Allowing interstate competition in health insurance.

Great Debates
1

This keeps getting mentioned by conservatives, including Ann Coulter and mentioned a few times in this thread, but based on past experience I’m going to assume someone will be along shortly to tell me I’ve created a straw man.

I’ve been told that the solution to the health care crisis is to allow interstate competition for health insurance. Problem is, I just don’t get it. When I mention UHC the term “magic” gets thrown around a lot. I’d rather not use that term, so could someone tell me what is supposed to happen nationally that doesn’t happen locally? From what I can tell, auto insurance companies compete nationally, is there any evidence that prices are lower as a result?

Mrs Coulter goes on to say: *The very next sentence of my bill provides that the exclusive regulator of insurance companies will be the state where the company’s home office is. Every insurance company in the country would incorporate in the state with the fewest government mandates, just as most corporations are based in Delaware today. *

To me, that sounds like each individual state gets ZERO say in regulation. As she says, the state with the most lax regulation sets the agenda for everyone else. How is that any better (or different) than having the Federal government dictating what states do? I think as a resident of not-Delaware, I’d PREFER to have the federal government call the shots because at least I have a say. I can’t imagine Texas wants to be told what to do by Delaware.

Here are a few question I need help answering before I can get on board and start working to repeal Obama-care:

  1. Does the cost of health insurance really vary that much from state to state?

  2. What causes this price difference?

  3. Even if Geico isn’t offering national health insurance, what’s to stop them from simply working in all states, is United Health not allowed to work in certain states?

  4. This concept of moving all the insurance companies to Delaware, and using their regulation, are conservatives really on board with that?

  5. What kind of a price reduction could we reasonably expect if insurance companies are competing nationally.

  6. The idea that increasing competition will reduce costs seems to imply that right now the insurance companies in my state are raking in massive amounts of profits thanks to their monopoly. I was under the impression that they aren’t making much profit, so where are the price reductions going to come from?

This is really the most important question, if you’re about to tell me Coulter doesn’t represent you, at least answer this question. Where will cost reductions come from?

Liberals/Democrats, as a special favour to me, try to avoid pouncing. You have a nice win, enjoy it. I really am curious to understand how all this is supposed to play out. What I’d love to know from Democrats is why they are against this form of legislation.

2

But flip around what you said about Geico: as a resident of not-Delaware, you already get to shop around for car insurance from this or that corporation headquartered in Delaware, and presumably have your pick of credit-card companies based in Delaware, and may well be choosing among competing grocery stores who are incorporated in Delaware, and thus and such.

You asked whether prices for auto insurance have dropped due to the interstate competition; I’d ask after the opposite side of a similar coin, as to whether it causes you angst in all those other Delaware-centric situations.

Do you imagine that’s already happening now, in all sorts of other contexts?

3

As usual, everything is a complete lie. To start with, corporations are based in Delaware because they have favorable laws with regard to incorporation. This does not mean that corporations are not regulated in the states in which they do business. McDonalds still need to meet local and state guidelines, pay state minimum wage, etc., etc. Geico auto insurance is still regulated at the state level despite the fact that Berkshire Hathaway (who owns them) is a Delaware corporation. We could decide to regulate health insurers at the Federal level instead of (or in addition to) state, but I don’t think that’s what conservatives want.

So basically people advocating this position are either lackeys of insurance companies who want regulation weakened to the point that insurance companies can follow the rules of the state with the most lax regulation and ignore the state laws where they sell insurance, or they are misinformed, or they are deliberately spreading falsehoods (again).

4

So conservatives want the federal government to take away the authority of the states to regulate health insurance sold in their own state? How is this a conservative principle? I thought conservatives were all about local control and states rights.

This is about total deregulation of health insurance. Conservatives want to do for health insurance what they did for banking. They really believe no one is watching.

