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Erase the lines between the States, DJ Trump

Don McManusDon McManus Member Posts: 21,940 ✭✭✭✭
edited February 2016 in Politics
It seems one of the popular notions of the GOP in this cycle, regarding Health Insurance, is the idea that we need to remove the barriers that currently prohibit out-of-state companies from selling health insurance to individuals. The argument is that it will increase completion, and allow multiple companies the ability to offer multiple policies to everyone in the nation.

On the surface, this seems to be a reasonable idea. More choice equals more options equals the potential for better service and lower prices.

Would this happen, and what are the downsides of such a plan?

An historical perspective:

Prior to the ACA, (and continuing today with additional federal oversight) the individual insurance commissions in the individual states regulated the health insurance companies within their borders. The idea being that the sale of insurance need not cross state lines, and thus the Commerce Clause did/does not apply. This system provided 50 individual environments controlled locally to serve the residents of that environment. The downside is, obviously, that if a person moves from one state to another, their insurance plan cannot move with them.

So, we have 50 different engines of innovation that are self-isolated, whose product is not individually portable, but allows for the evaluation of each of these 50 models by the other 49. This limits the individual, but provides for a great potential for the improvement of each of these models based upon the documented success or failure of another.

Now, the GOP Candidates (with the possible exception of Carson, who seems to want the Federal Government to write an annual check to each citizen to spend or save as they wish) are suggesting, in DJ Trump's words, to 'Erase the lines' between the states regarding Health Insurance.

What will be the result?
Initially, one could reasonably expect the plan to work as advertised. A large number of companies will offer a large number of different plans to every American. One can then reasonably expect, through competition, that the overall price of Health insurance will go down as companies compete for our business.

Long term, recognizing that Health Insurance is a capital intensive business, one must accept that the larger companies through efficiencies of scale will be able to price the smaller companies out of the market. Over time, like occurred in the auto industry in the early 1900s, the supply will be consolidated into a smaller and smaller number of providers - eventually fewer providers than we had before the ACA, and fewer than we have today. The expected competitive free-for-all between suppliers will, as with all capital intensive industries, be self limiting, in that those with less access, or less efficient access to this capital will eventually be priced out of the market and will disappear.

Therefore, in my opinion, while there is a fairly safe expectation of short term cost reductions, the long term prospects for cost reduction will be limited, if not contra-indicated by the consolidation of the industry amongst a few very large companies.

There is, however, a more important and dangerous effect that must be considered.

The erasure of the lines around the states is an increase in power of and by the Federal Government. It may make sense for the health insurance industry, but it is yet another power that would be usurped by the Federal Government. The next question is obviously monitoring and regulation. Prior to the ACA and still continuing, Health Insurance companies a primarily monitored and regulated by the individual states. Erasing the lines between the States will require that the Federal Government pick up the bulk of the monitoring and regulation - resulting in a one-size-fits-all regulation regime. This not only continues the degradation of the power and influence of the individual states, but almost by definition (given that the proponents all have listed basic rules such as portability, acceptance of coverage of pre-existing conditions, etc.) will result in Federal dictates as to coverage conditions. Much of the savings that is supposed to be realized by the competitive advantage mantra and the elimination of the ACA will be absorbed by this more powerful and intrusive Federal monitoring and regulation of the industry.

Is this a Federal issue? Maybe.

I only suggest that we think about the long term effects, both upon our health insurance and the relative power of the states with respect to the Federal Government before we jump in and say yes.
Freedom and a submissive populace cannot co-exist.

Brad Steele

Comments

  • kimikimi Member Posts: 44,730 ✭✭✭
    edited November -1
    Don, what about states regulating the bigger companies who would be out to cut out the smaller companies?
    What's next?
  • ScottymacScottymac Member Posts: 472 ✭✭✭
    edited November -1
    First Self responsibility.

    Except the fact is no one can afford a major health issue (OK Buffet and Gates could but most can't)

    So people choose to go without coverage and it costs everyone else somewhere somehow.

    Mandated health insurance is forcing the hand of those who refuse to be responsible and makes sure the provider gets paid.

    As far as state lines go their is absolutely NO reason blue cross or whoever can't sell healthcare policies nationally and perhaps that should have been stipulated in the law correctly mandating coverage.
  • Mr. PerfectMr. Perfect Member Posts: 59,616 ✭✭✭✭
    edited November -1
    quote:Originally posted by Scottymac
    First Self responsibility.

