiscretion. They didn't cover it up "perfectly", and they made some "mistakes" that led to them being caught.But it will never, never, ever be to admit that they have met the enemy, and it is them.I learned long ago how easy it is to say I screwed up, how pleasant it can be, and how it can flabbergast your detractors.I only wish the Augustans would figure that out.THAT would be as good as it gets.