sds:
From the article:According to an analysis of one of Mr. Shadegg’s proposals by the Congressional Budget Office, in states where insurance is expensive because laws require more comprehensive coverage, prices would likely increase for less-healthy people who continued to buy insurance from in-state insurers.Why? Healthier adults would buy cheaper policies out of state, the budget office said, while less-healthy adults would stick to in-state insurance because it covers the services they need. Premiums would rise for the latter group as the risk pool became less healthy and more costly.
“From a consumer protection point of view, the result of allowing sales across state lines would be that the state with the least restrictive regulatory scheme would have an advantage and could undercut all the others, and you would have a race to the bottom,” said John Rother, executive vice president of policy and strategy for AARP, the lobby for older Americans, which supports the Democrats’ legislation and markets insurance itself.
First of all, my guess is that political pressure would force many states to loosen their requirements to compete with other states. Second, wouldn’t we be better off if insurance premiums were more directly connected to our lifestyles? Shouldn’t obese citizens pay more for their coverage?
Broader competition between insurance companies will create better policies, and tying health (at least in part) to premium costs will incentivize healthier living.
I think consumer protection regulations are something best left to the states—which is one of the reasons it’s weird to see Republicans suddenly forget their love of state’s rights when this issue comes up. If a state wants to regulate its insurers, why not let it?
Hmmm. That’s an interesting point that I hadn’t really thought of. Practically, I wonder which approach is more likely to generate competition and bring costs down.
