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The Easy Fix For Health Care and Why Obama Opposes It

11 August 2009 32 Comments

The health care reform debate is raging.  Despite all the money being spent to convince the American people of Obama’s health care vision, a large segment of society is not convinced.  Why is it hard to convince some people?  Some distrust government, some believe government should not be a part of the health care industry and some believe there are better reforms to be made.  You can put me in all three camps.

There is a change to the way we receive health care that would do way more good than Obama’s agenda and it would not require a bunch of teleprompter speeches and USA Today articles (Pelosi) in order to sell it to the American people, because it is a mechanism that we are all too familiar with. Unfortunately, Obama is completely against it.

Health care could be drastically improved and be made much more affordable if individuals were allowed to purchase health insurance across state lines.

Why We Can’t Buy Health Insurance Across State Lines

Currently, we aren’t able to purchase a health insurance policy from another state.  The main reason for this is because states mandate various things on insurance policies and these vary from state to state.  The National Center for Policy Analysis describes it in the following way:

The cost of individual health insurance varies widely from state to state.  In a January 2006 report, The Commonwealth Fund compared the prices of individual health insurance policies in seven states with varying degrees of regulation.  The price of policies varied tremendously, due mainly to state regulations rather than variation in health care costs.

research illustrates how regulations can impact the insurance market.  But it is no accident — rather it is by design.  In states where health insurance costs are the highest, a portion of the premiums paid is being used to cross-subsidize the premiums of high-risk individuals.

Another WSJ article entitled “Cheaper Health Insurance” provides a few examples of these mandates from 2005 (may have changed since then):

New York requires every insurance policy sold there to cover podiatry. Acupuncture coverage is mandated in 11 states, massage therapy in four, osteopathy in 24, and chiropractors in 47. There are an estimated 1,800 or so such insurance “mandates” across the country, and the costs add up.

To illustrate, a 25-year old male in good health could purchase a policy for under $1,000 in Kentucky, yet in New Jersey it might cost upwards of $6,000.  Simply put, the state’s regulations on health insurance cause health insurance costs to be higher and because you can’t buy insurance outside of your state, you are stuck with higher costs if you live in a state with a high number of mandates; this leads to a lack of affordability for many people.

How An Interstate Market Would Work

It’s simple.  We buy just about everything BUT health insurance in this manner. If you aren’t satisfied with the health insurance options in your own state, you can buy a policy from another state.  We buy every other sort of insurance this way as well as every sort of consumer product.

As in any market for any product, more competition results in lower costs for the consumer.  More options mean more affordability.  As you hear Obama himself discuss in this debate, a public option would result in another option for consumers which would lead to more competition and more affordability.  Opening up the market across state lines would provide a whole heck of a lot more competition than a Federal option!  If more options for Americans were truly his goal, wouldn’t our President be pushing an interstate market?

There are two forces working against enabling an interstate health insurance market:

  1. Most Americans are used to getting health insurance through an employer plan
  2. Politicians, mostly on the left, including President Obama oppose such a market

A Few Notes On Employer Plans

There is nothing particularly wrong about getting health insurance through an employer-based plan.  It makes us feel like we’re getting something from our employer (benefits).

Those who oppose buying health insurance on an individual basis will claim that you’re trying to put the cost on the individual and not the employer.  This is not true.  An employer could reimburse an individual for health insurance costs just as easily as they provide a plan for them.

An interstate health insurance market would provide a myriad of options for individuals buying health insurance, and there are plenty of ways to ensure that employers can still offer reimbursement as an employee benefit.

On a political note, it is the general goal of libertarians and real conservatives to provide more freedom and choice on the individual level.  Typically, the liberal point of view is that government should provide more options and that individuals do not possess the knowledge or desire to make their own decisions.  Acquiring health insurance is no exception to this rule.

