Wednesday, July 27, 2005

Another way to improve health care via the free market

A little while back, I wrote how a free market solution can help solve the so-called "obesity epidemic." Health insurers should be able to charge higher-risk policyholders higher premiums, giving higher-risk people an incentive to improve their health, instead of Paul Krugman's 1984-like call for government to "do something."

This Wall Street Journal op-ed promotes a free market solution for making health insurance more affordable. More than one state has oppressive regulations on insurance, making policies more expensive for everyone, and often pricing them out of reach of the lower-income people that the regulations are said to help. Half an insurance policy is better than none, especially when the half you don't want involves podiatry and acupuncture.
But the most important issue here is justice. It is simply immoral that millions should be exposed to the possibility of financial ruin because of the all-or-nothing choice offered by the insurance regulations of states like New York and New Jersey.
That's what I liked best about the article. Free commerce is not a matter of economics, but morality. Shouldn't two people be free to conduct business voluntarily and peacefully, so long as they harm no one?

If an insurer does turn out to be fly-by-night, then that's fraud, which is punishable by law. That's such a rare instance, however, that the state hurts far more people (by making insurance more expensive) than it "protects."

John D. Rockefeller lobbied for hefty regulations, like minimum insurance requirements, that made it too expensive for his smaller competitors to stay in business. As the WSJ piece points out, BlueCross BlueShield basically does the same today. And who in the presidential debates was touting his health care plan, mentioning BlueCross BlueShield by name? Hint: it wasn't Bush.


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