Regulating Life

Health care regulation is the worst form of tax, as it confiscates wealth and prevents effective drugs and treatments—that save lives and allay terminal patients—from entering the market. Regulation isolates competition, limits market activity, and politicizes industries, all of which afflict consumerism and restrict individual liberty. Regulation confines industry and accepts the status quo, by constraining production and discouraging innovation and development. Regulation weakens economies and corrupts society, and in the American health care industry, it disparages industrial progress and escalates costs to unprecedented levels.

Christopher Conover of Duke University noted the social costs of regulation across 47 health care categories. In defining social costs as “the value of the goods and services lost by society resulting from the use of resources to comply with and implement the regulation, and from reductions in output” , Conover estimated that in 2002, health care regulation cost American taxpayers $169 billion. “Spread across all households, health services regulation cost the average household an estimated $1,546 in 2002.” This is more than Americans spent on both gasoline ($165.8 billion) and pharmaceuticals ($162.4 billion).

Government regulates insurance providers by placing restrictions on pricing, administration, and agreement terms. Pricing regulation expels actuarial science by preventing underwriters from assessing premiums based on risk. This may appear equitable, but in fact creates an ethical dilemma, as it forces low-risk customers to subsidize high-risk customers.

To regulate pricing in this way means someone who postpones buying health insurance for 20 years, and is suddenly diagnosed with heart disease, pays the same premiums as a healthy person who has carried insurance their whole life. To compensate for price controls, providers must offset premiums, which denies insurance to low-income and low-risk individuals—because premiums become unaffordable. It’s not compassion, but common sense that shows why this is unfair. In the quest for social justice, in theory, regulators produce a result that is unjust and unmerited.

Government also intervenes in health plans themselves, by mandating coverage for specific benefits. Part of this intrusion on the market lies with crooked constituencies that arouse biased legislation. By using constituencies that supply politicians with generous contributions, lobbyists and advocacy groups indirectly legislate health insurance mandates.

The Council for Affordable Health Insurance found that state governments currently legislate 2,133 mandates, requiring insurers to cover services such as “acupuncture, massage therapists and hair prostheses (wigs).” Not surprisingly, supporters of these mandates, who lobby for heavy regulation, include acupuncturists, massage therapists, and chiropractors.

Some state-mandated benefits are nonessential, while others are downright absurd: two states mandate coverage for naturopaths (specialized herb treatments and prescriptions); seven states mandate coverage for in vitro fertilization; forty states mandate treatments for alcoholism, 27 states for drug addiction, and 29 states for mental illnesses. Because someone spends his life snorting cocaine and chugging Jack Daniels should a healthy, responsible person finance his recovery? Elective government-mandated services and treatments such as these inflate premiums for everyone, even those with basic, high deductible plans.

In the 1960s there were only a handful of government-mandated benefits. And now, there are thousands. It is no wonder health care costs have skyrocketed over the past few decades. Mandated benefits may make insurance policies more comprehensive, but also more expensive, at an expense that is rarely beneficial.

They force providers to cover benefits that are usually paid out-of-pocket, many of which are discretionary and unrelated to health quality. Not to mention, individuals under certain state regulations might have to pay for services that return no benefit. After all, would most women support a government mandate that forced cable and satellite providers to include in their TV packages ESPN, ESPN2, ESPN Classic, ESPN News, Fox Sports, the Golf channel, and the NFL network?