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Selling health insurance across state lines is a reactionary idea

Health Ins X State lines
Health Ins X State lines
By Bert Loftman

A major Republican health care reform idea is to have health insurance to be sold across state lines. It was part of the 2010 Republican Pledge to America and many of the current Republicans health care reform plans. This is a reactionary idea where the national government is trying to fix problems that the state governments caused by trying to fix the problems the national government caused. Confusing isn’t it?

It all started during World War II when our national government subsidized health insurance, and the employer began providing the “benefit” of health insurance. It was subsidized by allowing both the income tax and the FICA taxes be waived when a worker received medical insurance as part of their compensation.

Before World War II, there was no problem. Individuals owned their own insurance policies. They chose the coverage and the deductibles. Even now there are such policies available but they are not subsidized by the tax codes.

With tax subsidies to job based health care, workers gravitated towards this benefit to save tax dollars. There is a common misconception that the employers got the tax break but this is not true. The employer deducts taxes and wages the same. They are both just the cost of doing business. It is the worker that is spared the income and Social Security taxes on this part of their compensation.

With this system, employers had a big say in what was covered. If a special interest group thought they needed coverage for something, they could ask the employer to cover it. If the employer refused, they could then make this a political cause. Advocates would then lobby their respective state governments for mandates for the coverage they desire.

Because of this, there are currently hundreds of different mandates in the various states. In Connecticut, the mandates include sex change operations and hormones. These do not come cheap and these state mandates drive up the cost of care. It is estimated that they add 30 to 50 percent to the cost of insurance.

On the surface, the Republican plan makes sense. ObamaCare had a variation of the same idea. They would replace the hodgepodge of state mandates with the ten essential mandates the central planners feel are most important.

Another problem with the Republican plan is its constitutionality. The original intent of our constitution was to give the states most of the power over the economy. Then if a state made a bad decision, it did not affect the whole economy. If it made a good decision, the resulting prosperity in that state would likely cause other states to follow suit.

There is no power in the U.S. Constitution that gives the federal government to mandate the health insurance coverage of the states.

Conservative Republicans should think this through and give us a way to return to free market medical care where individuals own their own insurance policies. Their solution must include changing the tax codes. This could be a true flat tax without allowing deductions to job-based health care, giving income tax and FICA tax subsidies to individuals, or repealing the 16th or income tax amendment.

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