Why should it be illegal to buy a high-deductible health insurance plan?

| October 2 2013
David Leeper

Decades ago, when I first began looking at car, home, and health insurance, my dad gave me some good advice.  He recommended that I buy only enough insurance to cover those risks that I could not afford to cover on my own. Do not, he said, become “insurance poor” as some of his friends had.

That was good advice. That’s the basic principle behind insurance. Buy coverage for what you can’t cover on your own.

hospital bill1Clearly a major house fire or open-heart surgery would be so expensive that I and my family could face financial ruin. I want that covered.  So I look for the highest-deductible clause insurance I can find, and I keep the savings on the premiums that come with a high deductible policy.

For smaller stuff, I “self-insure”.  In particular, for routine medical care, I’d like to shop competitively, either on a visit-by-visit basis or if I choose to buy a policy that covers routine care, to choose one that offers me good doctors at competitive, predictable rates.

Alas, it’s not possible. At the state level in Arizona, I have only limited a choice among a few healthcare companies. By state law, hundreds of others are legally prohibited from offering me their policies. Why? And now at the federal level, thanks to the beneficent Obamacare, even the authorized companies will be told what features and provisions they “must” offer, whether I want them or not and whether I want to pay for them or not.

Of course all this is done under the guise of “protecting” me from greedy insurance companies.

Memo to the state and federal healthcare insurance regulators: Thanks, but no thanks. I don’t want that kind of “protection” from you. I have far more trust in free market competition than I do in your wisdom from afar.  I have all the evidence I need that you are not smart enough to know what’s best for me, and you are too easily corrupted by lobbyists.  Mostly, I just want you to get out of the way.  

There are only two places I’d like to see the federal government get involved

anti-trust500First, see to it that health insurance companies are not engaged in price fixing. Use the antitrust laws to quash anti-competitive behavior among the companies and do not regulate the price and features of policies. Leave the latter to my free choice.

Second, use the Constitution’s commerce clause, as it was intended by the Framers, to remove barriers to interstate commerce — in this case, state-erected barriers to sale of health insurance policies across state lines.

There was once a time, before the Constitution’s ratification, where states could impose tariffs or outright bans on the importation of goods from other states.  One tariff begat retaliatory tariffs, and competition ground to a halt. That was a major incentive for replacement of the Articles of Confederation with the Constitution. So while I’m normally for “states’ rights” and the 10th Amendment, here’s one case where the heavy hand of the federal government could be used in a good way.  The Constitution Article I, Section 8, Clause 3 is very explicit — there can be no challenge from the states as there has been with Obamacare. So why not do it already?

competitionWhat do my two requests to the federal government have in common?  Both would increase competition. I’m no fan of big insurance companies. I’m sure they’re “greedy” as the Left says they are.  But what I want to see regulators do is harness that greed by making them compete vigorously for my business with lower prices and better services.  What I don’t want is for the federal government to regulate their prices. That inevitably leads to shortages and black markets.

Of course there is a third area where government should and must play a role — contract enforcement. If a company sells an insurance contract and a customer pays the agreed-upon premiums, the contract must be honored, and government has a role to play insuring that. But where government should not play a role is in setting the terms of that contract. If I’m not interested in “aroma therapy” as a covered treatment on a policy, I shouldn’t have to pay for it. If someone else wants it, they can look for a policy that covers it or just pay retail for the service.

This is all part of much larger problem: Despite all the evidence that it’s a bad idea, the Left still puts its faith in Big Government — the bigger and more centralized the government, the better. I put my faith in free market competition, and I welcome the presence of government only when it acts to increase competition among the providers and when it protects me from force and fraud.

Would that more Americans felt as I do … but far too many still do not. And we’ll all pay a price for that.

2 comments
dleeper47
dleeper47 moderator

Thanks, Mike. Apparently, using the commerce clause, as intended, to knock down state-controlled barriers to competition, has been proposed several times but never got anywhere.  

John Shadegg pushed that notion as far back as 2005, but he never got a proper hearing. There must be more powerful interests at work than simply We-the-People.