One popular conservative response to the call for a health care plan is to talk about allowing health insurance to sell policies across state lines. They respond with this item because, I think, they by-and-large like the idea, and it gives them something to talk about when the question comes up. Providing health care is a hard policy question, and finding a response that doesn’t dwell on ugly truths and/or bore your audience isn’t that easy. Currently, an insurance policy has to conform to regulations in each state. What proponents mean when they say “selling over state lines,” is that, as long as the policy conforms to the rules in the state where the company is located, the company can sell the policy to consumers in other states.
But selling insurance policies over state lines isn’t a good idea. Proponents paint the picture of a robust market where competition drives prices down. But this probably isn’t what the future would hold. We’ve seen the likely result in the context of the credit card industry: a regulatory race to the bottom where the insurers congregate in the state that gives them the most pro-insurance company regulations (which are often, of necessity, a bad deal for consumers).
Ezra Klein described it as follows:
[Conservatives] want insurers to be able to cluster in one state, follow that state’s regulations and sell the product to everyone in the country. In practice, that means we will have a single national insurance standard. But that standard will be decided by South Dakota. Or, if South Dakota doesn’t give the insurers the freedom they want, it’ll be decided by Wyoming. Or whoever.
This is exactly what happened in the credit card industry, which is regulated in accordance with conservative wishes. In 1980, Bill Janklow, the governor of South Dakota, made a deal with Citibank: If Citibank would move its credit card business to South Dakota, the governor would literally let Citibank write South Dakota’s credit card regulations. You can read Janklow’s recollections of the pact here.
Citibank wrote an absurdly pro-credit card law, the legislature passed it, and soon all the credit card companies were heading to South Dakota. And that’s exactly what would happen with health-care insurance. The industry would put its money into buying the legislature of a small, conservative, economically depressed state. The deal would be simple: Let us write the regulations and we’ll bring thousands of jobs and lots of tax dollars to you. Someone will take it. The result will be an uncommonly tiny legislature in an uncommonly small state that answers to an uncommonly conservative electorate that will decide what insurance will look like for the rest of the nation.
For those who put (in my mind) too much faith in the market, this can’t be what will happen. If the widget makers in South Dakota make low-cost but toxic, low-quality widgets while the widget makers in California make high-quality but expensive widgets, why shouldn’t consumers get to take their pick? Primarily because health care has a lot of qualities that make such a choice less than straight forward: the prices are opaque, consumers are going to have a tough time anticipating their needs, consumers aren’t doctors with an understanding of the medicine involved, health care is often not an arm’s length transaction you can walk away from if the terms aren’t to your liking.
Klein reports that a Congressional Budget Office study suggests such legislation “would not change the number of insured Americans or save much money, but it would make insurance more expensive for the sick and cheaper for the healthy, and lead to more healthy people with insurance and fewer sick people with insurance.” I’ve seen some take exception to the idea that the healthy should subsidize the sick; but that’s pretty much the whole idea behind insurance.
Also need to keep in mind that while your insurer could be located anywhere, for the most part, actual care is generally delivered locally. So the doctors and other providers in your city need to have a contract with your insurer. So instead of your doctor’s office needing to have enough office staff to deal with the dozens of different insurers and plans they deal with now, they will need to deal with hundreds, more????? different plans from insurers they may have never dealt with before? If you think it’s difficult now for your provider to make arrangements with your insurer to preauthorize a surgery, or prescribe an expensive medicine that requires “step therapy”, etc – well, how would you like to increase that hassle by an order of magnitude or more?
Can’t we all just agree that it’s time for a sensible single payor plan?
But doctors select which insurers they accept. Mine supports only the 15 or so biggest plans, and those plans are built into his practice management software, so it’s no burden to deal with them. He does not accept the lesser Indiana (Obamacare) plans like I have because they are rinky-dink outfits that seem to come and go and morph (MDWise, Caresource, Advantage)
As for single payor, in theory, sure. Even socialism works, in theory. But human greed ruins everything. The best example of single payor in the US is the VA system, which, under Mr Obama, became a national embarrassment, providing abysmal care, lying in reports, and persecuting whistle blowers.
“Can’t we all just agree that it’s time for a sensible single payor plan?”
I most respectfully disagree. Single payer might be the answer. For now I’d rather stick with private insurance and the myriad of choices they offer.
Other than Medicare, Medicaid, and the VA.
Keep in the mind that the Dutch went from a single payer to an ObamaCare model.
So you think it makes sense that a significant portion of health care spending goes not to to actual heath care services, but instead to the army of clerical workers needed to manage the claims and payment processes between health care entities and insurance entities?
Question: Are the Dutch people more satisfied with their healthcare now, or before the change? What triggered the change?
My answer is I am very comfortable using private insurance for a wide swath of Americans.
Many other countries use the same model and it can work better than single payer.
And I’d be comfortable expanding Medicare and Medicaid in bits and pieces.
The Netherlands and Switzerland operate national health insurance plans. But they differ considerably from the ACA. Insurance coverage is mandated and universal. In Switzerland a citizen that does not pay their insurance premium will have their wages garnished.
Most health insurers in the Netherlands are nonprofit and rates are set by the government. To a great extent, insurers in these countries are more like healthcare benefits administrative services companies. Large insurance companies that manage healthcare plans for an administrative fee while the employer group self-funds the cost of care.
The Swiss and Dutch healthcare financing model is much closer to American Medicare than the ACA. Medicare is the best model for single payor healthcare. It is one-third of the way there already. Medicare Part E (Everyone). It is perhaps the largest single health beneficiary pool in the world and has among the lowest administrative costs 2%. ACA plans struggle to keep admin costs under 13%.
From the research I found, Dutch administrative costs were about 2%. A good number and an indication that it is an effective model.
Medicare is administered by private insurers processing claims as Medicare Administrative Contractors. So Medicare Part E would look a lot like today’ s Medicare and the Dutch and Swiss Systems.
The problems with American healthcare financing and delivery are legion. It is the dictionary definition of an intractable problem. An effective model that contains costs and provides universal coverage will NEVER be implemented. The nation rejects reciprocal responsibility and codes its illusory tolerance for The Other with meretricious, malleable and eliding moral distinctions. Not a crucible of concern but rather a crooked deck with just one suit of kings, jacks palmed and aces up only a handful of sleeves.
I love this.
Of course it will be a mess. We aren’t dealing with actually trying to make healthcare better, this all has to do with politics. Republicans spent seven years whipping their base into a fury with how much the ACA was destroying America.
In their defense, it worked in a big way with voters. Only now, as it’s on the way out the door, are we hearing about the people who Obamacare helped. Where was the “Republican saved by Obamacare” during the election?
It does occur to me that the Democratic Party needs to solve their messaging issue, and fast, because they will shortly be blamed for the upcoming Republican healthcare disaster, on top of the Republicans being “forced” to do something because “Obamacare was so bad”.
The credit card industry is an apt analogy for how bad things will end up being.