Thursday, November 20, 2014

ACA/Obamacare: Revisiting Interstate Commerce and Buying Health Insurance Across State Lines

“The second open enrollment period for health insurance under the Affordable Care Act is underway, and the law is more unpopular than ever. According to Gallup, a record-high 56 percent of Americans now disapprove of the 2010 law.”

“Republicans in Congress — less inclined than some deep thinkers to sneer at "the stupidity of the American people" — unanimously opposed the Affordable Care Act when it was enacted, and were rewarded in the 2010 midterms for their steadfastness. In the ensuing four years, Republicans repeatedly called for replacing Obamacare with alternatives expanding choice, competition, and market reforms — and the voters just rewarded them again.

Of course, even with their new majorities in Congress Republicans will have to contend with President Obama's veto pen. So a bill "repealing every last vestige of Obamacare," as Senator Rand Paul of Kentucky exuberantly proposed on Election Night, isn't in the cards anytime soon. But that doesn't mean there is nothing to be done, particularly since the Supreme Court has agreed to hear a new challenge to the law, one that could potentially cause Obamacare to topple under its own weight.”

“One way or another, changes in the law are coming. Not all of them have to be bitterly controversial, or provoke cries of Republican overreaching. Here's a suggestion: Allow individuals to buy health insurance from out of state.

In an age when consumers can purchase almost anything from vendors almost anywhere, government policies protecting insurance companies from interstate competition are indefensible. Lawmakers would be laughed out of office, rightly, if they insisted that the only CDs, cellphones, or ceramics their constituents could buy were those manufactured in the state where they lived. All sorts of financial products are routinely acquired without to state borders proving an impenetrable barrier: life insurance, service warranties, stocks and bonds, bank accounts, credit cards. Why should a medical plan be any different?

There is no good reason to deny freedom of choice to Americans when it comes to buying health insurance. Yet licensing rules in virtually every state effectively prevent individual residents from shopping for health plans in any other state. Consequently, there is no national market for health insurance. There are only autonomous state markets, many dominated by near-monopolies that can get away with offering lower quality insurance at ever-higher premiums.

As Michael Cannon of the Cato Institute points out, it isn't only insurance companies that are sheltered from the rigors of competition. Insurance regulators are insulated too. State governments, inveigled by special interests, can burden health insurance policies with more and more mandatory benefits, driving up premiums to cover services that many consumers would never willingly choose.

In Massachusetts, for instance, health insurance policies must cover at least 49 specifiedtreatments and types of providers, among them midwives, infertility treatments, hair prostheses, and chiropractors. But what if all you want is a plain-vanilla health plan akin to those sold by insurers in New Hampshire (only 38 state-required health-care mandates) or, better yet, in Michigan (24) or Idaho (13)? Tough luck. That's what it means when interstate commerce in health insurance is blocked.” - Buy Your Health Insurance Out of State, Jeff Jacoby, 11/19/2014,

Link to the entire article appears below:

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