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GUEST COLUMNIST: Return to free market best hope for health insurance reform

October 7, 2009
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Those who think politics are boring have never watched a presidential address at a bar with a bunch of freedom-minded activists. I joined Liberty on the Rocks recently to watch Barack Obama’s speech on health reform. NPR reporter Jeff Brady joined us and contributed to a report broadcast nationally. A brief comment I made to Brady about insurance and pre-existing conditions provoked strong criticism and thrust me into an important national debate.

Brady asked about pre-existing conditions. I answered, “The idea is that it’s health insurance. And the whole concept of insurance is that you get it before you get sick, or before something happens to you. It would be the equivalent of not having any car insurance, hitting a tree, and then calling Geico and saying you want to sign up. It doesn’t make sense.”

Obviously in a few seconds I only had time for a brief statement, and not a full argument. I was surprised, then, at some of the vitriolic responses posted on NPR’s Web page.

One woman (wrongly) suggested that I “don’t know anyone that has cancer, heart disease, or any other chronic illness that can spring up in life at any given moment.” A gentleman said I am “ignorant, thoughtless, and misinformed.” Another man said, “This is ridiculous.”

I find it ironic that, even as the left demands civil debate, many on the left refuse to treat people with different views respectfully or give their views a sympathetic hearing.

Many Americans are concerned about the future of their health care and want to have a real discussion, so I would like to take this opportunity to explain my views more fully. Insurance is an important commodity that helps protect us from expenses of major health problems. It is so important, in fact, that we should restore a free market in insurance rather than expand harmful political controls.

In a free market, insurers and consumers voluntarily make an agreement to mutual benefit. When politicians dictate what policies and services will be sold and to whom, those politicians undercut people’s ability to reach insurance agreements that work best for them.

In a free market, companies that don’t take care of their customers risk losing them to a competitor, creating an incentive to provide the best service at the best price. When there is no free market for health insurance, there is less competition, resulting in less need to out-bid competitors for our business.

A free market also depends on the reliability of contracts. Once a contract between an insurance company and an individual is made, breaking that contract should be punishable by law. This means that if an insured individual’s coverage is dropped when they find a medical problem that was covered, they should be able to sue the company for breach of contract.

It is true that many people today with pre-existing conditions have trouble finding affordable coverage. But politicians, not a free market, created the problem.

Currently, employer-based insurance makes it difficult for those with pre-existing conditions to stay on the same insurance because it is not portable. Current tax law that favors employer-sponsored insurance over directly purchased plans makes it more likely individuals will be tied to their employer for insurance.

Insurance is meant to hedge against unforeseen, catastrophic events or illnesses, as opposed to covering every doctor visit. If it were, protection against major health problems or accidents would be possible for a majority of individuals and pre-existing conditions would be much less of a worry for those who need coverage.

Having a high-deductible plan coupled with a health savings account, as opposed to being tied to employer-insurance, would eliminate having to switch insurers for those with pre-existing conditions.

If we really want to address the problem of pre-existing conditions, we should fix today’s politically controlled insurance by restoring a free market.

Teresi is the founder of Liberty On the Rocks, a nonpartisan social organization that seeks to unite individuals who desire liberty. Readers can e-mail her at Amanda@libertyontherocks.org.

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