Tumblr Icon RSS Icon

Racing to the Bottom With Mike Pence

Posted on  

"Racing to the Bottom With Mike Pence"

Share:

google plus icon

160px-Mike_Pence_111th

As I believe I’ve mentioned before, one politician who I think is rarely dishonest in his presentation of his views is Representative Mike Pence (R-IN), who gives every indication of being genuinely stupid. The latest example:

GRETA VAN SUSTEREN: Why can’t we [sell health insurance across state lines]?

MIKE PENCE: Well, it’s really lost on me. I remember having a conversation with former senator Tom Daschle, who was really instrumental in the crafting and passage Obamcare, saying we couldn’t sell insurance across state lines because it would be a ‘race to the bottom.’ Well, I gotta tell you, I think a lot of small business owners out there would like a race to the bottom – on prices.

You can watch it here:

This is pretty easy to understand. If you regulate something at the state level, but allow it to be sold on a nationwide basis, then sellers will all migrate to the least-regulated state. This is particularly true in a business like health insurance that doesn’t involve much physical infrastructure. States may respond to this by further reducing regulation. That’s the race to the bottom. It’s true, of course, that if insurers were allowed to radically reduce the adequacy of the coverage they offer that they could also offer it at lower price. So that’s a debate we can have—should we try to make insurance much cheaper by making it much worse?—but it doesn’t take a genius to understand what the issue is.

Relatedly, I always find this dispute to be a welcome reminder that the whole insurance debate is distorted by a lack of appreciation of the central role the government plays in making the current system work as well as it does. Consider the question of pre-existing conditions. If not for existing regulation which ensures that people with pre-existing conditions won’t be discriminated against by insurers as long as they maintain continuity of coverage, the interaction between private insurance and 21st century labor markets would be absolutely toxic. And even so, we really need COBRA to make the continuous coverage system work. And most people’s insurance is already heavily subsidized through the tax code. So what we’re talking about when we talk about shifting to a mandate/regulate/subsidize scheme is extending the logic of the existing system. It’s fine to say you’d like to see a free market solution for health care, but you’d have to realize that such a system would look very different from the status quo even for people who don’t think that their current insurance depends on the government.

Tags:

« »

By clicking and submitting a comment I acknowledge the ThinkProgress Privacy Policy and agree to the ThinkProgress Terms of Use. I understand that my comments are also being governed by Facebook, Yahoo, AOL, or Hotmail’s Terms of Use and Privacy Policies as applicable, which can be found here.