Wednesday 19th of December 2018

Should We Have a National Market for Health Insurance?

For most politicians, it’s currently expedient to sensationalize the national situation as a dire “crisis.” Given this zeitgeist, you might find it surprising to learn that the U.S. Census Bureau reported recently that the number of people in the U.S. with health insurance actually increased by 3.6 million in 2007. Without a doubt, that is good news. But, to others, this news is not really something to jump up and down about because over three million of those people received their coverage from a public program.

Path to Government-Sponsored Healthcare

Many financial experts argue that the United States is on a slippery slope toward government-sponsored and taxpayer-funded care. The only way to combat this, they say, is to give the 45.7 million uninsured Americans more options to purchase private coverage. The government can create a climate conducive to more private competition in two ways. The states could do their part by reducing the regulatory burden on insurers so they can provide cheaper and higher quality coverage. At the federal level, the government could revise its tax policies to reflect the changes in the modern economy.

Will It Work?

So will government reforms to facilitate competition in the healthcare sector really work? Research seems to support the idea. A new study out of the University of Minnesota found that the government could add a whopping 12 million Americans to the number of insured citizens without spending a dime of taxpayer money. How? By allowing consumers to purchase health insurance plans across state lines, thus enabling them to shop for more affordable policies.

What Drives up the Cost of Coverage

The cost of insurance policies can be directly linked to state regulations that dictate what providers and services insurers must cover. More regulation with less competition means higher prices. For instance, an average policy in New York, a heavily regulated state, costs $388 per month, over three times what you would pay for the same policy, $98 per month, in the less regulated Iowa. Every state in the U.S. has different regulations mandating that insurers cover specific services that range from hair prostheses to maternal care. In all, there are 1,900 coverage mandates nationwide. The Council for Affordable Health Insurance has estimated that these mandates add 20%-50% to the cost of coverage.

Government’s To-Do List

States need to present consumers with more healthcare options that can fit into their budgets instead of conforming them to the priorities of politicians. Aside from removing the barriers to interstate health insurance, government could also improve the portability of insurance. For one, the government could change the tax subsidies directed to people with employer-sponsored insurance and turn them into refundable tax credits. This would help many of the millions of people without insurance buy policies that cannot afford it now.