Friday, September 25, 2009

"More Government Won't Help," Ron Paul

Ron Paul made this speech in the United States House of Representatives, September 23, 2009.

He begins, "Government has been mismanaging medical care for more than 45 years; for every problem it has created it has responded by exponentially expanding the role of government." He goes on to list 16 specific points, some examples of how the government has screwed up or set up for failure the medical care system, and other points suggesting better paths for us to follow to improve health care in the US.

The thing that amazes me in this debate is one simple example of the perversity of our political system: The government (including the president) assert that more competition is the key to a better healthcare system. They might be right. But one big reason we don't have more competition is government regulations forbidding it in some areas: Every state controls its own insurance companies, and forbids, by statute, selling insurance policies across state lines.

So you can't, as a Californian, decide that an insurance company operating in Arizona offers better coverage or better rates, and buy a policy there. It's against the law, in almost every state in the Union.

Recently, Republicans have suggested allowing cross-state-line competition in insurance, only to be roundly ignored. There are two reasons: First, state insurance commissions don't want to give up their regulatory power, which they can't exercise across state lines. And second, those who believe in government goodness are happy to list many reasons why it's better to exercise this control over insurance companies, who would otherwise do bad things. To control insurance-company abuse, they've set up 50 regulatory bodies, one in each state.

And when that doesn't work -- and insurance-company abuse of its customers is rampant, despite this supposedly noble political and bureaucratic control over them -- the solution offered is *never* to rethink the whole thing; no, it is to add more control. Always. There is, you see, no such thing as government failure that should lead to the government retreating from an area; only market failure that leads to government intervention.

Another level of irony is that the main forms of outrageous abuse insurance companies engage in could, in fact, easily be managed by the insurance commissioners doing their jobs better, and a few simple inexpensive laws being passed. Yes, laws.

For example: Insurance companies violate contract with customers by ending their coverage as soon as they catch an expensive disease. They do this by combing through the insurance application, which may have been filled out thirty years ago, to find apparent errors, to justify cancelling the policy. This is acting in bad faith, from a contract-law perspective, and a simple adjustment of contract law in each state would suffice to end this abuse. It's a contract-law issue, and shouldn't be used to justify government takeover of medical insurance. In most contract situations, simple rules say that if a contract is entered into in good faith, and a nonfraudulent error is not found within a reasonable time by the other party, then the error is considered nonmaterial and cannot be used to cancel the contract. For ordinary contracts, for example, if I make a spelling error in the name of my street or my house address, that is not fraudulently intended, then this cannot be made the basis for cancelling the contract twenty years later. Only in insurance contracts is this reasonable limitation not enforced. Our state insurance commissioners -- the ones whose campaigns for reelection are heavily funded by insurance companies -- should take care of this problem. They could. They won't. Their job isn't to solve problems; their job is to get reelected, which they do by demonizing their subjects and passing abusive laws that cause more problems.

How long will you continue to believe that this politicized system is a good way to solve social problems, in the teeth of the evidence to the contrary?

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