    Except the fact is no one can afford a major health issue (OK Buffet and Gates could but most can't)

    So people choose to go without coverage and it costs everyone else somewhere somehow.

    Mandated health insurance is forcing the hand of those who refuse to be responsible and makes sure the provider gets paid.

    As far as state lines go their is absolutely NO reason blue cross or whoever can't sell healthcare policies nationally and perhaps that should have been stipulated in the law correctly mandating coverage.
    It's not that you missed the point that is disconcerting, it's the miles by which you missed it that is.
    Some will die in hot pursuit
    And fiery auto crashes
    Some will die in hot pursuit
    While sifting through my ashes
    Some will fall in love with life
    And drink it from a fountain
    That is pouring like an avalanche
    Coming down the mountain
  • pwilliepwillie Member Posts: 20,233 ✭✭✭
    edited November -1
    I thought interstate commerce is a right of business...I use interstate liability (casualty) companies ..
  • ScottymacScottymac Member Posts: 472 ✭✭✭
    edited November -1
    Perfect the fact that you have spent so much time researching my comments is complimentary. [8D][8D]

    The MOST Conservative people (you right)?all agree that paying for your own healthcare is a responsibility so you can't be attacking that.

    As far as Federal Government regulating interstate trade that was covered way before and the fed has always had the right to regulate interstate commerce. (Article 1 Section 8 Clause 3).

    As far as addressing the reduction in cost associated with erasing the lines between the states I thought that my comments alluded to deregulating the health insurance companies would indeed reduce costs.



    quote:Originally posted by Mr. Perfect
    quote:Originally posted by Scottymac
    First Self responsibility.

    Except the fact is no one can afford a major health issue (OK Buffet and Gates could but most can't)

    So people choose to go without coverage and it costs everyone else somewhere somehow.

    Mandated health insurance is forcing the hand of those who refuse to be responsible and makes sure the provider gets paid.

    As far as state lines go their is absolutely NO reason blue cross or whoever can't sell healthcare policies nationally and perhaps that should have been stipulated in the law correctly mandating coverage.
    It's not that you missed the point that is disconcerting, it's the miles by which you missed it that is.
  • Don McManusDon McManus Member Posts: 21,940 ✭✭✭✭
    edited November -1
    quote:Originally posted by kimi
    Don, what about states regulating the bigger companies who would be out to cut out the smaller companies?


    Then you have the worst of all worlds, I would think. The Federal Government sets up a mandate with its layer of rules and regulations, and the states add their layer of rules a d regulations on top of it. It would greatly reduce the advantage of economies of scale because we would be left with 50 individual regulatory agencies that are working under an expanded Federal Regulating agency.
    Freedom and a submissive populace cannot co-exist.

    Brad Steele
  • Don McManusDon McManus Member Posts: 21,940 ✭✭✭✭
    edited November -1
    quote:Originally posted by pwillie
    I thought interstate commerce is a right of business...I use interstate liability (casualty) companies ..


    So do we. Health insurance is currently treated differently. Not saying that it is the best way to do it, just pointing out that a reduction in the power and rights of the states to further subjagate them to the Federal Government is not necessarily a good idea.
    Freedom and a submissive populace cannot co-exist.

    Brad Steele
  • BT99BT99 Member Posts: 1,130 ✭✭✭✭✭
    edited November -1
    Don't know about between the states, but there's a problem
    within the states. Friend of mine tried to get insurance and had
    problems finding a company that would sell it to him. He lives
    11 miles from hospital but no company would sell him insurance
    because he lived across the county line. They would sell him
    insurance in his county but he had to use hospitals about 60 miles
    away in the opposite direction. All this was because he was not
    allowed to keep the company he had. Best he could do for insurance
    for just him alone is $655. a month and a $6850. deductible.
  • kimikimi Member Posts: 44,730 ✭✭✭
    edited November -1
    quote:Originally posted by Don McManus
    quote:Originally posted by kimi
    Don, what about states regulating the bigger companies who would be out to cut out the smaller companies?


    Then you have the worst of all worlds, I would think. The Federal Government sets up a mandate with its layer of rules and regulations, and the states add their layer of rules a d regulations on top of it. It would greatly reduce the advantage of economies of scale because we would be left with 50 individual regulatory agencies that are working under an expanded Federal Regulating agency.


    What would you suggest then? Never mind. [:D]
    What's next?
  • Don McManusDon McManus Member Posts: 21,940 ✭✭✭✭
    edited November -1
    quote:Originally posted by Scottymac
    First Self responsibility.

