RALEIGH – In the midst of many contentious debates in the General Assembly over major issues – taxes, state spending, property rights, the death penalty, campaign finance, public corruption, and transportation, just for starters – a local bill on health care managed to get through the legislative process without attracting much notice.
As reported yesterday in the Asheville Citizen Times, the legislation authorizes a pilot program to set up a health-insurance pool through the Asheville Area Chamber of Commerce:
Under the plan, small and large employers in the area would combine to purchase health insurance. The legislation, which is awaiting a signature from Gov. Bev Perdue, gives the chamber and local businesses the ability to develop the arrangement that is not currently allowed by state law.
The chamber said the program could insure as many as 25,000 workers in the Asheville area. The pool would be the only one of its kind operating in the state and those working to develop it hope it could form the basis for other pools in the state and across the country.
Just to be clear: there is nothing new about multi-business pools offering health insurance. In fact, there’s nothing new about local chambers of commerce sponsoring health insurance pools – I once enrolled the John Locke Foundation in such a plan back in the 1990s.
As I understand it, what makes the Asheville plan different – and more like insurance pools in other states – is that it clears away various government regulations that impede flexibility in setting up insurance options and including both small firms and self-insured large firms.
A local initiative to clear away burdensome regulation. Sounds like a bill right up my alley, doesn’t it? And, indeed, had I been in the legislature this year, I would have voted for it. But I also wouldn’t have gotten my hopes up that it would bring a dramatic improvement in health insurance flexibility or affordability.
All other things being equal, pooling subscribers is a fine way to get a good deal in insurance. The problem is that health insurance isn’t like other forms of insurance, which act as tools for individuals to manage the risk of incurring big expenses for unforeseen events such as a house fire or the death of the family’s breadwinner. Today’s health insurance is more akin to prepaid health care, with relatively low deductibles and insurance claims for services costing just a few hundred dollars, and sometimes even a few dozen dollars.
Because of wrongheaded governmental tax and regulatory decisions in the 1930s and 1940s, employers became the primary sponsors of health plans for non-elderly Americans. After taxes, it was cheaper and easier to have an employer “buy” health care on one’s behalf rather than purchase routine care or health insurance directly.
Employer-based health insurance pools have many defects. The main one is that from year to year, neither employers nor insurers know precisely who’s going to be in the pool. That uncertainty manifests itself in higher rates and an annual enrollment period that makes little sense. Expanding beyond a single employer to a larger group may help a little, but it’s not the best solution.
The best solution is for families to own their own health policies, just as they own other insurance policies. Regardless of whether they change jobs, change careers, or change locations, their health plans would follow them. Pooling could still be available through churches, membership organizations, and other sponsors.
Within a much-expanded individual market for insurance, made possible by equitable tax treatment and light state regulation, it would make sense to purchase term policies, much like life insurance, that protect the family assets against catastrophic medical costs for 10 years or more, with guaranteed renewal at that time (though the premiums could be adjusted with changes in the family’s composition and health status).
What’s ironic about the Left’s current attack on conservatives who question ObamaCare is that we don’t like the current insurance market any more than they do. Far from carrying the water of insurance companies, we favor ideas that most big insurers detest, such as consumer-driven health care. They like the current employer-based model that they administer. The Left ultimately seeks a government-run model.
Hood is president of the John Locke Foundation