The problem with H.R. 1628, the recent act of Congress, signed by President Trump, is that it does not fix the health insurance industry. While that’s not Congress’ job, it’s also not its job to screw-up the industry, which is exactly what both the 111th Congress and the 79th Congress did.

The job of fixing any industry belongs to the individuals and businesses that make up the industry. They do so by modifying the availability and pricing of their products as recently demonstrated by Aetna. It announced that because it had lost over $700 million, it was pulling out of two states, Nebraska and Delaware where it had been selling health insurance. “Those losses are the result of marketplace structural issues,” the company said. In essence, the market is all screwed-up.

Aetna’s roots are deep, going back to 1850. It’s a fine company and well respected in the insurance industry by its customers, agents and competitors. Having spent over 30 years in the business of insurance, I know that the decision by Aetna’s managers was agonizing because they realized that they had failed.

Congress can learn from Aetna’s decision as it points directly to the 500 pound gorilla in the room, the confusion of the insurance industry that was caused by the 79th Congress when, in the waning years of World War II, it passed the McCarran-Ferguson Act. The bill passed by the House does not adequately provide for the market discipline needed for controlling the rising cost of health care or health insurance (i.e. consumer protection), does not fix the problems of buying insurance across state lines, how pre-existing conditions are going to be insured without bankrupting insurance companies and does not create a plan for driving low income Americans (Medicaid recipients) and other governmentally insured individuals (Medicare and Veterans) into the insurance marketplace.

This Act effectively prohibited insurance companies from operating under a single set of rules for nationwide or regional companies and consumers. Congress must begin the process of federal regulation of the business of insurance.

When I told a friend who heads a DC, free-market think tank, that I have a 38 page plan to “Repeal and Replace” Obamacare that relies on federal regulation, he laughed. “Thirty-eight pages!” he said. “Very few people in DC want to read three pages of anything,” he advised. “What makes you think the Congress isn’t going to screw things up in health insurance just as the states have?”

“Nothing,” I replied. “But, the core problem today is the 56 sets of laws and regulations that make it impossible for nationwide insurance companies to effectively price and market their insurance products.” And, that is exactly what Aetna and other health insurance companies have told us by their actions.

 

My plan starts with a standardized health insurance policy, morphs into federal or dual regulation of the business of insurance, identifies how health savings accounts can control health care and insurance costs and establishes a single, industry run system and methodology for addressing pre-existing conditions, insurer insolvency protection and a host of other issues.

Granted, the bill did repeal a lot of the economically disastrous effects of the prior administration and tries to tweak all sorts of issues. One of my favorites is how winning the lottery affects an individual’s ability to receive assistance from the government. (See H.R. 1628 § 114, (a), (1), (J), (i), et seq.) The entire bill addresses all sorts of intricacies, the minutiae of governmental assistance. But, it includes nothing that applies the most proven method of consumer protection, a free-market, for controlling costs and availability of both health care and health insurance.

Under my plan, the single health insurance policy would be the only health insurance policy (format, terms, conditions, exclusions, etc.) that would be allowed to be sold in the US. Thus, the insurance buying public … you and me … will finally understand what we’re buying.

Insurers would voluntarily offer other forms of insurance that are related to health insurance such as disability insurance, long-term care, dental coverage, term life insurance and even burial insurance right on the health policy. They could even manage the funds of our Health Savings Accounts that would be tied to our deductibles and co-pays.

It’s time for us to demand that Congress move health care and health care insurance into the 21st Century and allow us to buy insurance the same way we shop for other household products and services.

Cross indemnification Risk Sharing Pool