All this hurts people who buy their own insurance or don't have it. It would be good if they could buy a basic high-deductible catastrophic policy. For a healthy young person, such a policy would be relatively cheap. But because of special-interest lobbying, most states mandate that insurance cover things that most people would never buy if they were paying the cost openly -- things like Viagra and substance-abuse counseling. The Council for Affordable Health Insurance (CAHI) reports that states have imposed 1,824 mandates on insurance companies. This makes even a high-deductible policy absurdly expensive in many states.
Government further harms us by not permitting cross-state competition. As a New Yorker, I can't buy a cheap policy sold in Iowa, a state with fewer mandates, because I may only buy from companies that are subject to New York's costly regulations. That's nuts.
The upshot is that, however well intentioned, government regulation of medicine and insurance brings us mostly headaches, and Gov. Schwarzenegger's plan will bring Californians even more. But that should be between him and them. They should have the right to fail.
Many disagree with that. The normally wise Wall Street Journal editorial board says the courts should strike down the governor's plan because of ERISA, the federal law that presumes to supersede state laws on worker benefits.
But forbidding California to pursue dumb ideas is a mistake. As I've pointed out the last two weeks, the American founders showed their genius by dividing power between the states and central government.
Let the states experiment! Universal coverage is a feel-good idea that many people want Washington to impose. Better to have models of failure in individual states so we all don't have to suffer! We need living reminders of collectivism's faults. Without the Soviet Union, I fear that Americans will forget its horrors.
So states should be free to demonstrate the horrors without interference from Washington.
The feds should let us learn.
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