McCain, like most conservatives, believes that allowing cross-state purchases of insurance will help make health care more affordable. If people can shop for the policy that best suits their needs, the market will naturally bring down prices--while taking care of everybody's needs.
This is pure bunk--for precisely the reasons Obama just laid out. If insurers can sell policies across state lines, they will search out--and then converge upon--whichever state or states have the least stringent regulations. It will be exactly like the way the credit industry evolved.
The problem is that a lot of those regulations are there for a reason. They mandate screening for cancer, coverage of mental health or prescription drugs, payment for emergency services, and so on.
It's fair to question the necessity of a few; a lot of people would question a mandate for in vitro fertilization, which a few states have. But the vast majority of the regulations are for services that most people value highly. (And rightly so.)
Those regulations would effectively become moot if McCain had his way. What's more, the opportunities for consumer abuse--and outright fraud--would explode.
As it is, state regulators have difficulty riding herd on insurers in their own states. What's going to happen when, for example, customers in Florida have a problem with an insurer operating out of Idaho. (Idaho would be a logical destination for insurers, since it's the state with the least mandates on services.) Can they depend on the insurance officials in such a tiny state to take care of them?
Earlier this week, McCain economics adviser Douglas Holtz-Eakin said such worries were an "insult" to state regulators, who surely could handle the job. Perhaps he should take that up with the state regulators. In the past, when similar schemes were floated, the National Association of Insurance Commissioners opposed them for precisely this reason.
It was a bad idea then. It's a bad idea now.
And that's my last post on health care tonight. Promise!
Update: Almost forgot...the Center for American Progress Action Fund did a terrific report on this, if you want to read more. It's here.
--Jonathan Cohn