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> 1. Deregulate the health insurance market so you can sell across state lines. I've always found this suggestion a bit disingenuous. First, there is no feder

> 1. Deregulate the health insurance market so you can sell across state lines. I've always found this suggestion a bit disingenuous. First, there is no federal law that bans insurance from being sold across state lines. What they really mean (but can't say because it is not politically appealing) is "Don't allow states to regulate insurance sold in their state." State boards regulate insurance. They seem to do it well. No insurance companies failed during the 2009 financial crisis and the ones that came close (looking at you AIG) did so because of their activities and investments that fell outside of the state regulations. Not allowing states to regulate insurance would reduce costs, but not for the reason you think. The cost of getting a product approved in a given market is predictable and a very small part of the cost of doing business. By taking this right away from the individual states, we could see a race to the bottom where all insurance companies would incorporate in whatever state offered the lowest reserve requirements and loosest oversight. This would decrease the cost of policies and increase the profitability of the insurance companies. It would be great until there was a hard year and the insurance companies would have the be bailed out by the taxpayers. State regulation of insurance companies is a great thing. The states keep each other in line and they keep the industry solvent. Edit: BTW, auto insurance is also regulated on the state-level.

roenxi 7y ago
I don't live in America, but having strong opinions is fun so I'll wade in anyway :D The things you are talking about are regulatory standards. I've not seen anyone really suggesting that regulatory standards are a problem in the Americas (on the contrary, everything I've read suggests if you have in insurance the whole process can be pretty comfortable). gp's post is, in my eyes, clearly going towards the point that people should be choosing their own insurers, rather than their employers choosing insurers (on employees behalf). It seems like common sense to me that an individual will be better at choosing a healthcare provider than their employer. The idea that healthcare benefits are a factor to consider when choosing an employer is bizarre. The only reason to link the two is because Americans enjoy being different. And strangely anti-individual-choice in this instance. That dynamic is an obvious perversion of the market to deregulate.
- thebooktocome 7y ago
  > I've not seen anyone really suggesting that regulatory standards are a problem in the Americas This was a major component of Trump's platform, and where the "selling insurance across state lines" thing comes from.
  - TheRealDunkirk 7y ago
    Excuse me, but I've been saying this for a lot longer than Trump has been President. Not everything is about him, you know. Perhaps it is, in fact, a problem that needs to be addressed, regardless of who is in office.
- deleted 7y ago
  [deleted]
- wpietri 7y ago
  > It seems like common sense to me that an individual will be better at choosing a healthcare provider than their employer. I have picked insurance as an individual and as an employer, and that is 100% wrong. Any kind of insurance is difficult to shop for, because it's for something you'll only really need if you're unlucky; that means it's hard to tell whether the choice you make is a good one. Health insurance is worse, because it's an extremely complicated product. A company, on the other hand, gets to amortize the cost of figuring out the right options across all of the employees, meaning they can do a better job. They will often have a professional doing it, which helps more. They also get to gather statistical data on how well the insurance performs. And they have have much more negotiating power than individuals. One way to think of it is that markets work best when you have actors a) of approximately equal power, b) making frequent choices, c) where the products can be easily evaluated, and d) where experience with the product happens quickly, so that the feedback loops are short. Health insurance is exactly none of those things. Markets are tools, not magic wands. > but having strong opinions is fun so I'll wade in anyway :D Note that this is literally a life or death question for people in the US. You might think it's fun/funny. Having watched both my parents deal with cancer, that comes across poorly to me. > The only reason to link the two is because Americans enjoy being different. No. The American system grew up as it did for particular local reasons, not just a random desire to be contrary on some imagined global stage. It was in retrospect an obviously bad choice given that we spend way more than others while getting worse results. But it made sense at the time.
tfehring 7y ago
This is a great comment - I'll just make one minor but important correction. Reserve requirements are fairly uniform across states (see [0] for a list of differences), so they likely wouldn't be a major driver of health insurers' decisions about where to incorporate. The reality would be worse than you describe - rather than being driven by reserve requirements, the race to the bottom would be based on differences in the level of coverage that insurers are required to provide. Healthy people would buy coverage from states with lax requirements to reduce their premiums, while less healthy people would buy coverage from states with more stringent requirements to ensure their treatment would be covered. Premiums in states with stringent coverage requirements would increase, pushing more and more healthy people to cheaper alternatives, and eventually making coverage in those states unaffordable for the people who need it. [0] (PDF) https://www.naic.org/prod_serv/SPD-OPS-19.pdf https://www.naic.org/prod_serv/SPD-OPS-19.pdf
