NCPA - National Center for Policy Analysis


April 24, 2006

Massachusetts Governor Mitt Romney signed a bill recently that's being praised as a model for how to achieve "universal" health care. But while the governor claims his plan is market based, it does little to reform the regulations that have made coverage in his state among the most expensive in the country, says the Wall Street Journal.

How bad are Massachusetts' insurance regulations?

  • Guaranteed issue requirements force insurance companies to sell policies to all comers, even those who wait until they're sick to seek coverage.
  • Naturally the requirement to accept those free riders makes insurance much more expensive for everyone else.
  • It also means insurance companies aren't eager to be found by consumers, even though they are generally required to sell in the individual market in order to be able to offer coverage through employers.

The new Massachusetts health care legislation does little to address the root causes of this cost problem. Guaranteed issue is explicitly preserved. And while a new insurance regulation board could in theory do something about other costly mandates, it's not likely to do much in practice, explains the Journal.

But there is a far simpler way to begin tackling the problem of the uninsured than the Massachusetts path. To wit: Let the market start operating as it should. Companies like eHealthinsurance have already got a great infrastructure up and running and in many states consumers have real choices when it comes to health insurance products. States like New York and New Jersey, meanwhile, might try getting the regulators out of the way before following the Bay State in forcing people to buy needlessly expensive coverage, says the Journal.

Source: Editorial, "Mitt's Market Misfire," Wall Street Journal, April 24, 2006.

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