June 23, 2004,
Deregulating health insurance.
How many more Americans could afford health insurance if they weren't forced to buy coverage they don't want? Rep. John Shadegg (R., Ariz.) aims to find out. Today, he and House Speaker Dennis Hastert (R., Ill.) introduce legislation whose title forms the acronym, the "CHOICE" Act to allow individuals to avoid unnecessary regulatory costs by purchasing health insurance from whatever state they wish. The result would be more affordable health insurance for everyone and fewer uninsured.
You've heard of Doctors Without Borders. Get ready for Health Insurance Without Borders.
Five different states require consumers to buy coverage for wigs. Yes, wigs. Other types of required coverage include alcoholism (45 states) and infertility treatment (14 states), contraceptives (25 states), acupuncturists (10 states), marriage therapists (14 states), massage therapists (2 states), and osteopaths (21 states). States have passed over 1,500 laws mandating that health-insurance purchasers (individuals and employers) buy particular types of coverage they may or may not want, usually at the behest of those who provide the covered service.
Studies have found these mandates increase the cost of coverage by 15-30 percent, and prevent up to 25 percent of the uninsured from purchasing insurance. The situation is so bad that a few years ago Vermont Gov. Howard Dean (D) who never met a big-government idea he didn't like begged Vermont's legislature to stop enacting mandates because they were making coverage too expensive.
Currently, only very large employers can avoid these regulatory costs. Everyone else must pay up, go without health insurance, or move to another state.
The CHOICE Act would change all that by allowing any willing consumer to buy coverage from any willing insurer, nationwide. If you live in Maryland and are happy paying for all 58 coverage mandates, more power to you. But if you would rather save money on your premiums, you can purchase insurance regulated by Idaho (only 10 coverage mandates).
Giving individuals and employers this choice would dramatically lower the cost of health insurance of hundreds of millions of consumers, and the number of uninsured.
For his good deed, Rep. Shadegg can expect to be severely punished. No politician whose signature achievement in life has been to force his fellow man to purchase wig coverage is going to sit still while somebody tries to restore that choice to consumers. State legislators and regulators will do everything they can to kill this bill because it would shift power away from them to individual consumers, and force them to bow to the choices of consumers in the same way businesses do.
Despite what will be considerable opposition, the CHOICE Act has a lot going for it. Increasing consumer choice is the right thing to do. With health insurance premiums climbing at double-digit rates year after year, the health care sector cries out for regulatory relief. Finally, the concept has friends in high places, including Kentucky Gov. Ernie Fletcher (R), who sponsored a predecessor to the CHOICE Act while in the House, and (reportedly) President Bush. An aggressive push by these two chief executives could give the concept a major boost.
Rep. Shadegg could give the bill an additional boost. As introduced, it would apply only to those purchasing health insurance in the individual market. Yet employers and other group purchasers should have the same choice. Bringing group purchasers into the game could give the bill additional momentum by providing association health plans which are further along the legislative process the unitary health-insurance regulation its supporters desire while overcoming conservative objections about federalizing health-insurance regulation.
Michael F. Cannon is director of health-policy studies at the Cato Institute.