I was sitting at my desk writing out checks to various doctors, clinics, medical labs and agencies for my co-pays, deductibles, and insurance premiums when I heard a discussion on one of the morning news programs about President Obama’s newest health proposals.
He was suggesting a program that allows federal bureaucrats to review any premium increases by insurance companies. My first reaction was “that might be a good idea.” But then I started to think about it and changed my mind.
Every state has an insurance commissioner who is responsible for reviewing and approving or rejecting rate increases. We have a Madison County resident, State Sen. Ralph Hudgens, who is running for Georgia Insurance Commissioner in the fall elections. So any new federal agency dedicated to this cause would, once again, be taking away state responsibilities.
I realized as well that a federal office would try to force national standards on insurance rates. Again, sounds like a good idea until you realize that the cost of doing business varies widely between the states. Real estate, energy and labor costs in California, for example, are much higher than those in Georgia. Therefore, a federal ruling reducing rates in California might have the effect of increasing them in Georgia.
In addition, I can find nothing in the Constitution that allows the federal government to set prices within state borders. Such a bill, in my opinion would violate the Tenth amendment.
But there is one way it can legally be done. That is to pass the Republican plan to allow people to buy insurance across state borders. In that case, insurance rates would legally fall under the interstate commerce clause and federal price controls would be legal.
Then my mind turned to the idea of opening up the state borders so that people can buy insurance from any state in the union. That would greatly increase the competitive nature of health insurance. People in the high rate states, like California, New Jersey and others could save a considerable amount of money that way.
But then insurance companies in those states would be forced to reduce their rates in order to compete with the out-of-state companies, and might very well find that they are not able to stay in business with lower rates.
I have a confession to make. I am not as smart as some of my fans think I am. (Nor as dumb as some of my critics say.) I have no idea which is the better plan. But neither do the members of Congress. That is why the health care debate is so confusing. Perhaps the states should allow more companies to function within their borders to increase competition. But Congress does not have constitutional power to require that.
That might be a good question to ask the candidates for insurance commissioner. Maybe one of them has the answer.
Frank Gillispie is founder of The Madison County Journal. His e-mail address is firstname.lastname@example.org. His website can be accessed at http://www.frankgillispie.com/gillispieonline.
If an insurer in Georgia wished to sell health insurance in California they would have to be prepared to pay, at current California rates, the claims made by California residents. Perhaps the Georgia company could save a few cents in the differential between Georgia and California administrative expense, however, if the fees charged in California did not reflect the expense of that state, the residents of Georgia would have to subsidize the difference. Then that Georgia company would become too expensive for Georgia residents.
The free market would soon shake out the ground rules of competition across state lines, and the health care system would be improved even if marginally. It is questionable if many firms would venture into cross state line insurance, but it should be permitted. The unknown in this debate is what interstate commerce would do to insurance pricing and reimbursement policies.