JUNE 28, 2005 -- Cost is a major barrier for many Americans when it comes to purchasing health care insurance. For Rep. John Shadegg, R-Ariz., the solution is to allow consumers to buy insurance from any state, a step opponents say will undermine the entire health care system.
Shadegg's legislation (HR 2355), the focus of a House Energy and Commerce Health Subcommittee hearing Tuesday, would allow consumers to shop for health care the way they do for other products: via the Internet, through the mail, or over the phone. Consumers would not be limited as they currently are to picking only policies that meet their state's regulations and list of mandated benefits.
"This bill will cut costs by allowing an insurance company to go through one process and sell to people in 50 states, rather than going through 50 different regulatory processes," Shadegg said.
Citing the wide variances in individual states' rates for health care insurance, Energy and Commerce Committee Chairman Joe L. Barton, R-Texas, said Shadegg's approach adds up to "a little less government and a little more freedom" that could help make health care insurance more affordable. "Why should the consumer have to take . . . a policy that covers everything under the sun?" Barton asked.
Consumer and patient groups, as well as some lawmakers, say Shadegg's bill would cause insurers to gravitate to the four states—Ohio, Alabama, Idaho, and North Dakota—that have no coverage mandates so they could drop coverage for conditions such as diabetes and depression in order to make their policies less expensive. And Shadegg's bill would allow them to sell that coverage all over the nation, rather than having to create policies that meet each state's specific coverage mandates.
"This would clearly promote a 'race to the bottom' as insurers would be greatly rewarded for licensing their individual products in states with less regulation and fewer personnel to oversee what could be a large influx of new products," said Washington State Insurance Commissioner Mike Kreidler, a former Democratic House member himself (93-95).
Opponents of Shadegg's bill also say it would disrupt the nation's entire health insurance system because it would segment the market too dramatically. Rep. Sherrod Brown of Ohio, the panel's ranking Democrat, said Shadegg's bill would give choice to consumers now in good health while harming those who are not. "When you let insurers snake out from under consumer protections . . . coverage may be less expensive for some people. That's because it isn't available to all the others," Brown said.
Proponents of the bill fired back that if insurance were more affordable, there would be fewer uninsured. "There's not much protection to a consumer if you can't afford a policy," said Dr. David Gratzer, senior fellow at The Manhattan Institute.
Backers of Shadegg's proposal also said they doubted that consumers would purchase bare-bones policies that are without the coverage that many policies now offer, such as coverage for pregnancy or diabetes. "I think they are underestimating the intelligence of the consumer," said Robert DePosada, chairman and president of The Latino Coalition.