MIA: Interstate Insurance and Tort Reform

by Jason D. Fodeman

Among all the tricks and goodies stuffed into the 2,000-plus pages of the multi-trillion-dollar health-care plan under consideration in the Senate, two issues are noticeably absent: tort reform and allowing people to purchase insurance across state lines.

Advocates of a government-run public plan claim that it would inject some healthy competition into the existing insurance market. The idea that an expanding federal bureaucracy will foster competition is absurd on its face; the public plan in any of its various mutations will only hinder competition by crowding out the private marketplace alternatives. A better way to foster competition would be to allow the hundreds of existing insurance companies to compete across state lines. By requiring people to buy health insurance licensed in their state, current law creates territorial monopolies and compels many people to purchase unnecessarily expensive plans with pricey mandates they do not need or want. Car insurance and life insurance are both available across state borders; there is no reason that health insurance should not be as well.

Tort reform, though long overdue, is also conspicuously absent from the bill. Frivolous lawsuits have been driving up medical malpractice premiums for years. Ultimately, this increased cost is taken from the patient’s wallet. Jackpot justice also forces doctors to practice “defensive” medicine — ordering superfluous tests and procedures to prevent lawyers from filing lawsuits. Enacting tort reform could rectify these problems, and, according to a recent estimate by the Congressional Budget Office, reduce the deficit by $54 billion over the next ten years. Even President Obama spoke in favor of malpractice reform in his September health-care address to Congress.

These two policies alone could plausibly provide enough savings in the current system to cover most if not all of the currently uninsured. They could lower costs and improve access by building on the success of the current system rather than adding trillions to the deficit and throwing that system on its head.

Their absence from either the Senate bill or the bill the House passed last month speaks volumes about the bills’ real aims. The Democrats’ health-care plan is not about cost control, or quality, or even medicine — it’s about politics. It’s about expanding a constituency and increasing government control. The only affordability in the Affordable Health Care for America Act is its placement in the title.

— Jason D. Fodeman, M.D., is an internal medicine resident at UCONN, a former health-policy fellow at the Heritage Foundation, and the author of How to Destroy a Village: What the Clintons Taught a Seventeen Year Old.

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