5

[quote=“The_Other_Waldo_Pepper, post:2, topic:533708”]

But flip around what you said about Geico: as a resident of not-Delaware, you already get to shop around for car insurance from this or that corporation headquartered in Delaware, and presumably have your pick of credit-card companies based in Delaware, and may well be choosing among competing grocery stores who are incorporated in Delaware, and thus and such.

You asked whether prices for auto insurance have dropped due to the interstate competition; I’d ask after the opposite side of a similar coin, as to whether it causes you angst in all those other Delaware-centric situations.

Do you imagine that’s already happening now, in all sorts of other contexts?[/QUOTE

If all those things are in Delaware, I don’t actually get any choice now do I? How is that good for me? What if I like the way things are in all 49 states EXCEPT Delaware. Do you see my point that now Delaware gets to decide everything? It’s pretty much why all credit cards and auto insurance plans look identical and don’t provide any actual choice. I’m left to pick at random.

It doesn’t seem any more favourable than having all of our production facilities moved to Porto Rico, the place with the lowest labour cost. Or to China, the place with the worst human rights record (I don’t specifically mean this, just need to make the point). Or to the Cayman Islands with the most favourable tax laws.

It sounds like what you’re telling me is that my state is about to lose a ton of jobs, tax revenue, and regulatory authority to Delaware.

6

In the book the shock doctrine Noami Klein claims that during times of crisis, free market Milton Friedman conservatives try to implement policies designed to promote their economic worldview. This is why I am against it.

How will it reduce costs? By cutting consumer protections. That is the jist of it. The state with the lowest regulations, that allows companies to exclude the sickest people and that lets companies rescind policies the easiest is the one all the companies will set up shop in. Insurance will be cheaper, but it will be total junk insurance that only covers the healthy and then drops them the second they try to use it. You can sell health insurance for $100/month for a family just so long as you sell it from a state where no sick families are covered and policies are rescinded the second someone gets sick. Basically, if you don’t have to actually pay out any claims, health insurance can be sold dirt cheap. That is the goal of this legislation. Let insurance companies move to the states where they will be able to pay the fewest claims possible by giving them more power to exclude and deny people who need medical help. That will cause prices to go down. It will also make almost everyone drop insurance since they realize what a joke it is and see no reason to pay for something that’ll just be taken away once they try to use it.

Imagine buying lottery tickets for a lottery that had no jackpot. You pay for a ticket and there is no prize to win. That is what you’d end up with. Insurance that has even more power to avoid paying out medical claims. As a result, prices would go down. But the actual point of insurance (covering medical costs) would dissipate even more than it already has.
A health insurance policy that is required to cover everyone, and that cannot drop you for getting sick is going to be more expensive than one that can exclude the sick and drop healthy people once they get sick.

If you had federal consumer protections, I’d be ok with state to state competition. Obama said he’d be ok with that too. However the solution being presented doesn’t include those.

The reason is, again, the goal is to gut consumer protections.

Da Blather pretty much called it.

7

That’s what I’m asking you: does the current situation in fact fill you with that sort of concern in all those other contexts?

That prospect troubles me exactly as much with regard to health insurance as it does with regard to every other industry. Is it likewise the case in your case?

8

So, any chance you’d be able to answer any of my questions from the OP? I am seriously asking for a conservative to hold my hand and walk me through this. All you have to do is make a reasonable case and I’ll believe you. Providing me with a bit of rhetoric and then a couple of “flip it around” questions doesn’t help.

Seriously, there is a reason why Republicans are getting labeled as obstructionist, and being characterized has having no plan. Break that mold. Tell me about how interstate competition will lower the cost of health insurance.

9

Look, you linked to Coulter’s column right there in the OP, where she argues that:

You posted that first sentence from the quoted section, and then didn’t mention why you don’t agree with what immediately followed it. I’m not sure I find her claims persuasive, but the question is why you don’t find them to – uh, even be claims, I guess.

10

I linked to Coulter’s page mainly because it was the most recent that I read, also so that I wouldn’t instantly have to defend the charge of strawman.

There is also no point in my arguing with Coulter when she isn’t about to respond.