Shivetya 7y ago
The McCarran-Ferguson Act which is a law at the Federal Level enacted in 1945 is what gives states the the authority to regulate insurance offerings within their borders and what helped create the mess and inability to shop across borders. So yeah, its a Federal Law that screwed this up. Just because it does not prohibit cross state sales is just mincing words. It gave states the ability to make it near impossible to do so. Without consistent requirements how would one expect to have a viable product? There was an attempt to repeal it but that apparently did not get past the Senate, it was again pushed in 2017 through another act. There are attempts in the Senate as of 2019 to do it.
ShrinkingWild 7y ago
>It would be great until there was a hard year and the insurance companies would have the be bailed out by the taxpayers. Surely that wouldn't be the case? They wouldn't have to be bailed out; If a company hadn't planned ahead well enough to survive a bad year then they deserve to go under. In an unregulated economy, bailing out failed companies shouldn't be an option.
- chii 7y ago
  except all those people who's supposed to have been insured will now no longer be (but would've paid their premium, at least partially). So what happens then? Either those people lose their money, or the state bails them out. If the gov't forces an insurer to keep a reserve (for such an occasion), then it becomes regulation!
  - ShrinkingWild 7y ago
    Those people lose their money. I can't think of a good reason why they'd expect to get that money back, they were paying for a service that was being provided up until the company could no longer provide it. Losing your money to a failed company is a cost of doing business sometimes, it's a risk everybody takes when they purchase things in advance. The company/owner would owe a refund for the service not provided due to company collapse, whether or not they can pay that is another matter and should be accepted as part of the risk. There's no such thing as risk free business and attempts to remove the risk inevitably remove part of the value too.
    - vageli 7y ago
      > Those people lose their money. I can't think of a good reason why they'd expect to get that money back, they were paying for a service that was being provided up until the company could no longer provide it. > Losing your money to a failed company is a cost of doing business sometimes, it's a risk everybody takes when they purchase things in advance. The company/owner would owe a refund for the service not provided due to company collapse, whether or not they can pay that is another matter and should be accepted as part of the risk. There's no such thing as risk free business and attempts to remove the risk inevitably remove part of the value too. I think we as a society have deemed it unacceptable to hold consumers accountable for company selection in some specific industries. Banking and healthcare come to mind. We certainly don't think it's okay for depositors to lose their shirts over a banker's risk taking and we hold that value to such a degree that in America at least it has been codified into law. I know at least NJ mandates a separate fund that insurers must pay into to protect against this instance.
TheRealDunkirk 7y ago
Give me a better way to express this idea, then: How do we create a REAL market for health insurance, so we can buy it like EVERY OTHER KIND OF INSURANCE?
- jkaplowitz 7y ago
  It's not like every other kind of insurance, though. Health "insurance" covers many expected and predictable costs, which isn't what insurance is about in any industry. What we call health "insurance" is really just access to health care with expenses adequately covered, with only the portion of that covering unexpected or unlikely risks properly falling under the heading of insurance. Additionally, even the true insurance piece is one of the only kinds of insurance where it's a societal imperative (in most people's opinions) for everyone to get the insured benefits they need, regardless of ability to pay. Even car insurance isn't required for people who rely on mass transit. Health insurance policymaking needs to differ from most other kinds of insurance policymaking for these reasons.
  - TheRealDunkirk 7y ago
    That is an awesome answer, but pedantic. The real question is, again: how do we express the idea to create a REAL market for health "insurance"? It's not about the difference between health "insurance" and other kinds of "insurance." The question is how to express how to create a market for it.
    - jkaplowitz 7y ago
      Yeah, I am disagreeing with the choice of a market solution for something which we want to make available to people who can't afford it. That's not what markets are meant for or good at, especially not the deregulated free market that is often meant by questions like yours. As for a tightly regulated market with lots of requirements about coverage and price, some states already have that, and it's exactly those tightly regulated markets which the "let insurance sell across state lines" proposals want to disrupt.