Why Obama Does Not Want You To Have Interstate Health Insurance Options

I believe that Obama leans towards the view that more of an individual’s life should be under the watch of the Federal government.  This is especially true when it comes to your health care.  Government health insurance, health care rationing according to government’s view of the “greater good” are just a few examples of this.  By using words that we all identify with such as “affordability” and “increased competition”, many people believe Obama’s intentions are in our best interest.  But are they?

As I mentioned above, Obama often explains that his goal is to offer people more options for health insurance and provide more competition in the market place.  Is this true?  Put your political views aside and tell me why he would not be for you being able to buy health insurance from another state.

In a WSJ article from back in the Presidential campaign during 2008, the author explains why Obama is against an interstate market:

First, he doesn’t believe a market can work in health insurance. He believes it is necessary for the government to look over everybody’s shoulder to make sure patients are getting the care and coverage the government thinks is appropriate at a price the government considers affordable.

When McCain was promoting this concept while running for President, Obama ridiculed him by saying “he wants to run health care like they’ve been running Wall Street.” By Wall Street, I assume Obama merely means a marketplace environment. Is that really that bad? Isn’t that how we run just about everything?  Is the auto insurance market a disaster because it’s run “like Wall Street”???

You Have To Wonder What The Real Agenda Is

If the idea of allowing interstate competition seems logical and simple to you, it’s because it is.  So, why isn’t this happening?  There are politicians like Senator DeMint of South Carolina pushing this concept, and Senator McCain presented it during last years presidential campaign.

I think it’s obvious that increased competition and additional options for Americans isn’t the main goal of many of our leaders.  What is then, the real agenda behind a “public option”?  Could it be a tool to transition towards complete government-run health care?  Is that really so far fetched?

Forget the speeches and the political rhetoric.  Instead, ask your representative why we can’t buy insurance across state lines.  If they can’t convince you why interstate health insurance competition is a bad thing, tell him or her to expect to be out of a job come 2010.  If they can’t convince you how a Federal public option results in more options for you than opening up the other 49 states, tell him or her to expect to be out of a job come 2010.

Do you want to be able to buy health insurance like you buy every other product or would you rather be told what medical procedures you can or can’t qualify for by a government beaurocrat?  Better make your voice heard now before it’s too late…


  • Technology said:

    It seems like people are understanding what they want from the proposed health plan then getting upset over nothing.

  • Zeke2040 said:

    Great post. As I working citizen, I can see nothing good coming from this reform as it is currently being presented. I am also of the notion that health care should be competitive Nationally, not just locally. There is always a better deal for the consumer where there is competition between companies.

  • Zorro for the Common said:

    "I believe that Obama leans towards the view that more of an individual’s life should be under the watch of the Federal government."

    And I believe that you hate poor people and want to see them die.

    There, now that we've both offered dishonest caricatures of our opponents' positions, maybe we can move on and have an intelligent, respectful discussion.

    If you had taken the time to actually understand Obama's position, you would have known that the reason he (and many others) oppose an interstate health insurance market is because it would lead to a "race to the bottom", whereby insurers would all move to the states with the loosest standards, and other states will be forced to lower their standards to compete. You "assume" that when Obama analogized McCain's plan to Wall Street, he was simply referring to the marketplace in general. But Obama was very clear as to why he was making the comparison. From the second debate (http://www.twilightearth.com/archive/freelance-wr

    "And the reason that it’s a problem to go shopping state by state, you know what insurance companies will do? They will find a state — maybe Arizona, maybe another state — where there are no requirements for you to get cancer screenings, where there are no requirements for you to have to get pre-existing conditions, and they will all set up shop there. That’s how in banking it works. Everybody goes to Delaware, because they’ve got very — pretty loose laws when it comes to things like credit cards. And in that situation, what happens is, is that the protections you have, the consumer protections that you need, you’re not going to have available to you."