I started a thread to give conservatives the opportunity to explain how allowing interstate competition would change the health care industry for the better. Here I am trying to get information from which to form an opinion.

My opinion now is that you do not understand how changing that regulation will change health care. Way to represent. Here is a question, why are you leaving it up to me to figure out the Republicans plan for health care reform?

Do you really want me picking through Ann Coulter’s opinions? As an example

What do I say to that? Okay, so this is a way to bypass idiotic state mandates, obviously I agree with bypassing the idiotic state mandates, why wouldn’t I, they’re idiotic.

But what about the non-idiotic ones. Is it going to bypass good state mandates? Or are all state mandates idiotic? See how she fails to clarify her points?

She goes on to say

What choice? That statement on it’s own doesn’t make any sense, it needs context. What choices don’t I have right now? What choices will they give me in the future?

Have you ever bought a computer from dell.com? It’s kind of fun, they start you on a page with a bunch of computers and “starting prices” usually really low starting prices.

Then they walk you through a series of “choices.” Would you like a mother board (add $500). Would you like a cooling fan (add $500). Would you like a power cord or will you power it yourself (add $500).

Do I have that to look forward do with health insurance? A great plan starting at $100 a month. Want it to cover cancer (add $500). Want it to cover heart attacks (add $500).

I’m tired now and I’ve simply managed to convince myself that allowing interstate competition is a load of shit.

11

She provided that context: “perhaps Natoma could have afforded insurance had she not been required by Ohio’s state insurance mandates to purchase a plan that covers infertility treatments and unlimited ob/gyn visits, among other things.” Coulter’s explicit argument is that Ms Canfield (a) didn’t have the choice of purchasing “a plan that covered only the basics – you know, things like cancer” – but (b) would have been able to make that choice absent such a mandate.

Again, I don’t see any compelling reason to step in and stop Dell from doing that, and so I don’t see any compelling reason to step in and stop an insurance company from doing it. Likewise,

Because that’s just how I think. To me, the question isn’t why we should treat insurance companies like other corporations set to compete under free-market conditions; I figure that’s the default, and wait to hear reasons why we shouldn’t. Likewise, when Coulter says we should “prohibit the federal government from regulating insurance companies, except for normal laws and regulations that apply to all companies” – and pairs that statement with mention of how we “can’t have a free market in health insurance until Congress eliminates the antitrust exemption protecting health insurance companies from competition” – well, look, I merely default to agreeing that we should give said treat-'em-all-the-same approach the benefit of the doubt; call it a presumption of liberty, or something.

Coulter talks about letting the free market cause hotels to offer rooms with beds, about letting it stock the shelves at grocery stores and whittle vehicle sales down for whichever automaker supplies a product that falls out of demand; you talk about computer sales and car insurance; I talk about credit-card companies. My answer in each of those contexts is the same, and it’s the one I keep applying when the discussion shifts to health insurance or fast-food chains or household appliances: I like a free market for credit cards and car insurance and personal computers and cars and groceries and hotels, and so I keep on figuring we should give the free market a chance in the context du jour, unless I hear a really terrific reason to do otherwise, which I don’t.

12

I don’t think you get what’s going on here. The default is to treat health insurance differently. You’re a few years late to the party. It’s now up to you to convince me we should change it, otherwise we’re just going to go ahead with HCR.

If you had read what I posted about Dell you would have been outraged. The point I was trying to make was that they start with a fake low price, then pretend to let you chose what goes in your computer, then offer you an extremely expensive computer that you can’t afford. Just using the magic word choice doesn’t make things better. Do you really think if that girl had the option to choose between unlimited gyno exams (which she’d need) and cancer treatment (which she didn’t need) that she’d have chosen cancer? It’s already been established that at that age, and in good health, people don’t even get insurance. Ann Coulter, to be polite, is a fucking moron. I linked to her because I’m lazy, and you’re holding her up as a shining beacon of conservative philosophy. I posted here so that a conservative with some knowledge of economics and interstate commerce could spell it out for me.

