1. The “new Maine law allows insurers to charge older customers up to five times more than younger ones. But beginning in 2014, the federal healthcare law will cap that ratio at three to one,” reports The Hill. For why allowing insurers to more accurately price their premiums according to risk, see my Pajamas Media article “How to Insure Americans with Pre-Existing Conditions.”This law is in response to a 1993 law establishing community rating in Maine, which restricted how much insurers could vary rates.  For a summary of its damaging results, see “Maine Shows Path to Reform,” by Joseph Allumbaugh of the Heartland Institute.
2. In the same article, The Hill reports: “The Maine law … lets out-of-state insurers sell policies in Maine without getting a license there. But beginning in 2014, the federal law will require insurers to be licensed in every state where they want to sell coverage through a newly created insurance exchange.”  This allows for more competition and gives customers more freedom to by a plan not bloated with mandated benefits they do not need.

Meanwhile, Vermont’s legislature and governor have signed a bill intended to create a government-run monopoly health plan in the state, a.k.a., “single payer.” The Denver Post’s headline reveals its own, and the AP’s bias by referring to Maine’s plan as “universal health care.”  But remember having a government-run health plan does not guarantee that you get the medical care you need. The care is by far universal.  Health coverage is not health care.

For a critique of Vermont’s plan, see Vermont Takes the Single-Payer Plunge by Pete Suderman at Reason.

Jane Norton is seeking the Republican Party’s nomination to run for U.S. Senate this Fall. The Denver Post‘s eidtorial board interviewed her in July. Here’s the published section on health care:

Q: What about health care spending? What would you do there?

A: My first agenda . . . would be to repeal Obamacare. A $2.5 trillion proposal, the more and more we see what it does, the more onerous it is on our small businesses. We could pass substantive health care reform right now that would get at the goal of bringing the cost of health care down. You have to look at the drivers of health care costs. One of them is defensive medicine. So there’s a line or two [in the bill] but nothing substantive about tort reform so what we’ve done in Colorado was to put caps back on non-economic damages. We know that’s one of the drivers and that helps. So tort reform.

Tax liability. One of the fastest-growing areas if we have any job growth is with individuals who are setting out on their own. We need tax equity so that a person who purchases health care has the same tax benefit as somebody who purchases it in a group. Portability, so if you changed jobs you could take your health plan with you. The ability to purchase across state lines is another important one that I believe would bring the cost of health care down. If you inject choice and competition into the marketplace and don’t have so many market distortions, you can actually bring the cost down.

Comments:  She’s right about ObamaCare (HR 3590). Be careful about defensive medicine, and she’s right about the tax treatment of insurance and buying insurance across state lines. Though she should not conflate “health care” with “health insurance” as she does above, as they are quite different.

Details:

ObamaCare is HR 3590. For a detailed analysis of its harms, see Bad Medicine by Michael Tanner of the Cato Institute.

Defensive medicine: This looks like an easy target, and surely there’s room for improvement in how medical liability cases are decided. But there’s reason to question how big a factor it is in increasing health care costs.  In Forbes, Shikha Dalmia wrote:

According to a 2007 study by McKinsey&Company, physician compensation bumps up health care spending in America by $58 billion annually,on average, because U.S. doctors make twice as much as their OECD peers. And even the poorest inspecializations like radiology and surgery routinely rake in around $400,000 annually.

Doctors–and many Republicans–constantly carp about the costs of “defensive medicine” because it forces providers to perform unnecessary procedures and tests to insulate them from potential lawsuits. But excessive physician salaries contribute nearly three times more to wasteful health care spending than the $20 billion or so that defensive medicine does. “While the U.S. malpractice system is extraordinary,” the study notes, “it is only a small contributor to the higher cost of health care in the United States.”

Also in Forbes, Shirly Svorny writes:

A new Congressional Budget Office report estimates that a set of tort reform measures — including caps on awards for non-economic and punitive damages — would have lowered total national health care spending in 2009 by $11 billion, largely by reducing so-called defensive medicine. Damage caps, though, would result in patients losing the benefit of the market oversight and penalties associated with malpractice underwriting. Capping liability could have the unintended consequence of reducing private market efforts to investigate the risk characteristics of the individuals they insure and of hurting patients.

Read the whole article.

Health care, health insurance, and health plans: Insurance is a way of paying for health care.  What we call health “insurance” often is not really insurance, but a prepaid health plan.  So “health plan” is the most general term. Some health plans are really insurance, in that they generally don’t pay for routine and predictable expenses.

Yet given the state of Colorado politics and the political climate elsewher,e there’s very little “private” aspects left in the health insurance market.  State-level politicians require small-group and individual policies to include certain benefits (mandated benefits) and limit how much insurers can determine premiums based on risk, or lack of risk (insurance price controls, community rating).  State authorities also ban customers from buying more affordable and/or desirable policies legal in other states.  These controls reduce competition and increase premiums.

Colorado Republicans‘ top health-care bill is coming before a House committee today. But don’t expect you’ll ever hear about it again this year.

HB 1163, sponsored by Rep. Cindy Acree, R-Aurora, would authorize the Commissioner of Insurance to enter into multi-state agreements so that insurance policy issuers can offer individual health-care plans in Colorado that are regulated by other states. The issuer must be financially viable and ensure proper access to health care in Colorado through the plans, and Colorado would have the sole responsibility to ensure the plan complies with its insurance laws. …

Sen. Morgan Carroll, an Aurora Democrat considered her caucus’ expert on insurance issues, called the bill “basically a race to the bottom.” The only way that it would allow more Coloradans to buy insurance is if they are forced to get less comprehensive and less regulated coverage that state laws have frowned on, she said.

“It may allow people to search a little bit further for a bit cheaper price, but they’re stuck with an inferior product,” Carroll said. “Other states cannot enforce our protections.”

Carrol is mistaken.  Giving people the freedom to buy insurance that meets the regulatory requirements of other states is not force.  It’s, well, freedom.  Has it occurred to Morgan Carroll that some people might want less comprehensive insurance that Colorado politicians have made illegal?  (Other states do this, too.) Michael Cannon explains in the Cato Handbook for Policymakers (Chapter 16 on health insurance regulation):

Opponents will claim that regulatory federalism will lead to a ‘‘race to the bottom,’’ with some states so eager to attract premium tax revenue that they will eliminate all regulatory protections or skimp on enforcement. In reality, both market and political forces would prevent a race to the bottom. As producers of regulatory protections, states are unlikely to attract or retain customers—insurers, employers, or individual purchasers—by offering an inferior product. Purchasers will avoid states whose regulations prove inadequate, and ultimately, so will insurers. Moreover, the first people to be harmed by inadequate regulatory protections will likely be residents of that state, who will demand that their legislators remedy the problem. The resulting level of regulation would not be zero regulation. Rather than a race to the bottom, regulatory federalism would spur a race to equilibrium—or multiple equilibria—between too much and too little regulation. That balance would be struck by consumers’ revealing their preferences.

Also, for reference, Cannon addresses the following objection to allowing people to buy more affordable insurance across state lines: “Opponents of regulatory federalism will also claim that consumers would have to travel to another state to have those protections enforced.”  See the above links.

For more on this subject, see also

• Cannon’s policy paper: Yes, Mr. President: A Free Market Can Fix Health Care
• Butler and Ribstein, The Single-License Solution: Instead of federal chartering, states should compete with each other to produce efficient insurance regulation, Regulation, Winter 2008 [pdf]