    It's a problem that 40M Americans have no insurance. But it's also a problem that an even higher number of people are underinsured. They think they have insurance, only to discover once they get sick that they don't have the coverage they need (or that they thought they had). Allowing interstate purchases will only exacerbate that problem. And as for the analogy to auto insurance, the difference is that if I don't have auto insurance, I'm not allowed to drive. But if I don't have health insurance, that doesn't mean I won't incur costs for my healthcare.

    I agree that it sounds intuitively unfair to describe one of the goals of a health-insurance system as forcing healthy people to pay more in order to subsidize the less healthy. But that's misleading. For one thing, if we create a system whereby the healthy can buy insurance cheaply while the sick can't get anything, we'll all end up paying for it eventually, in the form of ER care, Medicaid, etc. Second, we don't know in advance which group people will fall into. Let's say that you and I are both healthy, and therefore pay low premiums. All of a sudden you get hit by a bus, or are diagnosed with cancer, or your wife develops complications with her pregnancy. Should you lose your insurance because, through no fault of your own, you just became a lot less profitable to the insurance company? Conversely, is it unfair to ask me to pay more to subsidize you? After all, it could just as easily have been me who got hit by that bus.

    Which gets to the final reason to oppose the "every man for himself" vision of healthcare that you propose: because it leads to an America that is cruel and heartless, and that's not the America I know.

  • Bert said:

    "…it sounds intuitively unfair to describe one of the goals of a health-insurance system as forcing healthy people to pay more in order to subsidize the less healthy."

    But isn't the entire purpose of insurance to share risk? Health insurance just for the healthy, or just for the unhealthy, isn't insurance at all.

  • Eduardo said:

    Very well said, Zorro! I agree with you.

  • Melissa said:

    “We buy every other sort of insurance this way as well as every sort of consumer product.”

    I think you need to learn a little bit more about how insurance is sold and regulated before advocating this type of competition. If I live in MA and decide I do not like my auto insurance options, I can’t just go to RI and buy a policy there. Sure, companies write across state lines but must file in every state – which changes the product that is sold. State Government still has a say in what is mandated in every policy.

    There are some experts in the insurance industry who do believe that changing the market model of Health Insurance would solve the health care issue. However there are MANY problems that simply changing the market model does not address.

    IMO – government would still going to “meddling” in the process, but on a smaller scale and in a more private space. When is the last time you checked in with your Division of Insurance?

    As for “easy fixes” – there aren’t any.

    *these views and my own do not necessarily reflect those of my employer

  • David said:

    We should have the public option to buy interstate health care. Can we not meet in the middle somewhere on this? If we were able to buy insurance in other states it would force companies to compete.
    In my state of NC Blue Cross owns 70% of the market share. It’s a monopoly. I know it’s the same way in other states. Force them to compete with other state monopoly companies and see what happens. Lower premiums.
    If we have lower premiums a good percentage of the 40 million un-insured could afford it. It doesn’t mean that they will buy it. More small businesses could offer employees insurance. Doesn’t mean all will. It would create less of a strain on Medicaid and Medicare to cover the the un-insured if several millions of people could now afford insurance.
    Other insurance companies have ratings that have a governing authority over them. AAA, AA, etc… It helps us know how to buy. Quality will improve, more service for less!
    Government needs to be involved in a small way. To fill in the gap when necessary. You know what? the government didn’t earn one penny of my paycheck last week but it was I who donated hard earned money to it’s programs…Medicaid, medicare, SS and state taxes. I’m use to it now. I don’t want to see people turned away from emergency care if they need it. That’s what it should be for…emergencies!
    By the way…Wall Street has had it’s up’s and down’s throughout it’s history and it has ALWAYS come right back up and increased. Take a look at a chart dating back to the Great Depression up to now and you’ll find a steady increase. Compare Wall Street to SS history from it’s inception. Wall Street is doing better by far friends.

  • Annis DAvis said:

    rticle that explains why Obama opposes this important solution!!
    The more Americans know about this and are informed, we can contact our reps/sen to use this in the healthcare solution!


