Here is an excerpt:
... [A] public option won't restore sanity to the health insurance market. What will, is getting get rid of the rules, mandates and tax exemptions that treat health insurance different from other coverages.Read the whole thing.
Consider auto insurance, which is typically required of us by states, and home insurance, which mortgage lenders demand. Both give us protection from financial ruin at more reasonable prices than health insurance because our options are greater and the scope of the coverage narrower. When we buy home insurance we are essentially purchasing security against a catastrophic event that could cost us our investment in our home and possibly ruin us financially. We don't expect this insurance to cover everything that goes wrong on the property. Instead, we accept that we will pay out of our own pockets the tradesmen who come and install our new water heater, fix our electrical short-circuits and repave our driveway. Many of us haven't gotten a health care bill in years equal to what we paid the plumber for his last visit because the cost of a home insurance policy that covered every leak and crumbling piece of pavement would be prohibitive.
There are significant other ways that government mandates treat health insurance differently, at great cost to all of us. Consider this scenario: You don't have home insurance and a big storm comes through and knocks over a tree into your roof. You can't just phone up an insurer, buy coverage and then submit a claim, even if you face financial ruin by not having the coverage. But that's more or less what you can do in health insurance under so-called guaranteed issue rules, in which someone who hasn't purchased insurance and gets sick can't be turned down for coverage. Needless to say, states that have guaranteed issued, like New Jersey and New York, have the highest health insurance premiums in the country because healthy people know they can run the risk of not buying insurance until they get sick. Insanely, the health reform package now on the table in Washington would create a federal version of guaranteed issue.
In auto insurance, some states have given us our own private version of tort reform to keep premium prices low. In these states, a driver can opt out of the litigation lottery when he purchases auto insurance by promising not to sue for pain and suffering if he's hit and injured by another driver. By doing this a policy holder can save hundreds of dollars a year on premiums. And yet for some reason the same option, that is, allowing us to buy a health insurance policy where we agree not to sue a health provider for pain and suffering if a treatment goes wrong, is not available, even though I imagine the cost savings would be enormous.
Government regulators also require us to buy so much more health insurance. In auto coverage, for instance, states will generally mandate that we have certain minimum coverage to compensate anyone we may crash into, but otherwise regulators will leave us alone to decide which options (towing, collision) we want to buy. By contrast, states will require buyers of individual and small group health policies to load up on mandatory coverage, including options that many people don't want to pay for, like fertility treatments. Politicians will often claim that they demand these coverages because they are looking out for our own good, but that's a difficult case to make persuasively when mandates help make insurance unaffordable for many people.
Government regulations and bad tax laws have turned health insurance from protection against unlikely-but-expensive events into inefficient pre-paid health plans.
We don't need yet more government regulations. Instead we should scrap the ones we already have and move towards a free market.
