The GOP Alternative

A week and a half ago, House Republicans finally unveiled their proposal for reforming the health insurance industry. According to the GOP website, there are four basic principles at the heart of their proposal:

* Number one: let families and businesses buy health insurance across state lines.
* Number two: allow individuals, small businesses, and trade associations to pool together and acquire health insurance at lower prices, the same way large corporations and labor unions do.
* Number three: give states the tools to create their own innovative reforms that lower health care costs.
* Number four: end junk lawsuits that contribute to higher health care costs by increasing the number of tests and procedures that physicians sometimes order not because they think it's good medicine, but because they are afraid of being sued.

I'm no expert, so I'm interested to hear what people know about these proposals - good and bad.  Here's my understanding of some of the potential drawbacks at play here.

Number(s) one and two (portability): The problem is that different states have different regulatory systems for insurers, some much more lax than others.  Let's say that Montana has the weakest laws for insurance companies.  In a national system, insurance companies would have an incentive to locate and sell their insurance packages out of Montana.  In so doing, they would evade the stricter consumer protections that many state legislatures have enacted for their citizens, and over time, consumers would have fewer and fewer protections as more and more insurers work out of Montana.  Thus, a Hoosier purchasing insurance might have more choices to pick from, but at a significant cost to her rights as a policy holder.  More expensive plans would likely have more protections, but those would not be available to most middle-, working-, and lower-class consumers.

Number three (state innovation): This sounds great, but from my reading of the commentary - and also from Mike Pence's statements at last night's health care panel, this seems to simply be a plan to enlarge and give additional funding to state high-risk pools.  These pools tend to have higher premiums, less generous benefits, and they also (usually) adjust premiums based on age.  

Number four (tort reform): Most states have already done this by placing caps on damages that can be recovered for medical malpractice.  It has not brought down the cost of care or the cost of insurance.  This discussion at the NYT health care blog was interesting.

Again, these are my very basic understandings of some of the potential problems with the GOP alternative.  I welcome corrections and clarifications on this stuff.