Under existing law, any health-care policy sold in Massachusetts must be issued by a company licensed to sell insurance in Massachusetts, and must comply with all of the state's regulatory conditions. These include "guaranteed issue" and "community rating" rules, which require insurers to offer coverage to any eligible applicant regardless of pre-existing conditions, gender, or health status -- and to charge all customers similar premiums, even if they pose very different risks to the insurance pool. The effect, of course, is to drive premiums upward for the young and healthy, who are left paying far too much for insurance -- and with an incentive to drop that insurance until they get sick.
Compounding the problem, Massachusetts (like other states) requires all health-insurance consumers to purchase a multiplicity of benefits they may not want. According to the Council for Affordable Health Insurance, Massachusetts law mandates coverage of 47 specific benefits, including alcoholism treatment, contraceptives, hairpieces, in-vitro fertilization, chiropractic treatment, and speech therapy. Any of these benefits may be valuable to someone who needs them, but bundling all of them into every health-care policy sold in Massachusetts drives up premiums for everybody.
Reasonable people can disagree on whether health-insurance in Massachusetts is over- or under-regulated. Certainly 47 mandated benefits seem moderate compared to the 60 that are required in Texas, or the 69 in Rhode Island. On the other hand, Hawaii imposes only 23 mandates, and Idaho only 13.
Why not let consumers decide for themselves what price and coverage standards they want? Romney opposes the federal health-care overhaul on the grounds that it amounts to a "one-size-fits-all federal takeover." So it does -- but insurance-licensing laws amount to a one-size-fits-all straitjacket at the state level. They leave consumers with fewer choices. They protect the handful of health insurers that dominate each state from outside competition (in Massachusetts, three companies -- Blue Cross Blue Shield, Harvard Pilgrim, and Tufts -- control 85 percent of the market for individual and small-group insurance.) And they leave lawmakers and regulators free to impose costs on insurance purchasers who have no option of taking their business elsewhere.
Romney should lead an effort to create such an option. He should promote legislation that would allow Massachusetts residents to purchase any health insurance policy that is properly licensed in any other state, and for that policy to be enforced according to that state's laws. If you like Massachusetts-style health-insurance regulation, you would shop for a health plan here. But those looking for more affordable coverage -- or for even more mandated benefits -- would be free to buy a policy from any licensed insurer in the country.
Opening the Massachusetts health-insurance market to nationwide competition would be a boon for consumers. It would force local quasi-monopolies, such as Blue Cross Blue Shield, to compete harder on price -- without having regulators twist arms or control premiums. It would make RomneyCare more palatable to more voters. And it would give Beacon Hill some real-world evidence of the level of regulation Massachusetts citizens actually prefer.
Is this a panacea? No. Nor would it substitute for genuine national reform, such as de-linking health care from employment. But it would be a change for the better, leaving Massachusetts improved, and other states with a model to emulate. "Some things I'd change," Romney says. This would make a good start.
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