THE HIGH COST OF HEALTH INSURANCE

Single-payer advocates would have us believe that the high cost of health coverage is caused by greedy insurance companies. And, predictably, the remedy these people recommend is more government regulation.

Well, as this excellent WSJ piece explains, more government regulation is not the solution. Why? Because excess government regulation is the CAUSE of high insurance prices.

To hear some of the presidential candidates, you’d think that health-insurance companies are the driving force behind the growing cost of health insurance. The more likely culprits are our politicians and the laws they pass.

Most government regulations are the result of pressure groups colluding with lawmakers to tilt the playing field toward some party in the market transaction, and health care is no different:

For almost every health-care product or service, there are at least two groups that want insurance to cover it: those who sell the products and services so they can get more business, and those who use the products and services to lower their out-of-pocket costs.

Both groups, therefore, push legislators to pass laws requiring insurance companies to cover these products and services:

As a result, government interference in and control of the health-care system is steadily increasing — and so is the cost of health insurance.

The concession that the insurance industry exacts for acquiescing in this kind of government meddling is protection of statewide markets and the right to charge exorbitant prices. But it doesn’t have to be this way:

Such micromanaging of benefits is unique to health insurance. State legislators aren’t nearly as aggressive in controlling life, property and casualty, and even auto insurance. As a result, those insurance markets function better and provide consumers with more choices.

So, how about we deregulate the insurance industry and remove the artificial barriers to competition? If we let insurance companies decide which products to offer the public, while opening up the market so that insurers must compete for our business, the cost of health insurance will go down and a big driver of health care inflation will disappear. By Catron