I do not consider myself a conspiracy nut or political extremist. Actually, when things are going smoothly I tend to be apolitical and only follow the news out of D.C. passively. Most of the time I pay as much attention to things in D.C. as I do that pesky fly hovering around my hot dog at the ball park. I would rather see the game than spend my time shooing flies.
Unfortunately, as a health insurance agent I have been forced to keep track of what is happening in Washington more than I normally would. After 3 years of watching the political fighting among our national leaders I feel dirty.
History of Health Care Concerns
In my 50 plus years of life I have never seen the nation as divided as it is right now. That included Viet Nam, Watergate and Iran-Contra.
Three years ago people complained about the increasing costs of health insurance but they accepted it as another distasteful fact of life. That has changed in the last 3 years. Today, health insurance is a political hot button with people of differing opinions on both sides of the issue.
Proposed Solution
One of the most popular issues about health care reform floated in the last 3 years is the idea of promoting competition among health insurance companies by allowing them to sell policies across state lines. A provision for that practice is in the Patient’s Protection and Affordable Care Act that was signed into law by President Obama last March. It allows insurance companies to form “State Compacts” to sell health insurance policies in multiple states.
At first look it sounds like a great idea. It would allow people in more expensive states like New York to buy a policy from a less expensive state like West Virginia that may be priced a little lower.
From a consumer’s point of view it may sound wonderful but from an economic point of view, there could be some problems.
Potential Problem
The reason policies in West Virginia are generally less expensive than New York is because West Virginia does not have all the mandated coverages that New York does. Since the insurance companies are not liable for the same things in both states their premiums are naturally lower in West Virginia.
In this hypothetical example, rather than helping people in New York the state compacts would actually hurt the people in West Virginia. The insurance companies would have to assume that more people from New York, with its mandates would register in the program and price the health insurance accordingly.
Some people would say, “So what, it would only allow the health insurance companies to get richer.”
In my opinion, people who think that the state compacts are going to benefit people in more expensive states are probably wrong. If history is any indication, the new program will not be priced based on the least expensive state but based on the most expensive state.
Frankly, I could not care less about the profit margins of health insurance companies. Since I am not employed by them, their financial status does not affect me. My concerns are my freedom.
Political Contempt
The 10th amendment of the U.S. Constitution limits the authority of the federal government to regulate commerce that is conducted within the borders of states. Federal regulations only apply for commerce conducted across state lines.
The McCarran-Ferguson Act of 1945 grants freedom from federal interference for insurance companies provided they stay within one state and are subject to the regulations of that state. That is why there are individual state Departments of Insurance.
The idea of allowing insurance companies to sell their policies in multiple states opens up the door to allow a future federal congress to seize control of yet another industry and take more power.
I know that good people differ with me. They think that having a powerful central government, who will take care of them, is a good thing. Personally, that idea scares me. I’m enough of a historian to know that one of the reasons behind the American Revolution was a protest of the powerful central government Britain had become in the late 18th century.
The debate over the role of government was just as nasty in the 18th century as it is now in the 21st century. Some good men, who had fought on the same side of a war just a few years earlier, allowed their political differences to end their friendships. Just like today, grown adults resorted to childish behavior.
In the end, the U.S. Constitution was formed. That document guaranteed the rights of self-regulation to the individual states as long as their business did not affect people in another state. I’m afraid that opening up insurance sales across state lines is just another opportunity to give away another state right to the federal government.
If you are interested in the concept of selling health insurance across state lines, review the Kaiser Health News article, “FAQ: Selling Health Insurance Across State Lines.”
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