roenxi 7y ago

I don't live in America, but having strong opinions is fun so I'll wade in anyway :D The things you are talking about are regulatory standards. I've not seen anyone really suggesting that regulatory standards are a problem in the Americas (on the contrary, everything I've read suggests if you have in insurance the whole process can be pretty comfortable). gp's post is, in my eyes, clearly going towards the point that people should be choosing their own insurers, rather than their employers choosing insurers (on employees behalf). It seems like common sense to me that an individual will be better at choosing a healthcare provider than their employer. The idea that healthcare benefits are a factor to consider when choosing an employer is bizarre. The only reason to link the two is because Americans enjoy being different. And strangely anti-individual-choice in this instance. That dynamic is an obvious perversion of the market to deregulate.

thebooktocome 7y ago
> I've not seen anyone really suggesting that regulatory standards are a problem in the Americas This was a major component of Trump's platform, and where the "selling insurance across state lines" thing comes from.
- TheRealDunkirk 7y ago
  Excuse me, but I've been saying this for a lot longer than Trump has been President. Not everything is about him, you know. Perhaps it is, in fact, a problem that needs to be addressed, regardless of who is in office.
deleted 7y ago
[deleted]
wpietri 7y ago
> It seems like common sense to me that an individual will be better at choosing a healthcare provider than their employer. I have picked insurance as an individual and as an employer, and that is 100% wrong. Any kind of insurance is difficult to shop for, because it's for something you'll only really need if you're unlucky; that means it's hard to tell whether the choice you make is a good one. Health insurance is worse, because it's an extremely complicated product. A company, on the other hand, gets to amortize the cost of figuring out the right options across all of the employees, meaning they can do a better job. They will often have a professional doing it, which helps more. They also get to gather statistical data on how well the insurance performs. And they have have much more negotiating power than individuals. One way to think of it is that markets work best when you have actors a) of approximately equal power, b) making frequent choices, c) where the products can be easily evaluated, and d) where experience with the product happens quickly, so that the feedback loops are short. Health insurance is exactly none of those things. Markets are tools, not magic wands. > but having strong opinions is fun so I'll wade in anyway :D Note that this is literally a life or death question for people in the US. You might think it's fun/funny. Having watched both my parents deal with cancer, that comes across poorly to me. > The only reason to link the two is because Americans enjoy being different. No. The American system grew up as it did for particular local reasons, not just a random desire to be contrary on some imagined global stage. It was in retrospect an obviously bad choice given that we spend way more than others while getting worse results. But it made sense at the time.

tfehring 7y ago

This is a great comment - I'll just make one minor but important correction. Reserve requirements are fairly uniform across states (see [0] for a list of differences), so they likely wouldn't be a major driver of health insurers' decisions about where to incorporate. The reality would be worse than you describe - rather than being driven by reserve requirements, the race to the bottom would be based on differences in the level of coverage that insurers are required to provide. Healthy people would buy coverage from states with lax requirements to reduce their premiums, while less healthy people would buy coverage from states with more stringent requirements to ensure their treatment would be covered. Premiums in states with stringent coverage requirements would increase, pushing more and more healthy people to cheaper alternatives, and eventually making coverage in those states unaffordable for the people who need it. [0] (PDF) https://www.naic.org/prod_serv/SPD-OPS-19.pdf https://www.naic.org/prod_serv/SPD-OPS-19.pdf

Shivetya 7y ago

The McCarran-Ferguson Act which is a law at the Federal Level enacted in 1945 is what gives states the the authority to regulate insurance offerings within their borders and what helped create the mess and inability to shop across borders. So yeah, its a Federal Law that screwed this up. Just because it does not prohibit cross state sales is just mincing words. It gave states the ability to make it near impossible to do so. Without consistent requirements how would one expect to have a viable product? There was an attempt to repeal it but that apparently did not get past the Senate, it was again pushed in 2017 through another act. There are attempts in the Senate as of 2019 to do it.

