This article was originally published in the Fayetteville Observer on Saturday, November 24, 2007.
Ever heard of the butterfly effect? The idea is that small changes in initial conditions can mean larger changes elsewhere in a system. A butterfly’s wing beat in Raleigh, through complex cause and effect, can make waves in Austin or Alaska.
The same can be said of our health care system — if we can find the wing beat.
Turns out it’s right before us. With little ink, the N.C. General Assembly could change health care in a big way — not just in our state, but all over America.
Sound impossible? To make waves in health care, all our state legislature would have to do is allow North Carolinians to buy health insurance in other states. "Allow?" you may be asking yourself. Why do we need permission to buy health insurance? Why can’t we get it from any company we like, whether it’s in Virginia, Delaware or North Dakota? These are all good questions — ones we shouldn’t fail to ask our state leaders.
Their likely answer will be: "It’s for your own good."
You see, our state has the power to regulate the health insurance industry. They have the authority to tell you what you must buy as a part of your policy, if you can afford it at all. These are called "mandates." They include components like chiropractic, drug-abuse treatment and mental health coverage.
We have 46 of these forced components built into our insurance policies here in North Carolina. But mandates add at least 45 percent to the cost of a premium here. As special interests (those who gain from a mandate) get more involved, mandates pile up, making insurance more expensive. But imagine how much more affordable insurance could be if we weren’t forced to pay for all of these components and, instead, were able to choose?
To be fair, other states have mandates. But most have fewer than North Carolina, some far fewer. If coverage mandates really are in our best interests, wouldn’t that fact be apparent in states that don’t have so many? People aren’t dropping dead in Idaho, for example (a state with only thirteen). Why shouldn’t we have the option to buy insurance from companies there? And if we’re convinced that N.C. regulators know better than Idaho regulators, we could choose to stay with N.C.-based insurers and/or select recommended components.
Mandates make health care too expensive. Isn’t lowering health care costs what’s best for us? Indeed, according to polling by the Civitas Institute, affordability is the single most important concern among North Carolinians (43 percent) when it comes to the issue of health care. (This is followed by concern about the number of uninsured poor at 31 percent. Concerns about quality of, or eligibility for, insurance register in single digits.) Yet, costs and access by lower-income families are two sides of the same coin. We want them insured. Not only do we care that some lack adequate coverage, we care that they shift costs onto everyone. (Medicaid costs are skyrocketing, even without extending it to the middle class.)
So what would happen if North Carolinians could buy insurance in other states? What if the legislature were even to consider such a wing beat?
In debating this proposal, you’d see special interests — like Blue Cross/Blue Shield — putting up the fight of their lives. Why? Because the flight of bargain-hunters from this state would challenge their near-monopoly and force them to compete — which they’d find difficult, given all the regulations. So BCBSNC benefits from mandates, since would-be competitors find only barriers.
Suppose legislation making it legal to buy insurance from other states actually got through. Not only would BCBSNC then have to put tremendous pressure on the state to let go of some of the more expensive and/or questionable mandates, but North Carolinians would benefit either way from lower-cost insurance. That’s really what we want, right?
Sooner or later people in other states would be demanding to buy insurance out-of-state, too: "If they can do it, why can’t we?" We might see a domino effect. Protected monopolies everywhere would have to get lean and mean to compete nationwide. Premiums (costs) everywhere would plummet. The competitive marketplace would expand beyond borders and insurers would scramble to offer the best in both price and quality. All because — for once — North Carolina had the guts to do something smart, novel and courageous.
The relationship between regulators and the insurance monopoly is cozy in our state — as in others. That’s why something like this will take tremendous political will. But if leaders really have our best interests in mind — not special interests — they’ll start making waves with a wing beat.