THE PLANK AUGUST 1, 2007
I'll have more to say about Rudy Giuliani's health care proposals soon. But, in the meantime, here's one quick thought.
Among his principles for reform is a proposal that would allow consumers to buy insurance from out-of-state sellers. The argument for this approach goes like this: States have all sorts of regulations on health insurance. These regulations make health insurance more expensive. But some states have fewer regulations -- so, if you would like, you should be able to get insurance from another state, where the relative lack of regulations will make insurance cheaper. This, he says, increases "choice."
Well, the premise is true: Regulations drive up the cost of insurance. But what the advocates of this approach don't tell you is that the regulations are there for a reason. They are there to protect consumers from fradulent or unreliable insurers, of which there are many. (These insurers prey upon people with pre-existing conditions, who have such a tough time finding affordable insurance in the first place.) They are also there to guarantee certain minimum benefits -- in part, to keep insurers from using selective benefit design to keep out undesirable risks. Without those regulations, a lot of people with serious medical conditions won't be able to get insurance at all -- which, you might say, is no choice at all.
The regulations are hardly a perfect solution; as the price of insurance goes up, healthy people become more likely to decline it. (That's why you need universal health insurance.) But gutting those regulations is no answer either.
I covered this in a TNR column two years ago, when Rep. John Shadegg introduced a similar proposal to Congress. (I also discuss this idea -- while offering a detailed story of somebody victimized by one of those scams -- in my book.)