Health Care Reforms Can Succeed

Published in The Oklahoman August 20, 2008

Oklahoma's uninsured rate — fourth-highest in the country — is directly tied to the relatively high cost of health insurance in the state.

And that, in turn, is tied to insurance regulations and the high number of legislative mandates dictating what services must be covered under health insurance policies sold in the state.

The average price of a job-based health insurance policy in Oklahoma is $4,088, compared with $3,991 for the national average. And to exacerbate the problem, the state's median annual income of $40,000 is significantly lower than the national average of $46,000. That means Oklahomans must pay higher health insurance costs with a lower-than-average median income.

It isn't surprising that more state residents are opting to go without health insurance — nearly 19 percent of Oklahomans compared with a U.S. average of 15.8 percent.

Oklahoma requires health insurance policies sold in the state to cover a range of services, from bone marrow transplants to hair prostheses and podiatrists to psychologists — 36 coverage mandates in all. The Council for Affordable Health Insurance estimates these mandates can add 20 percent to 50 percent to the cost of insurance policies.

Each of these mandates can be defended in its own right. But since the number of uninsured rises in conjunction with the cost of health insurance, the result is that Oklahoma residents increasingly are being priced out of the market.

It's as though the Legislature were telling motorists they must buy the equivalent of a fully loaded luxury car with satellite radio, heated leather seats and a global positioning system, or they will have to go without a car.

Also contributing to the problem, Oklahoma has a form of modified "community rating,” which means insurance companies are limited in how much they can vary premiums in the individual market. It means policies will be cheaper for those with higher health risks and more expensive for those with lower risks. This has the effect of discouraging young and healthy people from purchasing insurance.

The Oklahoma House Health Care Reform Task Force has been formed to investigate ways to expand access to health insurance for Oklahomans. Rather than expanding government programs, citizens need to be able to purchase more affordable private insurance. That means encouraging more competition among insurance carriers and giving residents more options to buy policies that suit them and their budgets.

Florida recently passed legislation that will allow its residents to purchase "mandate-light” health insurance policies that let citizens, rather than legislators, decide what services will be covered. Federal legislation has been proposed that would allow people to shop across state lines for policies that may be more affordable than those available in their heavily regulated states.

Many other policy reforms are needed at the state and federal levels. But Oklahoma's reforms will succeed if they are based on the principle of providing new incentives for more affordable insurance that engage consumers as partners in seeking the best value for their health care dollars.

Turner is president of the Galen Institute, a nonprofit research organization in Alexandria, Va., that focuses on free-market ideas for health reform. She testified last week before the House Health Care Reform Task Force.