HB 1256 Not Really A Benefit To Consumers
Colorado lawmakers introduced several health insurance related bills this week, including HB1256, which proposes to allow health insurance policies from other states to be sold in Colorado. This sounds an awful lot like the major talking point of John McCain’s health care reform platform last year.
Marcy Morrison, the Colorado Insurance Commissioner, works hard to regulate the health insurance market in Colorado to make it as beneficial as possible for consumers. Not all states have the same level of regulations in place, and opening the health insurance market to allow for out of state plans to be sold here in Colorado would mean that consumers could potentially end up with lower quality health insurance products, regulated by another state’s rules.
Our health insurance system is complicated enough as it is. There are already hundreds of health insurance policies available in Colorado, all of which have to meet the state’s guidelines and standards. Adding policies from out of state would just complicate things further, and make it more difficult for consumers to separate the good policies from the not-so-good.
John McCain was very much in favor of allowing health insurance to be sold across state lines. Interestingly enough, his home state doesn’t have a high risk pool for people who are unable to qualify for medically underwritten health insurance. Here in Colorado, we have a good high risk pool and good consumer protection laws. As a broker, I’d rather be selling policies that I know meet all of Colorado’s standards.
As I see it, people have the right to trade with others on a voluntary basis. If an insurance company offers a product and someone wants to buy it, I have no right to forbid it. Hence, I wouldn’t want to empower a politician to do it, either. Call me a free-trader.
Further, in some states the average insurance policy is less expensive than in Colorado, as I cite here.
To paraphrase the above post:
Opening the health insurance market to allow for out of state plans to be sold here in Colorado would mean that consumers could potentially end up with what they judge to be lower cost and/or higher quality health insurance products, regulated by another state’s rules. I’m up for allowing consumers to make that choice.
Brian,
Yes, that sounds pretty simple. But most of the people we talk to aren’t as savvy as you when it comes to understanding all of the details of their health insurance policy and how it pertains to their possible financial risks. They trust that what they’re buying has been reviewed by the Colorado department of insurance to meet a certain standard. Invite an agent from MEGA Life and Health over to your house to see how well the complicated contract gets explained and how well you understand what’s not covered. There is a commission involved, so he wants to make his product sound really good.
And I’m sure you know people that benefit from government mandated guarantee issue coverage (like through an employer). Health care isn’t as simple as choosing between McDonalds and Burger King. If we left it at the “right to trade with others on a voluntary basis” in the health care market, people with pre-existing conditions would have no choice and that logic breaks down.
There are simple examples, like choosing to buy steel from Hank Rearden or not. But the invisible hand only works when both the consumer and producer are able to choose freely. Saying something like “people have the right to trade with others on a voluntary basis” is misses the point in a discussion about health care.
One would think that providing more policies to choose from would be beneficial for the consumer.
I have not been able to find one insurer who provides policies not based on a pay-as-you-go basis.
In other words, individual health insurance policies are priced similarly to yearly renewable term life.
Who in their right mind maintains yrt life coverage for many years?
We need more quality policies, not more quantity policies.
Don Levit
Don,
All this would do is reduce the number of options available. The insurance companies would find the state with the least amount of consumer protections, close up shop in the states where they currently operate, and all move to that one state.
Consumers would not benefit at all from HB 1256.