Caplis & Silverman, Mike Coffman, 2/22/2010

Station: 630 K-HOW
Show: Caplis & Silverman Show
Guest: Mike Coffman
Date: 2/22/2010
Topics: Obamacare, Catastrophic Insurance Policies, Taxing Health Insurance.
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CAPLIS: I appreciate the chance to talk to you about the latest version of Obamacare, at least what we know of it so far. The leading edge, the headline story popping first up out of it is the president is proposing the federal government now can regulate insurance industry rates. I wanted to get your take on that to start. Welcome back to KHOW.

COFFMAN: Hey great to be with you.

CAPLIS: Thank you. So what do you think about that? What do you think about this whole idea that the federal government should be able to step in and say no to a particular rate that a private insurance company wants to apply.

COFFMAN: You know the sad thing is we are not fixing the current system. And a lot of it is regulated by states. But we have put so many mandates on these policies about coverage. Where we have taken the individual out of the equation, the consumer out of the equation, in terms of having skin in the game. The rates have gone through the roof. And I’ve got to tell you, I think what we need is price competition between insurance companies. And this really doesn’t do it. If you say to a private insurance carrier, and I think they want to end the private system, if you say to a private carrier OK this is what you can charge and we want you to do all these things. And if they cant do it they will just go out of business, that is not creating a free market environment. We need to strip come mandates out of these bills. I think we can do high risk insurance pools. But no where in this legislation is price competition.

SILVERMAN: Hey Congressman, nice to talk to you again….you taked about the rate increases on health insurance. Something a lot of us are very familiar with. What about the profits part of the insurance industry? In California, Wellpoint record profits but they are raising up the rates. How do you explain that?

COFFMAN: What we need is market competition. The President is right when he says there is inadequate competition among private insurance companies. But we do that through government regulations. We say that you cannot purchase health insurance across state lines. It has to be somebody that is licensed in your state. I think that if we opened up the market, deregulated some, and I think the role of the insurance commissioner is to make sure that these policies are transparent and that they cover what they say they are going to cover. But if we could open up market competition. When I was state treasurer, I looked and wondered why all the publically traded corporations were moving out of Colorado and incorporating in the state of Delaware. And it turns out that Delaware had a court system that specialized in hearing business cases. And I think provided a better environment, even though they charged more for their incorporation. I think if Colorado could come up with a great health insurance plan that would focus on catastrophic care and opened it up to the rest of the country, if in fact we opened up the market, and we charged a premium tax here, part of that would go to the general fund but part of it goes to cover a high-risk insurance pool with people that have chronic healthcare needs that are just priced out of the market, and we subsidize that here in Colorado, we could bring down the cost further. If we could sell a policy that would appeal to the country that would be more cost effective, other states could do that same. Lets open it up to competition.

SILVERMAN: Isn’t that part of the deal behind the public option? Make the insurance companies compete with government?

COFFMAN: Well, what the public option says is that we are not going to do the deregulatory parts that I mentioned that allows competition across state lines. So we are just going to leave it in place and say that the only one that can provide competition is the government? No, we need to open up competition to the private sector to bring down prices.

CAPLIS: Congressman Mike Coffman our guest. And doesn’t this go back to the lead question that I had for you, which was the idea of the federal government now being able to dictate rates for private insurance companies. Because behind this, cant the intellectually honest agree that the left for a long long time, and now they are in control of the Democratic Party, has been out to kill private insurance companies, health insurance companies, and replace them with a single-payer government provided health insurance plan? Isn’t that their holy grail and wouldn’t this be a big stem toward that?

COFFMAN: Yea it really would. And let me tell you one other thing. There are some real constitutional questions here. The notion that the federal government can impose an individual mandate. Certainly I think states can do it constitutionally, but I don’t see where in the US Constitution it gives the power to the federal government the power to do that. I think that there are other constitutional questions about the power of the federal government to do the things we are taking about doing. And clearly we understand the Commerce Clause and what is involved in that. I think that there are aspects in this legislation that clearly goes beyond that…

SILVERMAN: Hey Congressman, what is the argument offered for not allowing competition state to state?

COFFMAN: I suspect that the argument would be this: In 1946, the Congress of the US pretty much gave, if you are not a multi-state employer that falls under the exemption, that you are subject to state regulation, particularly in the small group market and the individual market. Each state has different criteria and so I think that they are saying would there be a race to the bottom if you opened up the market? And a state had a catastrophic policy without all the bells and whistles. First of all, I think that we insure for much too much. I mean, insurance is about the providing oh…

CAPLIS: Catastrophic type coverage.

COFFMAN: Yea, really for catastrophic. And so, the fact that we have gone beyond that were people don’t have skin in the game.

SILVERMAN: Yea, but lets talk about your ankle. It sounds like it was a bad break. Did you have to have surgery?

COFFMAN: Thank god I didn’t have to have surgery. Interesting enough…

SILVERMAN: But say you would have. That could run you 15, 20, 25 thousand dollars.

COFFMAN: That where you need where is that appropriate deductible. Let individuals make that decision. When I got out of the Marine Corp the first time and started a business, I had a catastrophic policy with American Family. I think it was $10,000 or something like that, and after that then they picked up the difference. I think that we should have the freedom to make those choices. And if you look at the system that is being advocated for today; 1) People wouldn’t be allowed to have a catastrophic policy. They would be mandated, with penalty if they didn’t, to have an individual policy that had all the bells and whistles on it. So I just don’t see how this is going to save us money in the end.

CAPLIS: Well great point Congressman. We really appreciate your time today.