Convenient Federalism 

This editorial made me laugh really... but does bring up a lot of interesting questions. And since I happen to work in the industry... I thought I might expound on a few of them. First a taste of the editorial:

The U.S. Senate is expected this week to vote on a health insurance bill that, like many ill-advised cures, has good intentions but potentially bad consequences. Sponsored by Sen. Mike Enzi, a Wyoming Republican, the aim of the bill is to make it easier for small businesses to buy affordable health insurance policies for their employees.
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The problem is that it would allow insurance carriers to pre-empt states, such as Wisconsin, from setting minimum requirements for health plans. That covers a wide range of services - everything from cancer screenings to chiropractic treatments, maternity care, mental health treatment and even diabetic supplies.

Not surprisingly, many organizations, including the American Cancer Society and the American Diabetes Association, strongly oppose the bill. They harbor legitimate fears that the bill could undo years of successful treatment and early intervention, not just for cancer but other illnesses.

It's that early intervention that not only relieves needless suffering but saves money in the long run by allowing employees to lead productive lives and not run up the large bills that they would if their problems reach the crisis stage.

First of all... it wouldn't actually allow insurance carriers to pre-empt states at all! It would allow companies to pick the state whose law they want to follow. This is actually quite common in other parts of business today. For instance, certain states are considered corporate havens (like Connecticut) because they have very favorable corporate tax laws. That's why a lot of nationally known companies incorporate in that state.

Right now, in order for an insurance company to do business in a state, they have to file their plans with that state, and have it approved. That means that insurance companies have to modify their plans for each and every single state they do business in, because the states generally don't have compatible laws. Believe me when I say that some insurance companies spend millions of dollars every year in computing infrastructure just to keep up with the myriad insurance laws that are passed annually by each state. Not only that, but then each state audits all the insurance companies to make sure they are obeying the law. If you're a nationally known insurance company, you have to handle audits from 51 separate auditors (including the federal government to handle IRS audits for HSA plans).

By allowing insurance companies to "incorporate" their plans in one state, that would reduce the amount of overhead associated with providing insurance considerably, and would help to reduce premiums.

Of course, what is truly funny about the editorial is how concerned the Journal Sentinel is with the sanctity of state laws. Federalism is one of those tricky things. Liberals only really appreciates federalism when it suits them. Allow states to decide insurance laws? Good. Allowing states to decide abortion laws? Bad. States deciding marijuana legality? Good. States controlling the drinking age? Bad. You get the idea.

In this case, this laws is getting around the "federalism" issue, by saying that only companies that cross state lines, or participate in multi-state groups would be allowed to shop for insurance in this new way. This basically brings interstate commerce into play where before it really couldn't.

The other issue that the Journal seems concerned with is that somehow insurance carriers would stop covering certain types of procedures. First of all, as I said before, insurance carriers would still have to obey state laws... it's just now they'd only have to obey the laws of a single state. Secondly, when it comes to preventative medicine, insurance companies have a vested interest in covering these procedures. Because cancer is significantly cheaper to treat when caught early, insurance companies like it to be caught early, and try to encourage it.

The problem is that many state laws are written in very rigid ways, prescribing the exact types of procedures that should be covered. Because medicine, and medical standards are ever evolving, and because state laws often times don't keep up, this actually ties the hands of insurance companies, and doesn't let them keep up, just because they have to obey state laws.

The Journal here is really just trying to use scare tactics where there is realistically nothing to be scared of. Of course, that's nothing new.