The Health Care Choice Act: The Individual Insurance Market and the Politics of 'Choice'

Abstract

Traditionally, employer-sponsored group insurance plans have been the backbone of health insurance coverage in the United States. While it is still true that most Americans get their health insurance through their employment, the erosion of employer-sponsored health insurance has increased the ranks of the uninsured and pushed more workers, retirees and their families into the individual insurance market. In 2005, for example, nine percent of the population, or nearly 27 million people, turned to individual policies for health insurance coverage.

The Health Care Choice Act of 2005 (the "Act") currently before Congress aims to reform perceived problems in the individual market, and is touted as part of the solution to the problem of the uninsured. It purports to allow individuals who are not eligible for or cannot afford group coverage to purchase an individual policy in and from any state. If passed, the Act would allow health insurers to offer individual policies of insurance from any state without being required to comply with the laws of the insured's state. Its proponents claim that it would lower the cost of individual health insurance by bypassing state laws such as those mandating benefits, and offer consumers more choice.

It does not appear that the Act would lower costs for most purchasers, increase meaningful choices, or reduce the overall number of uninsured. Moreover, the Act would permit health insurers to sell policies from the states with the fewest consumer protections, and to market and sell those policies to consumers in all other states. This would erode important consumer protections under state law and undercut the role of the states in regulating health insurance products and protecting their citizens. Worse, the Act could increase the existing problem of fragmentation in the individual and broader insurance markets and divert attention away from systemic issues such as the increasingly high cost of health care, and the growing crisis of un- and under-insurance. Indeed, the Act can be seen as an example of the larger political approach to health care policy, one focused on individual, market-based solutions that undermine the concept of health insurance as an expression of social solidarity and collective responsibility.

Keywords: health care, health law, health insurance, Health Care Choice Act

JEL Classification: I1