To Insure the Uninsured, Deregulate

The results are astonishing. Due entirely to the avoidance of excess regulation in their states of residence, 12 million more people would become covered, cutting the rate of non-insurance by one-fourth. This is without any federal expenditures – no tax credits, no subsidies, no change in tax law.

An important new study on interstate purchase of health insurance was released at a briefing of the American Enterprise Institute. It looks at the potential reduction of the uninsured by moving to a national market as envisioned by the legislation introduced by Rep. John Shadegg (R-AZ) and Sen. Jim DeMint (R-SC) allowing the interstate purchase of health insurance.

Produced by Steve Parente, Roger Feldman, Jean Abraham, and Yi Xu, all of the University of Minnesota, the study simulates three scenarios (a) a national market in which each consumer can choose insurance from the least regulated state in the country, (b) a regional market where people are confined to choosing coverage from the least regulated state in their region, and (c) a large-state scenario in which only the five largest states are allowed to offer cross-border coverage. The study provides minimum, midpoint, and maximum estimates of the changes in enrollment under each scenario. It finds the national market model would have the greatest impact.

The state-by-state impact is even stronger, especially for the most highly regulated states. New Jersey would increase its insured population 49%, Oregon 25%, Massachusetts 23%, New York 22%, and West Virginia 21%.

Obviously, this is an extremely complex simulation. The authors needed to calculate the cost of several areas of regulation including mandated benefits, guaranteed issue, community rating, and any willing provider laws, on a state-by-state basis and apply those costs to several different types of coverage. But there is no team of economists in the country better equipped to tackle the challenge, and these results should be taken very seriously, indeed.

Comments (4)

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  1. Ronda says:

    This is consistent with two previous studies – both of which found that as many as one in four uninsured people have been priced out of the market by mandated benefits:

    John C. Goodman and Gerald L. Musgrave. “Freedom of Choice in Health Insurance,” National Center for Policy Analysis, NCPA Policy Report No. 134, November 1988.

    Gail A. Jensen and Michael Morrisey, “Mandated Benefit Laws and Employer-Sponsored Health Insurance,” Health Insurance Association of America, January 25, 1999.

  2. Joe S. says:

    Being able to buy insurance across state lines is also part of the McCain health care plan.

  3. Dr. Bob says:

    Nothing like a bullet proof recent college grad, who would rather spend disposable dollars on food and drink, since they are healthy and feel invincible. Then suddenly they break a bone in a MVA or get an attack of appendicitis.

    You are right on; many people can get insurance through their employer, but opt not to. I don’t know the numbers, but I am sure it is significant. Also these kids consult a doctor only in a crisis situation; they do not believe in preventive care.

  4. Nancy says:

    As of this year I am priced out of good health insurance. I live in oneof the over regulated states (NY) I can’t
    buy into my employer’s plan. There are very few carriers for individual policies in NY, of those most of the plans are for self/employed, group small business,etc. We have a ystem called Healthy New York advertised
    all over but it’s for very
    low income and /or people with many children.