More Regulation Won't Help Health Care
The
rising cost of health care and health insurance is of concern to many
across the state. How should we try and achieve affordable coverage? A
task force created by Governor Strickland just released recommendations
that claim the way to lower health care costs is through increasing
regulations on health insurance and consumers. These regulations will
only raise health insurance prices, however, which will increase the
number of the uninsured. That is the last thing Ohio's health care
market needs.
Governor Strickland campaigned for office promising to convene a task force to study how to reform health care in Ohio. Living up to his promise, a "State Coverage Initiative Team" was appointed and released its recommendations in July. Among them were the proposal that the government mandate individuals purchase health insurance and require insurers to sell health insurance to all that apply (known as "guaranteed issue" in the health insurance world). Oh, and the state should also impose regulations to make this health insurance "affordable."
What this task force seems to have missed is the fact that you can force insurers to sell people insurance, or you can have affordable health insurance, but it is very hard to have both. Insurance companies stay in business by bringing in more money than they pay out. As part of that, companies may not choose to insure people whom they know will cost a lot.
While that is not so good for those people, this practice helps ensure that prices remain affordable for everyone else. If insurers are forced to take anyone who applies, even those who have very costly illnesses, then that means the price everyone else pays will be higher.
Of course, the task force wants to impose a policy that will regulate the cost of health insurance, trying to keep it "affordable" for everyone. What has happened in states that have tried this, according to the Council for Affordable Health Insurance, is that there is reduced competition among insurers and higher insurance costs than in states without this type of system.
One of the reasons this happens is because the young and healthy decide that insurance costs too much and do not buy it. But Governor Strickland's task force has the answer for that -- mandate that everyone buy health insurance.
What this means is that the young and healthy will be forced to purchase a product whose price has been artificially inflated by government decree. While they may have no need for this product and may never use it, the government makes them buy it in order to help subsidize others who use it.
In reality, this is really just a very inefficient tax increase. While I would never advocate that Ohioans' taxes be raised, it would be much simpler to achieve the goal of helping to make insurance available to those with chronic health conditions to simply raise taxes and have the state provide insurance for them.
One of the main reasons that health insurance is unaffordable to some in the state is because government mandates and rules have raised its cost. The Strickland task force recommendations will only raise this cost further. Instead of looking for ways to meddle in the market, this task force should have explored reforms that Georgia is pursuing, which hold the promise of lower insurance prices through less government regulation.
Affordable health insurance is a noble goal. But you do not reach that goal through more government interference in the market. The experience of other states with this type of regulation shows that if the task force plan is put in effect, it is likely to put health insurance out of reach for even more Ohioans.
Marc Kilmer is a policy analyst with the Buckeye Institute for Public Policy Solutions, a research and educational institute located in Columbus, Ohio.