I suspect that we’ll be talking about health care and the health care law, Obamacare, for some time now. And rightfully so, this is a huge issue at a time when we need to craft solutions, and quick. We simply have no money and need to solve that problem.
So, health care. This morning on the Brad and Britt Show the issue of allowing insurance companies to sell their policies across state lines came up. And Brad admitted he didn’t know why that was such a sticking point to Republicans.
This illustrates the disconnect in the discourse today. On one hand you have a group of people who want to legislate just “whatever they want”. This is akin to passing a l aw that requires the ice cream man to deliver me ice cream before bed. Who doesn’t want THAT? And on the other hand, you have a group of people who have actual knowledge of how things work trying to legislate the “business” of government.
So, Brad, here is why allowing inter-state trade of insurance would reduce costs.
Suppose that a corporation wants to open stores in all 50 states, say, like Target. But in order to do so, they have to meet individual state mandates on the products in their store they sell. Say, for example, that Minnesota has passed legislation that says Target must sell books to children of all ages and adults who are poor for $2.00 each. Target, wanting to remain in business in Minnesota, will either stop selling books all together [selling books at $2 won’t return them a profit] or, OR….they will RAISE the price of all books such that the price of a book to a non-poor adult is enough to cover the cost of having to provide subsidized books to the poor and the young.
Or, say that South Carolina passes legislation that requires Target stores that sell groceries that when someone does buy groceries from them, the store has to deliver those groceries to the customers house. Target will either stop selling groceries in South Carolina or, OR…they will raise the price of groceries to cover the government mandated delivery service.
Is it Targets fault that they are selling books at a higher price in Minnesota? Or that they are selling groceries at a higher price in South Carolina?
Now go further and say that ALL sellers of books in Minnesota must follow the same rules; likewise all sellers of groceries in South Carolina.
Overnight you have increased the cost of books and groceries in those states. And for what? For some government mandated feel good legislation. After all, why do you hate the young and the poor who want access to books? How DARE you pass laws that restrict their access to book?
And food? There are people in this world [at least on] who are home ridden and don’t have the luxury or ability of going shopping. Would you deny THEM food? Soulness, greedy capitalist pig. You are GREEDY!
So, in the name of altruism and good intentions, laws are passed that actually RAISE the price of goods while at the same time restricting supply.
As a citizen of Minnesota or South Carolina, would you like to enjoy the ability to buy a book in Iowa? Or South Dakota? Or even Mississippi if it were cheaper? Would you not like to shop for books in the same way you shop for Star Wars action figures? Or the citizen of South Carolina….would you blame her for peeking across the border in North Carolina for cheaper goods? Or Georgia? Or even, gasp, shopping on-line at Amazon? [Where, by the way, they DO deliver your groceries to you].
It is the states that make mandates that causes insurance policies to rise. Not ALL of the rise to be sure, but much of it. When Maine passes a law that requires insurance companies to sell a policy to any person, no matter how sick, as long as that person has been living in Maine for 60 days, the cost of policies is going to go up. When New York passes a law that requires insurance companies to cover acupuncture therapy, the price of that policy is going to go up. When Vermont passes a law that forces insurance companies to cover up to 14 days in the hospital no matter the ailment, the cost of policies is going to go up.
THAT is why breaking down state barriers would reduce the cost of coverage. Imagine if the Maine-ian could shop for a policy in North Carolina that covered only the eventualities and procedures that he wanted to insure? His cost would plummet. And his experience and value on his dollar would explode.
For sure Maine would see it’s insurance companies close shop nearly over night. And so, if they wanted to keep those businesses in state, they would have to remove the punitive restrictions they placed on them. And competition would force the cost down, the quality up.
That is why. THAT is why we want to see insurance sold across state lines.