Imagine a small town whose sole shoe store suddenly charged $500 for sneakers and $1,000 for wing tips. Shocked and awed, citizens convened a town hall meeting to decide what to do. Some wanted Congress to establish a Federal Footwear Commission to block “unreasonable” shoe prices. Others suggested inviting outside shoe stores to open on Main Street. They argued that this would expand consumer choices, reduce prices and, ultimately, persuade even the controversial shoe store to stop giving its former customers sticker shock.
This scenario parallels the Democratic versus Republican debate over Wellpoint’s anticipated 25 to 39 percent hikes in health premiums for its 800,000 customers in California.
President Obama’s new reform proposal would launch a Health Insurance Rate Authority. The Health and Human Services Secretary could use HIRA to block “unreasonable and unjustified” increases in private premiums. Yes, a one-year, 39 percent hike seems severe. Would a 29 percent increase stop the howling? How about 19? Even 9 percent seems steep. How on Earth would Uncle Sam define reasonable and justified?
Obama’s critics warn that he is turning into a 21st Century Jimmy Carter. This is unfair to America’s 39th president. Through HIRA, Obama would resurrect the pre-Carter era, when the Interstate Commerce Commission set rail and truck fees, and the Civil Aeronautics Board fixed airfares. President Carter signed legislation to declaw these agencies. This unleashed competition, slashed costs, and gave shippers and passengers innovative choices.
“Since passenger deregulation in 1978, airline prices have fallen 44.9 percent in real terms,” the Competitive Enterprise Institute’s Braden Cox and Fred Smith wrote in 2008. “The rigid fares of the regulatory era have given way to today’s competitive price market,” they added. “The total number of passengers who fly annually has more than doubled since 1978.”
Compared to Jimmy Carter, Barack Obama is building a bridge to “That ’70s Show.”
Competition, thus, is the smartest way to counteract Wellpoint’s price hike:
•Wellpoint’s customers — and all Americans — should be free to buy individual insurance within a dynamic, national market. Rather than remain chained to workplace coverage, everyone — from hourly laborers to footloose entrepreneurs — should be free to purchase, control, and transport their own plans from job to job, graduate school, their own start-up companies, or wherever life takes them.
•Individuals and employers could deposit money tax-free into voluntary, universal Health Savings Accounts. HSA owners could make tax-free withdrawals for medical premiums, deductibles, routine procedures, pharmaceuticals, and medical devices. Insurance policies would hedge against unexpected, major-medical expenses.
•Emancipating Americans who wish to buy coverage across state lines would let Wellpoint’s rattled California customers shop among some 1,300 plans available nationwide. Wellpoint boosted its rates, in part, because Sacramento bureaucrats stand between Golden State consumers and insurers outside California.
•Why not let ehealthinsurance.com become the Lending Tree of medical coverage? Subject to in-state purchasing restrictions, this website helps consumers choose among plans, just as Lending Tree helps home buyers shop for mortgages. Websites like ehealthinsurance.com could become the cornerstones for a thriving, private, national health-insurance market. This is far more encouraging than ObamaCare’s creaky, Washington-driven “exchange.”
•If, for instance, Rotarians, fly fishermen, or quilting enthusiasts pooled their members to secure group coverage, such “association health plans” would give consumers additional options.
•Risk pools also would give fresh alternatives to those with pre-existing conditions.
These free-market ideas are much more prudent than ObamaCare’s oppressive mandates and price controls. These solutions are far cheaper than ObamaCare’s $2.5 trillion price tag during its first 10 years in operation. Before forcing Americans to tremble before our omnipotent federal masters, why not try these voluntary, inexpensive, limited-government reforms first?
Of course, HIRA annihilates ObamaCare’s underlying rationale. ObamaCare is supposed to reduce costs. As the New York Post’s Charles Hurt observed, if ObamaCare would work as advertised, HIRA would be unnecessary. But since President Obama concocted this price-control mechanism, perhaps he quietly recognizes that his entire crazy health-care scheme won’t work.