Free markets? Compete across state lines? They alone won’t solve our health insurance problems

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By Consumers Union on Thursday, February 18th, 2010

As Washington tries to come together on a health reform plan, opponents are still throwing out the same old ‘solutions’ that they claim will lower everyone’s costs and get more folks health coverage. The only problem is, they don’t.

Check out what Consumer Reports says about the “solution” of simply allowing insurance companies sell policies across state lines without any other oversight:

“It would indeed lower insurance premiums for some people, namely the young and healthy who already have a relatively easy time finding affordable coverage. But it would raise costs for those who are having the toughest time under the current system — the sick and the aging.”

Why is that? Because states regulate insurance companies differently. Some states have strong laws that require every insurer take the sick and old and offer decent coverage, where other states allow insurance companies to ‘cherry pick’ the healthiest customers, or offer bare-bones benefits that stick patients with huge medical bills. Insurers will likely run to those states with weak regulations, and in turn, take only the healthiest customers, leaving those most in need of insurance without it.

The other argument against reform is to just let the ‘free market’ work when it comes to health insurance. The problem there is, as Consumer Reports points out, it isn’t a true free market, because consumers can’t easily compare and shop, or be treated the same for their healthcare dollar.

“It’s fairly easy to compare the features of a television or car, and if you can’t afford a new one, well, you do without or keep your old clunker going. Going without health insurance isn’t optional (or shouldn’t be), and the way the “market” works now, comparing one plan to another is difficult if not impossible.

“A television has a price tag right on it. Health insurance doesn’t. If you get insurance through your employer, you may have no idea how much it really costs beyond your personal contribution. (In fact, your employer might refuse to tell you even if you ask.) Those who buy their insurance in the individual market know what their premiums are, but may end up accidentally purchasing a ‘bargain’ policy that turns out to be hopelessly inadequate when they get sick and need to use it.”

A key component of reform is making sure health insurance is a good deal for you – the consumer – by treating you fairly no matter your health or age, and making sure you have clear information on price, what your costs will be for care, what is covered and what isn’t. For too long the market has been skewed in favor of insurance companies, and it has failed to deliver affordable, dependable health coverage to those who want it.

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