Mike Pence Wins Race To The Bottom

by Stuart Shapiro

Matt Yglesias savages Indiana Congressman Mike Pence for his seemingly ignorant response to a question on selling health insurance across state lines.   Pence, who was the recent winner of the “Values Voter Straw Poll” and is being increasingly talked about as a potential 2012 presidential contender, claimed not to understand the idea of the “race to the bottom” in the health insurance market.

Yglesias explains:

This is pretty easy to understand. If you regulate something at the state level, but allow it to be sold on a nationwide basis, then sellers will all migrate to the least-regulated state. This is particularly true in a business like health insurance that doesn’t involve much physical infrastructure. States may respond to this by further reducing regulation. That’s the race to the bottom. It’s true, of course, that if insurers were allowed to radically reduce the adequacy of the coverage they offer that they could also offer it at lower price. So that’s a debate we can have—should we try to make insurance much cheaper by making it much worse?—but it doesn’t take a genius to understand what the issue is.

Yglesias seems to think that Pence is stupid.  I tend to think that not too many of our representatives are downright ignorant.  Instead I think Pence understands perfectly well why insurance companies are not allowed to sell across state lines (unless they adhere to a federal minimum standard as stipulated in the Health Care Reform law).  He just doesn’t want his audience to understand.  And that deception may be worse than stupidity.

By: Stuart Shapiro

Stuart is a professor and the Director of the Public Policy
program at the Bloustein School of Planning and Public Policy at Rutgers
University. He teaches economics and cost-benefit analysis and studies
regulation in the United States at both the federal and state levels.
Prior to coming to Rutgers, Stuart worked for five years at the Office
of Management and Budget in Washington under Presidents Clinton and
George W. Bush.