DEBATE: McFadden’s Health Plan Would Create A Race To The Bottom

Investment banker Mike McFadden’s plan to let insurance companies sell plans across state lines would create a race to bottom and hurt Minnesotans.

FACT: SELLING INSURANCE PLANS ACROSS STATE LINES WOULD CREATE A RACE TO THE BOTTOM THAT WOULD INCREASE COSTS FOR THE PEOPLE WHO NEED GOOD COVERAGE THE MOST

“Selling Insurance Across State Lines: A Terrible, No Good, Very Bad Health-Care Idea.” In February 2010, the Washington Post’s Ezra Klein wrote that legislation allowing health insurance to be sold across state lines “would not change the number of insured Americans or save much money, but it would make insurance more expensive for the sick and cheaper for the healthy, and lead to more healthy people with insurance and fewer sick people with insurance. It’s a great proposal if you don’t ever plan to be sick, and if you don’t mind finding out that your insurer doesn’t cover your illness.” [Washington Post, 2/17/10]

CBO Said Legislation Allowing Insurance To Be Sold Across State Lines Would Not Mean More People With Insurance And Would Increase Costs For The Sick. “As it happens, the Congressional Budget Office looked at a bill along these lines back in 2005. They found that the legislation wouldn’t change the number of the uninsured and would save the federal government about $12 billion between 2007 and 2015. That is to say, it would do very little in the aggregate. But those top-line numbers hid a more depressing story. The legislation ‘would reduce the price of individual health insurance coverage for people expected to have relatively low health care costs, while increasing the price of coverage for those expected to have relatively high health care costs,’ CBO said.” [Washington Post, 2/17/10]

Allowing Insurance Companies To Sell Across State Lines “Means We Will Have A Single National Insurance Standard.” “Conservatives want the opposite: They want insurers to be able to cluster in one state, follow that state’s regulations and sell the product to everyone in the country. In practice, that means we will have a single national insurance standard. But that standard will be decided by South Dakota. Or, if South Dakota doesn’t give the insurers the freedom they want, it’ll be decided by Wyoming. Or whoever. This is exactly what happened in the credit card industry, which is regulated in accordance with conservative wishes.” [Washington Post, 2/17/10]

Bottom Line: Investment banker Mike McFadden’s plan would undercut Minnesota’s strong consumer protections and create a race to the bottom in terms of quality health care.

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