Hotels without beds? That’s not the issue, hotels that fuck you over are. I don’t want the health insurance industry anything like the hotel industry. Advertising ocean view, then acting like the reflection of the building down the street counts. Do you really want me to run through a list of ways hotels have screwed me personally? I’d fucking love the government to step in and clean shit up.

Did you know that in Queensland, Australia, hotels are obligated to cover occupant theft up to a certain value? Imagine that, the government had to step in and regulate hotels, in order for them to consider security in their best interest. Meanwhile, in the fucking libertarian utopia of Columbia my friend was robbed of everything BY THE HOTEL then told her they were going to charge her with trespassing if she didn’t leave. That sure sounds like the kind of health insurance I want. Think how cheap it would be if we allowed INTERNATIONAL competition!

I don’t think you’re quite taking this seriously enough. Remember when Norm Colman lost to Al Franken by 225 votes? I know those 225 people. Norm came to our work, told us to read Ann Coulter’s website, that it was pretty self explanatory, told us that the default was him being the senator, and left. Al came to our office and told us about how wonderful UHC was. As the only person in the room to have experienced UHC I vouched for it, and here we are.

So don’t worry about it, I get it. You don’t know how changing the legislation will change things. You just consider them default and assumed. If there are any other conservatives that would like to explain why changing the current legislation would be a good thing I’m all ears. I really would like to figure this out.

13

If this woman had trouble with something the ob/gyn could have detected ahead of time, and didn’t get cancer, Coulter would have been saying things would be better if the woman could have purchased a plan without cancer coverage for less. Her plan would work great so long as someone tells us exactly which diseases we have. Preventative care and monitoring, especially if a woman is pregnant, can save tons of money. Low birth weight babies cost a fortune.

There is plenty of evidence that too much opportunity for choice does not lead to good decisions, as people tend to go with the default which they think has been chosen by someone wiser than they are. If insurance becomes pure choice, the companies can create a default which maximizes their profits, not the benefit of the consumer. I doubt the average insurance purchaser has such a good grip on frequency of certain illnesses based on their ages and life styles as to make a good choice. So it would be a disaster. Plus, if you buy a Dell system with inadequate disk, you might run a bit slower or have to clean up. If you buy inadequate insurance, you can go bankrupt or die.

14

See, I just can’t follow your reasoning, here.

You say we should treat health insurance differently. And then you talk about Dell – which, as near as I can tell, outrages you*** in its own right*** rather than as a mere cautionary tale by analogy regarding insurance. And then you move on to the analogy with hotels – but not as mere analogy:

And so I’m not quite getting your point: it’s apparently not that you want to “treat health insurance differently”, but that you are like me in wanting to treat it and other businesses the same. My first reply was to analogize this industry with car insurance and grocery stores and credit-card companies – and your first response to that was the following:

If that is your point with regard to auto insurance and credit cards, then I honestly don’t see why you’re saying we should “treat health insurance differently”; it sounds like all the reasons you have for wanting change in that context mirror the ones you have for wanting change in the other contexts – just like my reasons for wanting interstate competition minus the antitrust exemption mirror the reasons I have for wanting it in the other contexts.

If that’s our disagreement, then it’s so overarching that analogies don’t even begin to win either of us over; they merely illuminate how big the difference between us is, such that each of us can but point at it.

15

We had a debate on this proposal in the Pit a while ago. Long story short, the Congressional Budget Office analyzed a proposal to do just this, and found that it would neither reduce prices nor increase coverage in any substantive way. It is a proposal that reshuffles the deck chairs on the Titanic, and the only real appeal of it is that it rubs some people’s ideology the right way.

Cite.

16

It is certainly very interesting to see that someone has crunched the numbers and produced a result. I also like that their conclusions matched the pre-conceived notions I had in my head.

But what I’m after is the methodology, the hows and whys of this concept. Is there anything more than just ideology? On the surface it seems like the main argument is the believed truism that “increased competition must and always will cause lower prices,” followed by the belief that “lower regulation will make things better.”

