Deregulation offers simplest way to lower insurance prices
SEEKING to lower insurance premiums for Oklahomans, lawmakers have considered two major proposals this year. One would allow market demand, not political whims, to determine coverage offerings. Another attempts to accomplish that goal by allowing the sale of insurance across state lines.
The latter option involves many logistical challenges. The far simpler method would be for lawmakers to go with the first option and eliminate many state mandates, which are piled on top of the mandates imposed by the federal Affordable Care Act.
Last week, a House committee narrowly advanced Senate Bill 478, which would let the state Insurance Department compact with other states so insurers in those states can sell policies in Oklahoma’s individual market. The policies wouldn’t have to comply with the roughly 40 mandates imposed by Oklahoma politicians. In theory, that could mean those policies may cost less.
But, as a blog post on the website of Health Affairs noted earlier this year, “It takes time and a considerable amount of effort and expense for insurers to create a network of providers. They must negotiate with hospitals, physicians, and other providers to get them to participate in the network so members have access to care.”
Insurers already established in Oklahoma, which have substantial numbers of members, have more leverage in those negotiations. An out-of-state insurer wouldn’t have that advantage. As a result, the blog stated, “if an out-of-state insurer were able to offer consumers a plan with a premium that costs 30 percent less than plans available through in-state insurers (because they don’t have to include certain mandated benefits), it’s quite possible that the out-of-state insurer would have to pay that 30 percent difference — or more — to providers just to get them to participate in the network.”
Five states allow the sale of policies by out-of-state insurers: Georgia, Kentucky, Maine, Rhode Island and Wyoming. Those laws have provided little consumer benefit because out-of-state insurers aren’t able to offer a robust provider network at prices that make the policies attractive to consumers.
Rather than go through that hassle and logistical challenge, Oklahoma lawmakers should reconsider legislation to allow the sale of mandate-light policies in Oklahoma.
One such measure, House Bill 1712, failed to get a floor vote in the Oklahoma House. That bill deserved support. Consumer demand, not the whims of politicians, should determine policy coverage in Oklahoma.
There’s a word for insurance policies that provide all things to all people in all circumstances: unaffordable. Thus, consumers must be allowed to decide what trade-offs they are willing to face when buying insurance. To cite just one example, we doubt many Oklahomans believe they need the wig coverage Oklahoma politicians force them to buy.
Those who doubt that mandates make insurance unaffordable need look no further than Oklahoma’s Obamacare exchange, where rates are expected to surge 58 percent to 96 percent this year. Many factors are at play there, but excessive mandates certainly play a role.
Put simply, politicians need to give up control and allow Oklahomans to make health insurance decisions for themselves.