Consumer Alert: Interstate Insurance “Scam”

[ThisThreadIsSatire]

(Op-Ed NOT reprinted from The Washington Post)

As the Senate moves closer to debate on their version of health care — or more accurately, health insurance — reform, those in opposition are beating the drum ever louder for what they claim is a simple solution that will guarantee increased competition and result in lower premiums: “… allow consumers to purchase health insurance across state lines.” Lately they have added, for emphasis, (and in unison thanks to the lobbyists’ “send all” button) “If I can buy a car in another state, why can’t I do the same for health insurance?”

It all seems so logical. And unlike the issue we are hoping to resolve, it’s easy to understand. Even better, it fits conveniently into any sized sound bite.

Just one problem — it would only result in the further deregulation of an industry that is already monopolistic in nature. And history shows that the less a monopoly is regulated, the more its customers get screwed…

In other words, it’s a scam.

As evidence, I offer the following falsehoods that this so-called “logic” perpetuates:

* that most individuals currently have the opportunity to shop for their own health coverage. The vast majority who have private insurance get it through their employer or union, who decides for them,
* that there is, in fact, real competition in the industry. As long as the insurance companies are exempt from anti-trust regulations, ‘more choices’ just means there are more tables and the “Collusion Banquet”. While the House bill would remove the exemption, the Senate will have to adopt an amendment to add it to theirs, requiring an unlikely 60 votes, and
* that the companies cannot currently sell insurance wherever they want

This last point gets to the real crux of the matter. This isn’t about from where people can buy insurance; it’s about from where the insurers can sell it. Currently, to do business in any state, all they have to do is set up a corporation there – and of course abide by that state’s regulations, (and pay taxes).

But by “crossing state lines” the insurance companies can set up shop in the state whose regulations are most advantageous for themselves, not their customers. It’s no accident that so many businesses incorporate in Delaware and so many credit card issuers incorporate in South Dakota. It’s about regulation — or lack of it — period.

To demonstrate why allowing the companies to sell health insurance across state lines is such a bad idea, let’s start with their own example: I live in New York. I am free to buy a car in New Jersey, Pennsylvania, or anywhere else I choose. But if New York is where the car is ‘garaged’, in other words, the car’s ‘residence’, then I must register and insure it in compliance with New York regulations. This makes sense, because if I cause damage or injury, it will most likely occur in New York, and if I’m uninsured or under-insured, it is New York taxpayers who may very likely end up footing the bill.

This holds even truer when it comes to health insurance. Uninsured and under-insured people still get sick and injured, and still get care in hospitals whether or not they can pay for it. When they can’t, it is the state that winds up making up for the shortfall in order to keep the hospitals open. So it only makes sense that the state decides, for the benefit of its resident taxpayers, what the rules are within their own borders. In New York, that means insurers must cover anybody who applies regardless of current health or pre-existing conditions. And a pre-existing condition is defined as “any condition for which a person received treatment or treatment was recommended within the preceding six months.” (Source: http://www.nysegov.com) (A history of being a victim of domestic violence, for example, is not considered a pre-existing condition – as it is in six other states and the District of Columbia.) If the person had no insurance for more than 60 days prior to enrolling, the company can impose a 12 month waiting period before they start paying for the pre-existing condition, but they cannot deny coverage.

Of course, the insurance companies, their lobbyists, and others they finance would have us believe that such regulations are not the reason they would like to sell insurance to New Yorkers, for example, from another state. It’s just that to incorporate in New York costs $170 – an expense they would be forced to pass along to their unfortunate customers…

In the meantime, while another state would be collecting taxes on the insurance companies’ profits, New York’s taxpayers, would be left to pay the shortfall resulting from under-insured patients or those with denied claims or canceled coverage.

Great idea…

(From http://www.TheDesperateBlogger.com)