Health care is one of the main problems that we have to solve. Here are some questions and maybe some answers.
Health Insurance Blues: Give Choice a Chance
By Chuck Muth
CNSNews.com Commentary
August 06, 2007
The nation's largest health insurer, UnitedHealth Group, wants to buy
Sierra Health Services in Nevada. The merger would give the new company
a virtual monopoly over health insurance in the Silver State, reducing
competition, which usually means increasing costs.
Supporters,
however, say the merger will actually reduce costs and improve service
due to the efficiencies of scale the giant conglomerate will enjoy.
Hmm. That doesn't exactly seem to be the case when it comes to the publik skools now, does it?
Nevertheless,
being a free-market kinda guy I haven't yet heard any compelling reason
for the government to block this merger of two private companies. And
the fact that the self-serving Culinary Union is now in open opposition
to the takeover tends to weather-vane me in the opposite direction.
No,
the answer to legitimate concerns about giving UnitedHealth a virtual
monopoly over the health insurance market in Nevada isn't to block the
takeover of Sierra Health Services, but to open Nevada's market to
interstate competition. In this age of Amazon and eBay, it makes no
sense whatsoever that Nevadans are prohibited from buying health
insurance from a company located in another state.
And yet,
thanks to an anachronistic law passed in 1945, the McCarran-Ferguson
Act, combined with the lobbying power of Big Insurance, there is no
competitive interstate insurance market similar to the highly
competitive interstate banking market. For example, Nevadans can deal
with a relatively small local bank or choose to deal with a big
interstate bank such as Bank of America or Wells Fargo. Both entities
thrive in Nevada and consumers, armed with market choice, benefit
greatly.
Not so when it comes to health insurance companies. Why not?
Because
state legislators want to retain the ability to force insurance
companies to foot the bill and cover expensive benefits which they
don't have the guts to sock directly to taxpayers. These are called
"mandates" - as in, the legislature makes it mandatory that the
insurance company cover them or the insurance company doesn't get to
operate in Nevada. Yes, legal extortion.
Around the country,
many states force insurance companies to cover benefits ranging from
acupuncture to marriage counseling; from contraceptives to hearing aids
to hairpieces; from podiatry to osteopathy; from chiropractors to even
massage therapy. All in all, there are over 1,800 such mandates found
across the country. And these mandates jack up the cost of insurance,
creating a huge difference in premium costs between some states.
For
example, a recent e-HealthInsurance.com study showed that a healthy
25-year-old male could pick up a basic health insurance policy in
Kentucky for $960 a year. That same policy in New Jersey, however,
would set the lad back a staggering $5,880 a year.
And the Wall
Street Journal noted that the same study "found that a typical
insurance policy - $2,000 deductible, 20% co-insurance - for a family
of four could be had for as little 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."
Why shouldn't a family in New York be able to purchase that far less expensive policy from the Missouri company?
If
you want to shrink the ranks of the uninsured, perhaps it's time to
open the market and reduce the cost so that average people can afford
basic coverage without all the government mandated frills. Instead of
blocking the mergers of health insurance companies in one state,
perhaps it's time to open up the competition among all 50 states?
Rep.
John Shadegg, Arizona Republican, has proposed just such legislation in
Congress; however, Congress in the hands of pro-union/anti-free market
Democrats and is unlikely to act favorably on such a common-sense,
cost-free solution to the health care insurance problem. Which is why
state legislatures should take the lead and open up their own markets
without waiting for the feds.
Let's give choice a chance.
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