Commentary

Health Coverage Chaos

By Deroy Murdock
This article appeared in the Washington Times, January 23, 2006.
The Republican Congress can’t seem to touch health care without making America sick. While Health Savings Accounts are a recent plus, the long-feared Medicare drug benefit premiered Jan. 1 to widespread panic.

Seniors are confused and frustrated, while fiscal conservatives stand aghast as tax dollars fly from the Treasury like bats fleeing a cave.

Congress can redeem itself with a simple and cost-free cure rather than a expensive complication. The Health Care Choice Act, sponsored by Republicans Rep. John Shadegg of Arizona and Sen. Jim DeMint of South Carolina, would let American consumers buy health insurance across state lines, as they now may shop coast to coast for mortgages.

Shadegg-DeMint would let insurers licensed in one state sell to individuals in the other 49. As such, Congress would use its constitutionally enumerated powers to liberate interstate commerce and transform 50 separate, closed medical coverage markets into one open, national health-insurance market.

The proposal applies to state-regulated health plans, roughly 55 percent of the insured marketplace and purchased primarily by small businesses and individuals, according to America’s Health Insurance Plans, a trade association for the health insurance industry. The other 45 percent of the insurance market are health plans purchased by large employers and labor unions, among others, and, as well as federal programs like Medicaid and Medicare, would not be affected.

“Two-thirds of the uninsured have incomes below 200 percent of the federal poverty level, and most cite unaffordability as the top reason for why they are uninsured,” said Mr. Shadegg, who hopes to succeed Rep. Tom DeLay, Texas Republican, as House majority leader. “Until consumers can purchase their health care like their auto, homeowners, or life insurance, we won’t reform health care; we will only re-regulate it.”

“Just as Delaware became a magnet for banking, some states will become magnets for health insurance,” predicts David Gratzer, a physician and Manhattan Institute senior fellow, and one of this idea’s earliest proponents. “People seem to understand intuitively that it doesn’t matter whether their checks come from Delaware or New York or California. Likewise, the issues around health insurance are cost and availability rather than state of origin.”

Location matters. A health policy for a single Pennsylvanian costs roughly $1,500 annually. Cross the Delaware into New Jersey, as George Washington did in 1776, and a similar health plan costs about $4,000, thanks to state regulations.

“When doctors worsen a patient’s condition, we call it an iatrogenic ailment,” Mr. Gratzer notes. “We lack an equivalent term for when politicians aggravate a problem.”

By mandating benefits, state legislators have swelled the uninsured numbers. As Victoria Craig Bunce and J.P. Wieske explained in their January 2005 report for the Council for Affordable Health Insurance: “Mandating benefits is like saying to someone in the market for a new car, if you can’t afford a Lexus loaded with options, you have to walk.”

Making every health policy cover acupuncture, marriage therapy, or in vitro fertilization, as some states do, looks less compassionate when such adornments drive the humble from the market. CAHI estimates state mandates can raise insurance prices 20-45 percent.

“Guaranteed issue” rules, which let people wait until they ail to purchase coverage, also boost prices. Ditto “community rating.” It slaps the same government-controlled price on insurance for everyone — young or old, fit or fat — in a given jurisdiction. This is as idiotic as charging 16-year-old boys and 60-year-old widows the same auto insurance rates.

Economics aside, Mr. Gratzer praises Shadegg-DeMint’s clinical potential: “The more people who are covered the better. That means fewer people hesitate to get tests or follow up with physicians. Eventually, that will lead to a healthier population.”

Critics argue letting consumers shop for health insurance will launch a dreaded “race to the bottom” as Americans buy inexpensive plans from unscrupulous insurers in unregulated states. But which states, precisely, let health insurers operate like numbers rackets? Of course, consumers could avoid questionable plans in clueless jurisdictions by patronizing reputable, sensibly supervised providers.

So, what’s the cost? Nothing. Unlike nearly every act of this Congress, this proposal spends no tax dollars. Your wallet is safe. For now.

Democrats routinely complain 45 million Americans lack health insurance. Many are between jobs, young, or more prosperous, and decide to forgo insurance. Still, Democrats correctly call this a serious concern for many Americans. The Shadegg-DeMint proposal could be a key solution to this problem.

Democrats should embrace this Republican idea. If they would rather deny the uninsured an expanding array of lower-cost health-coverage options, let them say so this election year.

New York commentator Deroy Murdock is a syndicated columnist with the Scripps Howard News Service and a member of the Advisory Board of the Cato Institute’s Project on Social Security Choice.