How Wrong Laws Make Health Insurance Expensive

Published January 1, 2004

Health Care News, a publication of The Heartland Institute in Chicago, featured a series of monthly case studies documenting how government regulations like community rating and guaranteed issue have destroyed the individual health insurance markets in eight states, creating a large uninsured population.

The evidence shows these laws are poorly crafted and fundamentally unworkable. Such poor public policy-making explains why, for example, health insurance premiums in New York State are three times higher than in California.

With the exception of Kentucky and New Hampshire, where policymakers are attempting to restore the free market and individual choice, the states profiled have done little to address the economic hardship they have caused for residents.

To help solve the uninsured problem, elected officials in Maine, Massachusetts, New Jersey, New York, Vermont, and Washington State should move in the direction of consumer-driven health care by taking the following suggestions:

1. Repeal community rating and guaranteed issue mandates. 2. Roll back mandated insurance benefits by allowing insurers to offer mandate-free policies.

3. Give individuals a 100 percent above-the-line tax break on premiums.

4. Encourage the use of Health Savings Accounts by allowing state income tax deductions.

5. Establish a high-risk health insurance pool for the medically uninsurable by using the $1 million seed money fund established by the Bush administration.

IT’S YOUR HEALTH is written by Conrad Meier, senior fellow in health policy at The Heartland Institute. This program is produced as a public service by Radio America. Meier passed away unexpectedly on March 18, 2005.