Wednesday, September 23, 2009

Choices, Competition, and Straw Men

Last week Chronicle columnist Lisa Falkenberg posted a piece titled "Power to choose is little more than myth". Writing about the debate over health care "reform", she claims that most Americans have little choice in regard to health insurance.

As Yale University political science professor Jacob Hacker told The New York Times recently: “For many Americans, the idea that they have a choice of health plans is about as mythical as unicorns.”

First, we must remember that 47 million American don't have health insurance at all. Their options are limited by factors ranging from affordability to being denied coverage for pre-existing conditions.

The rest of us who are blessed enough to have some form of health insurance find our options limited as well, by factors such as market saturation and the limited number of plans offered by employers.

In other words, since our options are limited, we really have no choice in the matter. The fact is, our options are limited in regard to every product and service--everything in the universe exists in some finite quantity--but this does not mean that we have no choice. For example, I can purchase gasoline from at least eight different places within a mile of my home. My options are limited--they are finite--but I certainly have a choice in where I purchase gasoline. Falkenberg's argument is nothing more than a straw man.

Falkenberg goes on to cite statistics showing that, in most states, health care insurance is dominated by a few companies. This, she concludes, is evidence that competition does not exist in those markets. But nowhere in the article does she explain why this situation exists, or why it is necessarily bad.

Falkenberg conveniently ignores the fact that health insurance companies are regulated by the individual states. And those regulations prohibit individuals and businesses from purchasing health care insurance from a company in another state. If I want to purchase health insurance from a company in Ohio, and they want to sell it to me, neither of us can act on our own judgment. The law prohibits us from doing so. Presumably, the state provides this service to prevent me from making a bad decision; it also prevents me from making a good decision. In fact, such prohibitions prevent me from making decisions--decisions about my own life and health care.

Objective reporting requires that all of the relevant facts be presented. If one is going to decry limited choices in health insurance, one has a professional responsibility to report why that condition exists. But Falkenberg is not interested in objective reporting--she has an agenda to push and she isn't about to let the facts get in her way.

State regulations do more than reduce competition for health insurance--they also drive up the cost of the options that do exist. An opinion piece in the Wall Street Journal reported:

New York requires every insurance policy sold there to cover podiatry. Acupuncture coverage is mandated in 11 states, massage therapy in four, osteopathy in 24, and chiropractors in 47. There are an estimated 1,800 or so such insurance "mandates" across the country, and the costs add up....

What's more, states like New Jersey and New York add two more ultra-expensive requirements: "Guaranteed issue" allows people to wait till they are sick and then buy insurance; "community rating" prevents insurers from charging different prices to people of different ages and health status. These may sound like compassionate ideas, until you realize they make insurance so expensive that millions of people are exposed to financial ruin because they aren't allowed to buy basic policies focused on catastrophic costs.

Falkenberg noted the number of people who can't afford health insurance, but again failed to mention the role that state regulators play in this. She ignored the regulations that limit competition; she ignored the costs imposed by those regulations. She ignored the restrictions placed on consumers--not only are they prohibited from buying policies from insurers in other states, they are prohibited from buying policies that do not meet state requirements.

Falkenberg concludes:
Those who choose to fight change, particularly those with health insurance, should first understand the status quo, which is that many of us don't have a choice at all.
I would suggest that Falkenberg heed her own advice and study the facts before spouting off. The status quo is government control and regulation--in regard to both health insurance and the provision of health care services--which she simply evades throughout her piece.

And while she is in a studious mood, perhaps she will break out a dictionary as well. A choice exists when two or more options are possible. Falkenberg has options: she can accept what her employer offers, she can purchase health insurance on her own, she can find an employer with a health plan more to her liking, or she can do without. But since she doesn't like those options, she wants to whine that she really doesn't have any choices.

The sad irony is, while Falkenberg is lamenting the options she actually has (and ignoring the reasons that she doesn't have more) she advocates a plan that will eliminate all options.

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