Buy health insurance on-line?
Should Americans be able to buy health insurance online like clothes, airline tickets, and pet medications? Small Business & Entrepreneurship Council chairwoman Karen Kerrigan says yes.
She notes that Americans bought about $95 billion in goods and services over the Internet in 2003, which added to entrepreneurship and the economy’s overall health and vitality. “We can buy just about everything else on-line. Maybe it’s time that health coverage be added to the list. You might say that such a concept would probably take an act of Congress, and you would be right.”
There is, in fact, a groundswell of interest in the concept growing in the Congress, Ms. Kerrigan tells State Health Watch. U.S. Rep. John Shaddeg (R-AZ) has introduced legislation, The Health Care Choice Act of 2005 (HR 2355), that would allow people to buy health insurance from any state, regardless of their residence. There are 44 co-sponsors of the legislation from both parties. And in the Senate, Jim DeMint (R-SC) has introduced companion legislation.
Ms. Kerrigan says she hopes President Bush will become actively supportive of the concept. “We’ve been educating the public and policy-makers on the concept and why the legislation makes sense. It takes a lot of outreach to lay the groundwork so Congress will be willing to consider the legislation.”
State legislatures and the federal government have passed more than 1,000 laws that require consumers to pay for various benefits in their insurance policies, she adds. Large businesses and labor unions are exempt from mandated benefits because they are self-insured under ERISA. “That means that individuals who buy their own policies and small employers end up paying the price for these politically popular but very expensive mandates. The situation is intolerable in some states. Families who buy their own health insurance in New Jersey, for example, are forced to pay anywhere from $3,000 to $17,000 per month for a health insurance policy with a $500 deductible. Nobody has this kind of money, so what do people do? They usually go without insurance. When they are sick, they go to the emergency room where hospitals often overcharge them.”
Internet commerce a solution?
The solution, she says, is to allow consumers to buy health insurance over the Internet in any state. Thus, New Jersey residents could buy insurance for themselves or their families in Pennsylvania, New Mexico, or Alabama. “Using the Internet, we can tear down the barriers to expensive red tape and regulation and open the door to affordable health insurance for millions of Americans,” she says. “People would be able to shop the entire country for health insurance plans that fit their particular needs — it would be a national marketplace. They wouldn’t have to pay for benefits they didn’t need or want. Costs would come down, and more people could afford insurance, all without a big government takeover of the health care system and the large tax increase that would be needed to fund such a scheme.”
Four congressional findings
There are four congressional findings in Mr. Shaddeg’s bill:
1. The application of numerous and significant variations in state law impacts the ability of insurers to offer, and individuals to obtain, affordable individual health insurance coverage, thereby impeding commerce in individual health insurance coverage.
2. Individual health insurance coverage is increasingly offered through the Internet, other electronic means, and by mail, all of which are inherently part of interstate commerce.
3. In response to these issues, it is appropriate to encourage increased efficiency in the offering of individual health insurance coverage through a collaborative approach by the states in regulating this coverage.
4. The establishment of risk-retention groups has provided a successful model for the sale of insurance across state lines, as the acts establishing these groups allow insurance to be sold in multiple states regulated by a single state.
One of the key concerns is that currently states have the responsibility for regulating insurance. According to Mr. Shaddeg, “Rather than going through 50 different regulatory processes, this bill will allow an insurance company to go through one process and sell to people in all 50 states. We can help people, not by setting up a massive new government bureaucracy, but by empowering individuals to make the best choice for themselves and their families.”
Should states regulate?
Ms. Kerrigan says Congress needs to determine if it still is appropriate for states to have the responsibility for regulating health care. From her perspective supporting small businesses and entrepreneurs, states often create more problems through their regulation of insurance.
“We’ve called for a gathering of state and federal officials to look at the problems and try to reach agreement on solutions,” she tells State Health Watch. “The pendulum has swung much too far.”
Support for the concept also has come from Manhattan Institute senior fellow David Gratzer, a physician. In a Wall Street Journal Online commentary, Gratzer noted the difference in health insurance premiums from state to state, attributing much of the variability to state mandates of covered services.
The consequences, he said, are higher premiums, more uninsured because of the higher premium cost, and reduced labor mobility.
“Some suggest massive tax credits and other subsidies,” Mr. Gratzer wrote, “an unlikely possibility in light of the budget deficit. An alternative would be to allow out-of-state purchases of health insurance. The federal McCarran-Ferguson Act of 1945 empowers states to regulate ‘the business of insurance.’
“Nothing prevents Congress, however, from allowing interstate sales. The foundation of such a bill would be the Constitution’s Commerce Clause. Individuals and small businesses would then be able to shop around and find a low-cost policy — an affirmation of free-market principles since interstate restrictions now leave many Americans at the mercy of a small number of local health insurance carriers,” he explained.
“Allowing a competitive market for health insurance won’t be a major budgetary expense, but it may prove priceless to the cause of advancing market reforms to better American health care,” Mr. Gratzer notes.
While she couldn’t predict how soon the Shaddeg/DeMint legislation might move through the Congress, Ms. Kerrigan says she believes cross-border purchasing has a better chance to be adopted than does legislation for association health plans, which has drawn considerable vocal opposition.
[Contact Ms. Kerrigan at (202) 785-0238. Download the legislation from http://thomas.loc.gov.]
Should Americans be able to buy health insurance online like clothes, airline tickets, and pet medications? Small Business & Entrepreneurship Council chairwoman Karen Kerrigan says yes.
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