NCPA - National Center for Policy Analysis


November 5, 2009

Consumers benefit from choice and competition.  The key to both is not more government regulation and control, but less.  More competition among health insurers is a consummation devoutly to be wished.  But there are far better ways to get there than a public option, says columnist Jeff Jacoby. 

Tear down the barriers to buying health insurance across state lines:

  • Under federal law, states are permitted to regulate "the business of insurance" as they see fit, and most of them have seen fit to allow the sale only of insurance policies licensed by their own state insurance commissions.
  • As a consequence, there is no competitive national market for health insurance; there are 50 state markets instead, most of which are dominated by a handful of insurers.

Repeal mandatory benefits that make health insurance needlessly expensive:

  • Compounding the lack of interstate competition is the way states drive up the cost of health insurance by making certain types of coverage compulsory.
  • Consumers and insurers should be free to work out for themselves just how comprehensive or limited a policy should be.
  • But state mandates prevent such flexibility by requiring insurance companies to sell a fixed array of benefits that many customers may not want.
  • Individuals seeking plain-vanilla health insurance -- a policy that will cover them, say, in case of major surgery or catastrophic illness -- may find themselves forced to pay for a policy that also covers acupuncture, in vitro fertilization, alcoholism therapy and a dozen additional treatments.
  • When compulsion takes the place of competition, the result is invariably less choice at higher cost.

De-link health insurance from employment:

  • Nothing distorts America's health insurance market like the tax preference for employer-sponsored health insurance.
  • Until that preference is removed, tens of millions of Americans will continue to rely on their employers' health plan instead of buying health insurance for themselves, they way they buy every other type of insurance.
  • Fix the tax code, and no longer could insurance companies routinely bypass employees and deal only with their employers.
  • Instead there would be intensive competition for individual customers -- and the lower premiums such competition would yield.

Source: Jeff Jacoby, "The public's best option: Less government, more choice," Jewish World Review, November 5, 2009.

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