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Monday, July 25, 2005

Sensible Health Care Reform?


The idea behind the legislation, sponsored by GOP Representative John Shadegg of Arizona, is disarmingly simple: Allow Americans to buy health insurance from vendors in any one of the 50 states. Right now Americans who aren't lucky enough to get insurance from large employers or poor enough to qualify for Medicaid find themselves at the mercy of the legislators and insurance commissioners of the state in which they happen to live. This can be OK in states that exercise this regulatory function judiciously. But in others, the young and working poor find themselves effectively priced out of the market by special-interest regulations dressed up as consumer protections. New York requires every insurance policy sold there to cover podiatry. Acupuncture coverage is mandated in 11 states, massage therapy in four, osteopathy in 24, and chiropractors in 47. There are an estimated 1,800 or so such insurance 'mandates' across the country, and the costs add up. 'It is always the providers asking for the mandate; it is never the consumer,' says health policy guru John Goodman, who has testified before legislatures considering such rules. What's more, states like New Jersey and New York add two more ultra-expensive requirements: 'Guaranteed issue' allows people to wait till they are sick and then buy insurance; 'community rating' prevents insurers from charging different prices to people of different ages and health status. These may sound like compassionate ideas, until you realize they make insurance so expensive that millions of people are exposed to financial ruin because they aren't allowed to buy basic policies focused on catastrophic costs. How expensive? A 2004 study by eHealthInsurance.com found that a typical insurance policy ($2,000 deductible, 20% co-insurance) for a family of four could be had for as little in as $172 per month in a reasonably regulated locality like Kansas City, Missouri. But in New York that family's only option--managed care--would run $840 per month, and in New Jersey family policies run a whopping $1,200-plus. We bet Democratic Representative Frank Pallone's constituents in New Jersey would be interested in his view that insurance in his state is only 'slightly' more expensive than elsewhere.
I would be interested in more analysis on this. From what is here, it seems to me like a very good idea, and one that could dramatically reduce the cost of health care. I know that Washington State is one of the over-regulated ones, and regulated especially stupidly at that, so it would have a direct benefit to me. If anyone has any good reasons why this is a bad bill, I would be interested in that though. I must say that I have a small degree of trepidation about this. It seems to me that this bill makes too much sense and would be too easy to put into place. I have a hard time believing that anything so good could come out of DC, so there must be a catch somewhere. Update: Ezra Klein has blogged on this, without satisfactory reasons to be against it, in my opinion. However, a discussion has now started in the comments that hopefully will prove enlightening.


Blogger Cubicle said...

If insurance falls under the commerace clause, I wounder why states are allowed to keep the rules in place.

I can tell you on bad thing that would happen, all the insurance agenices that had made money in one state would immeadatly lose all of their business.

7/25/2005 05:10:00 PM  
Anonymous Blue Cross of California said...

The health care reform is a great way to help our health care system. There are too many individuals which lack coverage and we need to work on fixing this problem.

11/28/2005 06:20:00 PM  

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