Health coverage: Run by the government or the marketplace?

Joe Siegel

Guest columnist

Perusing the Gateway letters concerning health care coverage this past year, you can easily conclude that beliefs are extremely polarized, more so even than opinions on defense policy. In our community, health care issues seem to be striking at the core of readers’ concerns, ranging from privacy to budgets, and, of course, our well-being.

We’ve all read the talking points: many uninsured, pre-existing conditions, taxing of benefits, single-payer, rationing, Canadian-style — you get the picture.

As a free-market/non-government interventionist type, I see one particular issue as the instigator of problems from quality of care to cost, and that would be the restrictions on buying health coverage across state lines.

The cost differential between any particular age or health status demographic from state to state is enormous, but people in Gig Harbor are no sicker than in San Antonio. A state which mandates Cadillac-style policies that require insurers to cover acupuncture, fertility treatments, massages and the like restricts buyers’ choices and costs them more than a state which allows insurers to offer cafeteria-style policies, which means you choose the coverage and deductible.

That being self-evident, I wondered why there aren’t movements to allow health care coverage to operate under the same type of interstate commerce that allows consumers to buy running shoes or pocket protectors. So I contacted state Rep. Jan Angel, R-Port Orchard, one of our 26th District legislators. Her office responded with useful background on the issue.

They told me several state legislatures have proposed removing constraints on purchase of policies nationally, and Washington State is among them. House Bill 1871 was introduced by Rep. Jaime Herrera, R-Camas, in October 2009, but it was denied a public hearing before the Health Care and Wellness Committee, chaired by Eileen Cody, D-West Seattle.

If the chair chooses not to hear the bill, the proposal dies in session, and that’s what happened. Why?

Cody co-chaired a similar bill, HB 3015, that has additional “consumer protections.” She has not responded to my requests for a definition of “consumer protections,” a phrase that makes my ears burn.

Why not let the free market work it out? If you don’t like one company’s offer, then take your business elsewhere. Anytime someone says, “I’m from the government, and I’m here to help,” I want to run.

Predictably, the ultimate result is economic stagnation. Push down on one side of a blob of silly putty to benefit a special interest group, and the putty unintentionally rises on the other side, damaging someone else. The famous economist Frederick Hayek called erratic government intervention “arbitrary coercion.”

Angel’s office also cited the 1945 federal law called the McCarran-Ferguson Act. The act allows states to regulate health coverage, which constrains interstate purchasing. It resulted from the Supreme Court’s review of a claim by an insurance underwriter and several states (the plaintiffs), who asserted that states have the authority to regulate health insurance. The court deferred the issue to Congress, which legislated McCarran-Ferguson into law.

That effectively endorsed the plaintiffs’ argument that Article 1, Section 8 of the Constitution, the Commerce Clause, which gives Congress the power to regulate interstate commerce, authorizes the states to impede interstate health insurance commerce.

In reading Section 8, it’s clear it was written to allow the federal government to promote interstate commerce, certainly not to allow individual states to restrict it.

Go figure.

So under that odd logic, why not apply the McCarran-Ferguson act more broadly and prevent Weyerhaeuser from selling timber out of state? Then we would only be able to buy our 2-by-4s within Washington? How would that artificial lack of competition affect price and quality?

In the 18th century, the father of modern economics, Adam Smith, called natural marketplace efficiencies “the invisible hand.” That invisible hand should be unleashed by having well more than 1,200 national health insurance companies compete for business in our state, as opposed to 61.

Why not substitute that de-regulatory method of increasing competition for President Obama’s desire to fix inadequate health insurance competition through a “public option?” (The inadequate part ironically created by government intervention/McCarran-Ferguson.)

So back to my above “why?” Don’t the polarized opinions in the Gateway’s letters really represent the gulf between pro- and anti-regulatory belief systems? The liberal vs. conservative philosophy characterizes those who do and those who don’t believe government has the ability to successfully ration products without ruining innovation and supply.

Take a walk through Gig Harbor North and ask business owners who insure their employees, and workers who purchase their own coverage, whether they think they’d be better off with increased choices that result in better and cheaper options; or our current, artificially limited status quo.

Our state’s health care system would be far more efficient if we revised or eliminated unnecessary and capricious laws that restrict interstate commerce.

Guest columnist Joe Siegel can be reached by e-mail at jbod@comcast.net. He blogs at libertythruknowledge.com.