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Commentary

Health Insurance Showdown
Wall Street Journal, 5-9-06

The Wall Street Journal describes legislation in the Senate and House, respectively, that would help deregulate insurance markets for individuals and small businesses, spurring competition and making health insurance more available and affordable for millions of Americans.

When Ron Pollack of Families USA starts screaming, Republicans must be doing something right about health care. And so they finally are.

As early as today the Senate will vote to prevent a Democratic filibuster of legislation that would make it easier and cheaper for small businesses and their employees to buy health insurance. The House has already passed similar legislation, and today's vote is the GOP's best hope to do something significant about health-care affordability before November#&151;and potentially for years to come.

The bill at hand, sponsored by Wyoming's Mike Enzi, concerns so-called Small Business Health Plans, often referred to as Association Health Plans. The idea is that if small businesses are allowed to band together on a nationwide scale, they'll have greater leverage when negotiating prices with insurers. The bill would let them bypass many of the state insurance rules that make coverage so expensive. By creating a larger and freer market for health insurance, the Enzi bill would increase the number of people who have it...

If anything, the Enzi bill's flaw is that it doesn't deregulate the small-business insurance market enough. The plans would cover all major medical expenses, as they should. But while insurers could offer chiropractor-free plans, they would also have to offer the option of a plan equal to one offered state employees in one of the five most populous states. State employee plans—paid for by taxpayers—tend to offer an expensive set of benefits beyond what even the worst-regulated states require via mandates. The Enzi bill would also create a new national insurance regulation board to oversee the plans. This sounds innocuous as currently described, but the tendency of these things over time is to become monsters.

A better approach is being offered by Arizona's John Shadegg in the House and South Carolina's Jim DeMint in the Senate. Their legislation would allow not just small businesses but individuals to buy health insurance across state lines, with those policies regulated by the states from which they are sold. That's the way banking now works. What we really should be aiming for is a national market of portable, individually owned policies that can be bought from many insurers, including over the Internet.



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