Free-Market Solutions Help All, Not Just Some

My op-ed on the new autism mandate ran in the Missouri Record this morning, and the blogosphere has already begun to respond! Perhaps I did not articulate myself clearly enough, because this author’s post reflects some misunderstandings of my argument that I would like to clear up:

The problem with free market, anti-regulation fundamentalists is that their arguments lead to despicable results (witness Rand Paul’s opposition to integrated lunch counters). A prime example shows up on the Missouri Record site, where grad student Caitlin Hartsell argues that if we increase costs to insurance companies by making them pay for autism spectrum disorders, those insurers might increase rates. (Characteristic of free-market extremists, she doesn’t provide numbers, or consider the possibility that the costs could be covered by reducing out-of-control executive compensation packages).

If you have a strong stomach or sense of humor, go read her obsequious offering to her Show-Me Institute bosses, and substitute any malady whatsoever as the subject. Try breast cancer or broken limbs, and you can have an argument in favor of freeing our health insurance companies from the burden of having to pay for, umm, health claims.

Where to begin? I never argued that insurance companies shouldn’t pay for claims; I argued that creating mandates is not the solution.

Competition needs to be increased in the insurance market, thus giving insurance companies a strong incentive to cater to people by providing coverage for things like autism therapy. A better solution than a mandate would be to increase competition by breaking the tie between someone’s employment and their insurance, by giving individuals the same tax breaks for insurance policy purchases that employers receive. This would give people more stability, because they could carry their insurance policies throughout their lives, and through uncertain economic times. If the tax break were offered to individuals rather than just employers, it would also reduce the incentive for them to offer “Cadillac” health plans that inevitably trade a portion of employees’ monetary compensation for expansive coverage that doesn’t meet everyone’s needs or budget requirements.

Unfortunately, the free-market argument is far too often misunderstood, because it focuses on the “unseen” as opposed to the very visible “seen” of children with autism. The author of that blog entry and I may very well hope for the same outcomes, but we disagree on the best way to achieve them. I want very much for children with autism to receive the necessary therapy. I also want children with any number of diseases to obtain proper care and coverage. By subjecting the market to competitive forces, people would have an increased ability to choose health insurance plans that fit their unique needs.

Statistics about the increase are available, but they are disparate, and determining the relevant figures depends on which side of the debate you ask. It will also depend on how regulators choose to interpret the provisions. But when costs increase, there will be people at the margin who are affected. Those most affected are the people whose illnesses or conditions aren’t covered by a mandate — their insurance costs are higher, but they do not receive any benefit.