During what was promoted as a “major” health policy address this afternoon, Mitt Romney suggested that insurers should be able to sell policies across state lines and states should design different health care reforms. But when pressed on how he could prevent healthier individuals from moving to cheaper but less comprehensive insurance based in states with fewer protections and leaving states with more rigorous regulations with sicker, more expensive patients, the best Romney could muster is — they can vote their leaders out of office before ironically making the case for strengthening safety net programs:
Q: What’s to keep states from having to race to the bottom? …
ROMNEY: The answer is, the people of that state are going to vote out of office the people who don’t do a good job. States are competing…I also think there is a recognition in this country that we’re a grand and generous people. The idea that we would ever say to people, ‘tough luck, you’re poor, you’re not going to have health care,’ that’s just not Americans. We’re going to care for one another.
To figure out how Romney’s deregulation scheme would really play out, it’s worth considering what happened to the banking industry following a pair of Supreme Court decisions deregulating the industry: credit card companies relocated to states with no interest rate caps and charged “what they wanted” to borrowers in states with interest rate limits. They used pricing practices “like teaser rates, to attract cash-strapped families and then…double or triple those rates without notice.”
Why wouldn’t the same thing happen in health insurance? An insurance company could establish itself in the Cayman Islands for instance — as the GOP’s health care law allowed — and sell policies to New Yorkers who are ostensibly protected by tougher regulations that may require coverage for maternity care and cancer screenings. Only in this case, an insurer could flaunt New York’s consumer protections and essentially extend the Cayman Islands’ loose regulatory policies to New York. Healthy individuals would move to cheaper plans from the Cayman Islands while New York insurers — with their more rigorous insurance regulations — would be left with sicker, more expensive patients—and higher premiums.