Those two beliefs are fine, but they aren’t as true and solid and some would like them to be.

From what I learned in first year economics, for increased competition to cause lower prices there has to have been an excess in profits caused by barriers to entry (in this case interstate competition). So I ask, does my insurance premium contain an excess of profits?

I was under the impression that insurance company profits are actually very low, in the 3% range. Is that the amount of savings I can look forward to?

The other way competition could lower prices is by encouraging increases in efficiency, thereby encouraging competitors to achieve the same result with lower costs. I was also under the impression that the health insurance industry was currently extremely efficient, much more so than any government run system could be, is there something they are doing now that could save me money?

The conclusion I draw from Ms Coulter’s hotel example is that by allowing interstate competition, all of the insurance companies (and by that I mean just the largest three) will move to the place that provides them the most protection at my expense. That the real reason my premiums will go down is because I was given the “choice” to remove coverage. If my premiums go down because I have less coverage, I’m not better off.

Remember when we talked about Medicare? When Democrats wanted to reduce costs, it was said that cuts to Medicare meant a reduction in coverage. And that a reduction in coverage would HURT seniors. In this case, cuts to my insurance premium will be cuts to my coverage, which I assume will hurt me.

It appears that state mandates are forcing insurance companies to include coverage I might otherwise opt out of.

Unless I don’t opt out of them, in which case I’m not better off. So it sounds like a bit of a shell game: my costs will go down because my coverage will go down, so then I’m free to opt back in, at which point my premiums are the same (or higher). This is where the Dell example came in, it looks like I can get a computer at a low price because they’ve pulled everything out of it. When I put everything back in I find that the price is back up or higher than before.

Coulter’s cancer example highlights this perfectly. She makes the claim that right now my $6700 insurance covers fertility treatment, ob/gyn, exams (for the misses), and cancer treatment. Knowing what I know about those three things, I can safely say that opting out of the first two isn’t going to save me more than a couple of bucks.

But ignoring that point for the moment, if my wife was presented with that option, she would choose the first two. She would tell me that we are healthy and don’t have cancer, but she needs the ob/gyn exams and when we go to start a family she wants the fertility coverage. She would tell me that we can swap out the fertility coverage for cancer coverage after we have kids. How has that helped me? If I get cancer before the next open enrollment I’m completely and thoroughly fucked.

17

For the last time, I am not saying we should treat insurance companies differently. I am saying, as clearly as I can, that we are treating them differently. They are not allowed to compete across state lines, unlike everything else. The are currently treated different.

The conservative proposal was to eliminate that restriction. They said it would lower health insurance premiums.

I am asking how and why that would work. I don’t personally give a fuck one way or another how we treat insurance companies. My opinion of them (which isn’t exactly a secret) is completely and entirely irrelevant here.

If you don’t know, it’s okay. If anyone else does know, I would seriously like to understand this so that I can make a properly informed decision.

18

Profits may be low, but overhead is much higherthan comparable services by Medicare:

Overhead disparity is caused by huge salaries and bonuses at the top.

19

emack – you certainly threw out a lot of thoughts, and while I can’t respond to each one, I think you are certainly on the right track.

Any reduction in premiums generally (as in, consumers as a whole paying less) by removing state mandates is going to come from offering insurance that covers less, and your comments on when competition lowers costs is spot-on.

There are continuing debate over whether private insurance is more efficient than public health care. Suffice it to say that I think the overwhelming evidence is that private insurance is LESS efficient overall, because every doctor’s office and hospital requires more people to handle billing for different insurance companies, each with their own policies on what they will and will not pay. A single-payer, universal health care system has the advantage of having only one set of procedures for doctors to collect money for services.

I can’t say this with any certainty, but I wouldn’t be surprised at all if a doctors office had to deal with 30 insurance companies due to allowing interstate competition, rather than perhaps 10 or whatever, that there may be some slight increase in the cost of administering health care services.

20

By who? How are they treated differently than auto insurance?