Facing Declining Budgets, Legislators Push Costs on Others

Posted by John LaPlante in Insurance Regulation on Feb 5th, 2010 | no responses

The Wall Street Journal reports on efforts in state governments to expand public programs and the role of states in health care. There’s legislation in at least 11 states to enact a single-payer system, add more people to public programs, or take similar measures.

The article notes that states [having balanced-budget requirements but not a printing press] have had to deal with economic reality: “Before Barack Obama was elected president, much of the focus of a health-care overhaul was at the state level. …. But for now, budget woes are undercutting efforts to add to state-government rolls, and many states are actually cutting health programs.” That should force legislators who want to expand public programs in health to reduce public programs elsewhere. But programs in education, aid to local government, and corporate welfare, have their defenders, too.

With little new money to spend, legislators turn to the next best thing: Forcing other people to spend. So we’ve got laws requiring insurance companies and their customers to pay for treatment for autism, “dependent” children who are 25 years old, and so forth. Legislators are getting some help from one high-profile lobby:

To jump-start some efforts, the American Medical Association plans this spring to roll out a “code of conduct” as a model for its state affiliates to use in pushing for new regulations on health insurers.”We believe there’s going to be a lot of interest in many states,” said the group’s president, James Rohack.

Certainly businesses of all sorts of face regulations. But the amount of regulation, generally, is correlated with the degree to which consumer don’t have other options. The price of hamburgers? Not regulated. The price of electricity, which in most places is available from only one supplier (by law)? Regulated.

The purchase of insurance is highly regulated, more like the electricity model than the hamburger one. For practical purposes, most people have one choice when it comes to insurance. And as with electricity, the lack of choice stems in large part from the law. It’s time to change the law, so that it no longer discriminates against individuals or small groups of people who wish to buy insurance on their own rather than go through an employer or wait for a government program.

The Journal notes that there’s legislation in two states that would give consumers more options, without imposing costs on taxpayers or policy-holders: “In New Hampshire and South Carolina, Republican lawmakers have introduced bills that would allow consumers to buy health plans across state lines.”