Editorials

There is no magic bullet to cure what ails our health care system. Smaller steps are required, says Health Care Policy Analyst Kalese Hammonds of the Texas Public Policy Foundation.

“The American health care system has been hailed as the best in the world, but our top of the line care comes at a price and as that price rises, so does the cost of the health insurance that many need in order to pay for it,” Ms. Hammonds says.

Much of that cost can be blamed on state regulations.

“Rather than allowing consumers to make their own decisions regarding health insurance benefits, most state regulatory regimes dictate the structure of health insurance policies through mandates,” she says. “The coverage requirements mandated by state legislatures arbitrarily inflate the cost of health insurance, making even a basic plan too expensive for many consumers who have no alternative for the state-dictated plans.”

Texas ranks as one of the nation’s strictest regulators.

“With 55 mandated benefits, Texas is one of the five most heavily regulated health insurance markets in the country,” Ms. Hammond reports. “Texas law requires health insurance policies to cover services ranging from in vitro fertilization to marriage and occupational therapists, and it also includes a mental health parity mandate that requires insurers to pay as much toward mental health care as they do for traditional health care.”

That parity mandate has hiked policy prices by as much as 10 percent, she says.

“The problem is magnified by state policies that deny consumers the option of purchasing less regulated health insurance from other states,” Ms. Hammond says. “Whether the implementation of these de facto trade barriers is motivated by an earnest desire to protect consumers or fear of interstate competition, the result is the same: limited choices and inflated prices.”

Every state puts up such barriers. And that’s unfortunate for consumers.

“Presently, a 25-year-old male in Texas would pay $248.79 for a health insurance plan that he could get in Alabama for only $77.65 a month,” Ms. Hammond says.

It’s notable that far fewer Alabamans are uninsured — 13.5 percent, compared to 23.9 percent of Texans. That could be directly attributable to the fact that Alabama imposes only 19 mandates, compared to Texas’ 55 mandates.

“A nationally competitive market would encourage states to deregulate health insurance in an effort to be the state where insurers choose to be chartered and regulated,” Ms. Hammond points out. “Once individuals and insurers are allowed to elect the regulatory state of their choice, a race to provide both consumers and providers a more economical regulatory environment will force states to relinquish their regulatory grip on health insurance.”

Currently, congressional action on opening up the markets is stalled.

“Fortunately, it is not necessary for state lawmakers to wait for congressional action,” Ms. Hammond says. “With the power to regulate insurance at the state level, state lawmakers can lift the trade barriers that restrict interstate competition by changing state law to allow residents of their state to purchase insurance sold in any other state.”

When Texas lawmakers convene in January, they should not only reject new mandates, but also look for opportunities to lower health insurance premiums for consumers by allowing competition.

“Texas has the opportunity to lead the way in creating a more competitive health insurance market while giving Texas consumers more health insurance options,” Ms. Hammond says. “Ultimately more competition will give Texans more choices in both benefits and prices.”

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