Instead of a public option, give the public options

In the Boston Globe, Jeff Jacoby shares three ideas to make health insurance more accessible and affordable.

Tear down the barriers to buying insurance across state lines.

Under federal law, states are permitted to regulate “the business of insurance’’ as they see fit, and most have seen fit to allow the sale only of insurance policies licensed by their own insurance commissions. As a consequence, there is no competitive national market for health insurance; there are 50 state markets instead, most of which are dominated by a handful of insurers. This, says Michael Cannon of the Cato Institute, is the “original sin’’ of health insurance regulation.

When it comes to almost any other product or service, Americans would find a ban on interstate commerce and competition intolerable: Imagine being told that you could buy a car only if it was manufactured in your state. Consumers in the market for a mortgage are free to do business with an out-of-state lender; those in the market for health insurance should be equally free to do business with an out-of-state insurer.

The High Cost of Minimum Wage

In the Boston Globe, Jeff Jacoby explores how raising the minimum wage hurts those entry-level job seekers that its supporters are trying to help:

Those who press for a higher minimum wage often claim that making entry-level jobs more expensive won’t reduce the number of entry-level jobs. Were the government to compel a 41 percent increase in the price of gasoline or movie tickets or steel, every rational observer would expect a drop in the demand for gasoline, movie tickets, or steel. Yet when it comes to the minimum wage, politicians and journalists somehow persuade themselves that making workers more expensive won’t reduce the demand for workers. Senator Edward Kennedy, for example, blithely asserts: “History clearly shows that raising the minimum wage has not had any negative impact on jobs.’’ Activist Holly Sklar, campaigning for a $10 minimum wage, likewise insists that “raising the minimum wage does not increase unemployment in good times or bad.’’

But that’s exactly what it does. Artificial price floors - mandatory minimum prices set higher than what the market will bear - generate surpluses. Minimum-wage laws are no exception. The price floor imposed by the government on the supply of low-skilled labor results in a labor surplus, which is just another way of saying higher unemployment. How much higher? Economists Joseph Sabia of American University and Richard Burkhauser of Cornell estimate that the minimum-wage hikes of the past two years will wipe out more than 390,000 jobs. According to David Neumark of the University of California at Irvine, an expert on labor force economics, the minimum-wage jump scheduled for this month “will lead to the loss of an additional 300,000 jobs among teens and young adults.’’ (more)

Hatttip: Carpe Diem