    Except the fact is no one can afford a major health issue (OK Buffet and Gates could but most can't)

    So people choose to go without coverage and it costs everyone else somewhere somehow.

    Mandated health insurance is forcing the hand of those who refuse to be responsible and makes sure the provider gets paid.

    As far as state lines go their is absolutely NO reason blue cross or whoever can't sell healthcare policies nationally and perhaps that should have been stipulated in the law correctly mandating coverage.


    If I interpret this correctly, you are supporting the individual mandate found in the ACA that forces all American to buy coverage. In this we will have to agree to disagree.

    Your last statement is factually incorrect. Currently there are laws in the individual states that prevent the cross-border sale of health insurance. The states could change these laws if they so choose, but to date, they have chosen not to do so. The Commerce Clause does not cover intra-state transactions, so it does not apply in this case.

    I am not saying that interstate policy availability in necessarily a bad thing. I am fairly confident, however, if mandated and manipulated by the Federal Government it will be a net negative.
    Freedom and a submissive populace cannot co-exist.

    Brad Steele
  • Don McManusDon McManus Member Posts: 21,940 ✭✭✭✭
    edited November -1
    quote:Originally posted by kimi

    What would you suggest then?


    Ideally, kimi, I would think that the individual states opening up their markets to outside companies would be best. If this were the case, the individual states could create those regulations and controls that fit their residents and continue the ability of these states to uniquely serve their people.

    I believe, however, that once this happens, Congress will jump on it via the Commerce Clause and force standards as we see in the ACA.

    Kind of he devil you know vs the one you don't know.
    Freedom and a submissive populace cannot co-exist.

    Brad Steele
  • Mr. PerfectMr. Perfect Member Posts: 59,616 ✭✭✭✭
    edited November -1
    quote:Originally posted by Scottymac
    Perfect the fact that you have spent so much time researching my comments is complimentary. [8D][8D]

    The MOST Conservative people (you right)?all agree that paying for your own healthcare is a responsibility so you can't be attacking that.

    As far as Federal Government regulating interstate trade that was covered way before and the fed has always had the right to regulate interstate commerce. (Article 1 Section 8 Clause 3).

    As far as addressing the reduction in cost associated with erasing the lines between the states I thought that my comments alluded to deregulating the health insurance companies would indeed reduce costs.



    quote:Originally posted by Mr. Perfect
    quote:Originally posted by Scottymac
    First Self responsibility.

    Except the fact is no one can afford a major health issue (OK Buffet and Gates could but most can't)

    So people choose to go without coverage and it costs everyone else somewhere somehow.

    Mandated health insurance is forcing the hand of those who refuse to be responsible and makes sure the provider gets paid.

    As far as state lines go their is absolutely NO reason blue cross or whoever can't sell healthcare policies nationally and perhaps that should have been stipulated in the law correctly mandating coverage.
    It's not that you missed the point that is disconcerting, it's the miles by which you missed it that is.

    I stumble upon a clueless comment of yours and now you think I'm searching you out. How cute. Mommy bathe you today?
    Some will die in hot pursuit
    And fiery auto crashes
    Some will die in hot pursuit
    While sifting through my ashes
    Some will fall in love with life
    And drink it from a fountain
    That is pouring like an avalanche
    Coming down the mountain
  • Mr. PerfectMr. Perfect Member Posts: 59,616 ✭✭✭✭
    edited November -1
    quote:Originally posted by Don McManus
    It seems one of the popular notions of the GOP in this cycle, regarding Health Insurance, is the idea that we need to remove the barriers that currently prohibit out-of-state companies from selling health insurance to individuals. The argument is that it will increase completion, and allow multiple companies the ability to offer multiple policies to everyone in the nation.

    On the surface, this seems to be a reasonable idea. More choice equals more options equals the potential for better service and lower prices.

    Would this happen, and what are the downsides of such a plan?

    An historical perspective:

    Prior to the ACA, (and continuing today with additional federal oversight) the individual insurance commissions in the individual states regulated the health insurance companies within their borders. The idea being that the sale of insurance need not cross state lines, and thus the Commerce Clause did/does not apply. This system provided 50 individual environments controlled locally to serve the residents of that environment. The downside is, obviously, that if a person moves from one state to another, their insurance plan cannot move with them.

    So, we have 50 different engines of innovation that are self-isolated, whose product is not individually portable, but allows for the evaluation of each of these 50 models by the other 49. This limits the individual, but provides for a great potential for the improvement of each of these models based upon the documented success or failure of another.

