“You can fix ignorant, but you can’t fix stupid,” state Sen. Steve Thompson of Marietta warned his colleagues last week. “And this bill is just stupid.”
Thompson was right, but 37 of his fellow senators went ahead and voted for House Bill 47 anyway. As a result, the health-insurance bill now sits in the hands of Gov. Nathan Deal, needing only his signature for final passage.
According to its champions, including state Rep. Matt Ramsey, R-Peachtree City, state Sen. Chip Rogers, R-Woodstock, and others, the bill merely allows the sale of individual health-insurance policies across state lines, which is a longtime conservative goal.
In fact, the model for the bill was provided by the American Legislative Exchange Council, a business-funded group based in Washington that markets conservative ideology to state legislators. That ideology holds that selling individual policies across state lines would increase competition and thus lower the price of health insurance.
But if you think it through, the practical consequence of the bill is to make the already unequal relationship between insurance company and customer even less favorable to the customer.
Under current law, individual health insurance policies sold in Georgia have to follow Georgia laws that were adopted by Georgia legislators to protect and benefit Georgians. Among other things, for example, such policies are required to cover breast-cancer screenings. Those laws are also enforced by a Georgia insurance commissioner.
Under HB 87, that would no longer be the case. Georgia regulations — and Georgia enforcement — would not apply. Companies from out of state could sell policies here as long as they abided by the rules and regulations that were in effect back in their home state.
In other words, by voting to approve the bill, Georgia legislators voted to cede regulatory control over their own citizens to unknown regulators in an unknown state, people with no incentive to care about what happens in Georgia or to Georgians. And they have done so for purely ideological reasons.
Now think about what happens if other states follow Georgia’s example: If insurance companies are bound only by the laws of the state where they’re headquartered, they will inevitably gravitate to the state that adopts the weakest regulations and takes the most pro-industry stance toward enforcement. And states will compete for that “honor” for the jobs it might bring.
That’s not mere conjecture. Why do most companies incorporate themselves in Delaware? Because at the turn of the 20th century, Delaware made a conscious decision to woo them by adopting very business-friendly laws.
The credit-card industry offers a more recent example. In 1980, New York-based Citibank went shopping for a state that was willing to enact extremely lenient laws covering the issuance of credit cards. It found a willing partner in South Dakota, which was starving for economic development. The state agreed to rewrite its banking laws, dropping interest-rate ceilings and other consumer-protection regulations, in exchange for getting a few hundred well-paying jobs.
“Citibank actually drafted the legislation,” then-Gov. William Janklow recalled later. “Literally we introduced it, and it passed our legislature in one day.”
At the moment, every state in the country has its own insurance regulator, and for good reason. States learned the hard way that without regulation and oversight, the insurance industry can be vulnerable to fraudsters and con men. (Most people in the industry today are honest people providing an honest service; the intent of oversight is to keep it that way.)
The net effect of letting companies “sell insurance across state lines” is to gut that state-based regulation in favor of lax or non-existent regulation. Such a step is particularly hypocritical given the emphasis that Rogers and others have placed on defending Georgia’s sovereignty. In effect, they’re now giving it away.