  • Bill Purcell said:

    I am not an insurance expert. But, it is my understanding “insurance” is simply a “bet” by a company willing to pay if the event occurs. The company gets to keep the money (bet) if the event does not occur. We could institute some national ground rules that would not allow insurance companies to take the bets if they did not agree to cover certain procedures. If you want a insurance policy to include special screenings or tests, let the buyer beware (caveat emptor) and be sure to “bet” on a policy that would include those tests. In other words, let the individual take personal responsibilty for himself. I guess I’m one of those “cruel and heartless and every man for himself” Americans that Zorro for the Common good talks about. I want to know where does it say in the Constitution that health care is a right?

  • MedStudent said:

    As a med student I will say that we cannot ever afford to neglect the poor and the at risk. The bible says that as we do onto the least of these so do we do unto him. Zorro is partly right. Yet, so is the self-professed heart of stone above. Yes, the world is imperfect and there will always be poor, sick and dying people. I dont favor government run healthcare because they still cant figure out that the population dynamics have changed and cant support social security and because judging by how they treat our veterans at places like Walter Reed and our current military personnel (they go off base whenever possible) they cannot be logically entrusted to run another program like national healthcare. I also would like to add here that they admit to massive fraud, mismanagement etc currently in Medicaid and Medicare but somehow are pleading for more control and more money.

    There are many things we can do to improve the system. Tort reform is an area that must be addressed. Interstate healthcare and competition is closer to the American way and our founders ideals than government control. States can change their policies to prevent such abuses of the people more easily than we can create a new division of the government. I also like the idea of taking the old Health Service Corps (downsized in the 1980s) and expanding them to provide service for the ~13% of uninsured/indigent people. Because it would be government run the litigation costs would be much lower and doctors would not accumulate debt by pledging a commitment to the Corps.

  • 20smoney said:

    Thanks for your comments MedStudent!

  • NJShibaOwner said:

    Wouldn't allowing insurance to be bought across state lines require that we set up a *new* federal agency to monitor and administer these? Woudln't it also mean taking the rights away from the states to regulate insurance and usurp it with federal oversight? Less state control, another government agency? I dont understand why the Republicans are for this.

  • Ross said:

    Zorro's response reveals a stunning lack of understanding of free market dynamics, and appears to egregiously under appreciate the intelligence and capability of the people to ferret out good deals for themselves from competent, well-intentioned companies.
    Zorro and Obama both fail to appreciate a free market and it's forces. Obama mistrusts the free market, or fears it. Perhaps because a free market always exhibits both extrema: the best and the worst of man.

    But in a free market, people who buy the product or service choose the winners, and this is key and is dependable as the sunrise. People will find and buy the best policies for themselves. Period.
    Sure states with looser standards would attract the attention of some insurers; those companies less concerned with a loyal following and more concerned with a fast buck, but the American way of competition and innovation would insure, just as it has whenever markets are free to compete, that those insurers that want a good reputation and a loyal client base would prosper. Who hasn't experienced the gravitation toward the company, product, or service that comes to them highly recommended by a trusted friend or associate?
    No, a free marketplace of interstate competition IS the American way, and IS the only viable solution to the high cost of insurance. This coupled with tort reform, simultaneously enacted, is the solution.
    It's the lawyers and lobbyists that don't like this idea, and it's a clear indication of who actually runs this nation that both of these problem solving mechanisms are panned by Congress and the President, and disparaged by ideologues living in a fantasy world where compulsory participation is mistaken for charity.
    Government intervention is needed only as a referee in the game, but NOT TO PLAY in it. Government is a disaster at running any program of appreciable size. Name ONE standard of living program run by the government that is on budget, or even within 1,000 percent of the original budget. Can you name one?

    Leave it to the free market to solve the insurance problems, without restrictions like tort law and prohibitions on interstate competition, and the problems WILL BE SOLVED, by the people, for the people.

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  • Brad said:

    wouldn't a public option be a form of competition to the state health insurers?

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