Competition in Health Care would Lower Costs

A report by Dr. Sven Larson from the Center for Freedom and Prosperity Foundation examines policies to remove government barriers and restore competition to the market for individual health insurance. The paper argues that state governments deserve the blame for the high costs of non-employer based health insurance. Larson says that politicians set up cartels by requiring purchase of health insurance only from in-state insurers. And after setting up cartels they impose numerous coverage mandates.

These mandates drive up the cost of insurance, since states prohibit consumers from buying across state lines. The excessive number of mandates are plaguing the health insurance market and takes away from individual choice. In 2008 there were a total os 1,961 mandates across the 50 states. The number of mandates in each state vary (Pennsylvania has 52). The report shows that states with more coverage mandates have higher rates of residents lacking health insurance.

The solution is to allow a national market for non-employer based health insurance. Congressman John Shadegg (R-AZ) is proposing doing that through the Health Care Choice Act (H.R. 3217). A significant component of the solution is jurisdictional competition. According to the report, “politicians are less likely to over-tax, over-spend, and over-regulate when they know that individuals can work, save, shop, or invest in another jurisdiction.”

Larson concludes, “if health insurance consumers were allowed to buy insurance across state lines, fewer Americans would go without any insurance.”