It's no secret that Republicans lack a comprehensive plan for health reform. However, there are certain ideas that seem to keep popping up when I hear "serious" Republicans talk about what they would like to see done to reform the healthcare system. One of them is allowing people to buy health insurance from outside of their own state (currently not allowed).
The argument is, that this would support competition and make gov't run programs such as the Public Insurance Option no longer necessary. I hope to show you in less than one minute, why this idea will not help out consumers one bit.
The idea has been championed by John McCain, and was raised today in an op ed piece from three doctors who are just furious that they weren't invited to join President Obama today.
What's wrong with this idea?
In short it will be a race to the bottom with states competing against each other to attract health insurance companies to become centered in their state. The net result will be that the consumer loses.
The same thing has happened in the Credit Card industry. Ever wonder why every Credit Card Company is centered in Wilmington, DE? It's because you are allowed to buy a credit card across state lines and the law of the state where the credit card company resides controls over the contract (unless the parties stipulate to another jurisdiction). Delaware, in an effort to attract said credit card companies, has no cap on the interest that they can charge. I think you get the picture.
Put yourself in the position of governor of a large state, one that is really struggling to pay it's employees, one that has billion dollar deficits. Isn't it obvious that it would be politically expedient to offer insurance companies legal perks to attract their business and bring in revenue. And isn't it equally as obvious that these perks are not likely to be beneficial to the consumer as the insurance companies and the insured have very different goals?
The answer of course is obvious that interstate health insurance would be deleterious to consumers. However, when framed as promoting "competiton" it sure does sound like an idea that would benefit consumers.