ShrinkingWild 7y ago

>It would be great until there was a hard year and the insurance companies would have the be bailed out by the taxpayers. Surely that wouldn't be the case? They wouldn't have to be bailed out; If a company hadn't planned ahead well enough to survive a bad year then they deserve to go under. In an unregulated economy, bailing out failed companies shouldn't be an option.

chii 7y ago
except all those people who's supposed to have been insured will now no longer be (but would've paid their premium, at least partially). So what happens then? Either those people lose their money, or the state bails them out. If the gov't forces an insurer to keep a reserve (for such an occasion), then it becomes regulation!
- ShrinkingWild 7y ago
  Those people lose their money. I can't think of a good reason why they'd expect to get that money back, they were paying for a service that was being provided up until the company could no longer provide it. Losing your money to a failed company is a cost of doing business sometimes, it's a risk everybody takes when they purchase things in advance. The company/owner would owe a refund for the service not provided due to company collapse, whether or not they can pay that is another matter and should be accepted as part of the risk. There's no such thing as risk free business and attempts to remove the risk inevitably remove part of the value too.
  - vageli 7y ago
    > Those people lose their money. I can't think of a good reason why they'd expect to get that money back, they were paying for a service that was being provided up until the company could no longer provide it. > Losing your money to a failed company is a cost of doing business sometimes, it's a risk everybody takes when they purchase things in advance. The company/owner would owe a refund for the service not provided due to company collapse, whether or not they can pay that is another matter and should be accepted as part of the risk. There's no such thing as risk free business and attempts to remove the risk inevitably remove part of the value too. I think we as a society have deemed it unacceptable to hold consumers accountable for company selection in some specific industries. Banking and healthcare come to mind. We certainly don't think it's okay for depositors to lose their shirts over a banker's risk taking and we hold that value to such a degree that in America at least it has been codified into law. I know at least NJ mandates a separate fund that insurers must pay into to protect against this instance.

TheRealDunkirk 7y ago

Give me a better way to express this idea, then: How do we create a REAL market for health insurance, so we can buy it like EVERY OTHER KIND OF INSURANCE?

jkaplowitz 7y ago
It's not like every other kind of insurance, though. Health "insurance" covers many expected and predictable costs, which isn't what insurance is about in any industry. What we call health "insurance" is really just access to health care with expenses adequately covered, with only the portion of that covering unexpected or unlikely risks properly falling under the heading of insurance. Additionally, even the true insurance piece is one of the only kinds of insurance where it's a societal imperative (in most people's opinions) for everyone to get the insured benefits they need, regardless of ability to pay. Even car insurance isn't required for people who rely on mass transit. Health insurance policymaking needs to differ from most other kinds of insurance policymaking for these reasons.
- TheRealDunkirk 7y ago
  That is an awesome answer, but pedantic. The real question is, again: how do we express the idea to create a REAL market for health "insurance"? It's not about the difference between health "insurance" and other kinds of "insurance." The question is how to express how to create a market for it.
  - jkaplowitz 7y ago
    Yeah, I am disagreeing with the choice of a market solution for something which we want to make available to people who can't afford it. That's not what markets are meant for or good at, especially not the deregulated free market that is often meant by questions like yours. As for a tightly regulated market with lots of requirements about coverage and price, some states already have that, and it's exactly those tightly regulated markets which the "let insurance sell across state lines" proposals want to disrupt.