    Now, the GOP Candidates (with the possible exception of Carson, who seems to want the Federal Government to write an annual check to each citizen to spend or save as they wish) are suggesting, in DJ Trump's words, to 'Erase the lines' between the states regarding Health Insurance.

    What will be the result?
    Initially, one could reasonably expect the plan to work as advertised. A large number of companies will offer a large number of different plans to every American. One can then reasonably expect, through competition, that the overall price of Health insurance will go down as companies compete for our business.

    Long term, recognizing that Health Insurance is a capital intensive business, one must accept that the larger companies through efficiencies of scale will be able to price the smaller companies out of the market. Over time, like occurred in the auto industry in the early 1900s, the supply will be consolidated into a smaller and smaller number of providers - eventually fewer providers than we had before the ACA, and fewer than we have today. The expected competitive free-for-all between suppliers will, as with all capital intensive industries, be self limiting, in that those with less access, or less efficient access to this capital will eventually be priced out of the market and will disappear.

    Therefore, in my opinion, while there is a fairly safe expectation of short term cost reductions, the long term prospects for cost reduction will be limited, if not contra-indicated by the consolidation of the industry amongst a few very large companies.

    There is, however, a more important and dangerous effect that must be considered.

    The erasure of the lines around the states is an increase in power of and by the Federal Government. It may make sense for the health insurance industry, but it is yet another power that would be usurped by the Federal Government. The next question is obviously monitoring and regulation. Prior to the ACA and still continuing, Health Insurance companies a primarily monitored and regulated by the individual states. Erasing the lines between the States will require that the Federal Government pick up the bulk of the monitoring and regulation - resulting in a one-size-fits-all regulation regime. This not only continues the degradation of the power and influence of the individual states, but almost by definition (given that the proponents all have listed basic rules such as portability, acceptance of coverage of pre-existing conditions, etc.) will result in Federal dictates as to coverage conditions. Much of the savings that is supposed to be realized by the competitive advantage mantra and the elimination of the ACA will be absorbed by this more powerful and intrusive Federal monitoring and regulation of the industry.

    Is this a Federal issue? Maybe.

    I only suggest that we think about the long term effects, both upon our health insurance and the relative power of the states with respect to the Federal Government before we jump in and say yes.



    Don, one of the reasons the founders included the ability for the federal government to regulate interstate commerce was to unify the several states. Do you think that is an outmoded model?
    Some will die in hot pursuit
    And fiery auto crashes
    Some will die in hot pursuit
    While sifting through my ashes
    Some will fall in love with life
    And drink it from a fountain
    That is pouring like an avalanche
    Coming down the mountain
  • Don McManusDon McManus Member Posts: 21,940 ✭✭✭✭
    edited November -1
    quote:Originally posted by Mr. Perfect
    Don, one of the reasons the founders included the ability for the federal government to regulate interstate commerce was to unify the several states. Do you think that is an outmoded model?


    No, Mr. P. I do not think it outmoded at all, provided we could trust the Federal Government to do what was intended. The commerce clause reserved to the Federal Government the power to regulate trade between the U.S. and Foreign countries so that a single trade agreement would apply to all states and importers and exporters would not have to deal with 13 different trade arrangements. It also was intended to provide for a free-trade zone amongst the states.

    We have seen how this has been abused with regard to the interstate sale of firearms, of course, and my fear is that the Federal Government will again over-step its boundaries and dictate what that trade shall look like instead of simply ensuring that the sale of insurance can transparently be conducted across those lines.

    For whatever reason, the health insurance industry developed differently in this country than did almost every other industry. The individual states determined that they would regulate the industry within their borders, and to do so, because of the commerce clause, would have to insist upon that industry being contained within the borders of the state. I believe this arrangement to have both positive and negative attributes, and am merely pointing out that erasing the state lines has potential drawbacks that may outweigh its advantages.

    The bigger fear I have is, as stated, is the continual elimination of the importance of state borders. This obviously started in the lead up to the Civil War, and the importance of state borders has been reduced tremendously over the intervening years. There are positive arguments for erasing state borders regarding health insurance. At some point, if we continue to find individual reasons to erase the lines between the states, they will cease to exist as anything significant. That, IMO, would destroy any hope for the diversity of thought and approach that has contributed to the strength and success of the American experience.
    Freedom and a submissive populace cannot co-exist.

    Brad Steele
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