Posts Tagged ‘Barack Obama’

Portable Health Insurance

Sunday, December 21st, 2008

During the campaign, the candidates told us what their policy initiatives would be for everything from taxes to the military. I usually don’t focus much on health care policy, but delved into each candidate’s platform en force after speaking with a good friend on the topic.

The campaign is over. Even though he lost, I’d like to talk about one of the items in McCain’s plan. Here is the pertinent quote:

Families should be able to purchase health insurance nationwide, across state lines.

At first, this sounds like a great idea. Why shouldn’t I be able to take my insurance from New Jersey to Washington? It would sure make life easier, right? Just ask those folks that live near a state border and have to constantly tune out 50% of the ads they hear / see since the products aren’t available in their state.

But then I thought about the idea, and the ramifications of implementing it. What would portability mean in the long term?

For one, the federal government would take on the role of regulating which companies can offer health care. States currently fill this role. This would make it easier to get coverage, especially for those living near state lines. It should also free states of the burden of managing the insurance companies. But…

Would it hurt states that lose licensing revenue? If, on balance, it results in net savings for the industry then I’d be tempted to think it’s a good idea. The states may not agree, though.

My big concern here is that removing the state barriers will likely result in consolidation in the health care insurance business. Right now, small regional firms can survive because they have marginal protection behind the artificial barrier of state lines. Without that protection, we’d likely see larger insurance companies swallow up smaller ones, much the same way banks consolidated in the 90s. Is that good?

Of course, opening up the system would also kill some of the near monopolies that exist out there. Well, for a time… until the consolidation results in us only having five insurance companies in the whole country.

Portable health insurance sounds like a good idea, at first, but I think it would have a net negative effect on the industry. Without other reforms, it would certainly hurt the consumer in the long run.

So why bring it up now? McCain lost, right?

Alas, the first part of President-Elect Obama’s Health Care Reform Plan states:

Give all Americans access to affordable, comprehensive, portable health coverage.

I hope that, when the new President and Congress sit down to talk about health care, they carefully consider the ramifications of consolidating health insurance regulation in Washington. Breaking down the state barriers may seem like a good idea, and may be publicly popular, but I don’t think it is the best move.

Not yet. (And I’m not sold on the idea that it’s necessary, anyway.)