Health Insurance Is Broken—Let the Market Fix It

Let me say something that will make a few folks in D.C. squirm: If we treated health insurance like real insurance, costs would come down. Innovation would flourish. And patients—not bureaucrats—would call the shots.

I recently had the pleasure of sitting down with Nick Gerhart, COO of Homesteaders Life Company and former Iowa Insurance Commissioner, for the Lunch Hour Podcast. We covered a lot of ground—innovation in insurance, the regulatory mess stifling competition, and why your car insurance doesn’t cover oil changes but somehow your health plan is expected to cover everything from prescriptions to pedicures.

At the heart of our conversation was a simple idea: if you want affordable, accessible health care, you’ve got to unleash the market. That means letting insurers compete across state lines. It means empowering consumers to choose plans that actually fit their needs. And it means cutting the red tape that’s strangling innovation in a $5 trillion sector of the U.S. economy.

Health Insurance Isn’t Really Insurance Anymore

Let’s start with the basics. When most people think of insurance, they think of protection against unexpected, costly events—like a house fire or a car accident. You pay premiums to hedge against risk. That’s how it’s supposed to work.

Health insurance? Not so much. Today, it’s more like a government-mandated prepayment plan. It covers everything, even the routine stuff you know you’ll need. And that’s a huge part of the problem.

As Nick put it, no one expects State Farm to pay for your tire rotation. But when it comes to health care, people expect their insurer—or more often, the government—to foot the bill for every little thing. That’s not insurance. That’s cost-sharing, and it's wildly inefficient.

Add in layers of bureaucracy, mandated benefits, and complex billing systems, and it’s no wonder premiums have gone through the roof. For a family of four, you’re looking at $40,000–$50,000 a year out of pocket if you don’t qualify for subsidies. That’s not sustainable—and it’s certainly not consumer-friendly.

Regulated to Death

One of the reasons we’re in this mess is the heavy hand of government. Since the passage of the Affordable Care Act (ACA), Washington has decided what kind of plans people can buy, what those plans must cover, and how they’re priced. And that’s made real innovation almost impossible.

The ACA was sold as a fix—but instead, it created a one-size-fits-all straitjacket for the entire industry. States have added their own mandates on top of that, further restricting flexibility. So what do we have now? Fewer choices, higher premiums, and a marketplace that punishes anyone who dares to think outside the box.

Nick shared stories from his time as a regulator—how insurance commissioners are focused primarily on two things: solvency (so insurers can pay claims) and consumer protection (so people have a place to go when things go wrong). That’s how it should be. The problem starts when Washington tries to micromanage the entire system from the top down.

Let’s be clear: we don’t need more federal control. We need more market freedom.

Competition Works—If You Let It

There’s an idea that’s been kicking around for years, and it’s one we should have acted on yesterday: allow health insurers to sell across state lines. It’s not a radical idea. We let banks do it. We let airlines do it. We let car manufacturers do it. Why not health insurance?

Right now, if an insurer wants to operate in multiple states, they have to jump through separate regulatory hoops in each one. That means duplicative paperwork, costly compliance, and inconsistent mandates. In theory, Section 1333 of the ACA allows states to form compacts, but almost no states have done it. Why? Because it’s still too complicated.

As Nick explained, the real barrier isn’t just regulatory. It’s also about networks. You can’t sell a plan in Iowa unless you’ve got doctors in Iowa willing to join your network. And building that network from scratch? It’s a nightmare for any small or mid-sized insurer trying to compete with the big players.

The end result is a market dominated by a handful of giants who can afford to play the regulatory game. And everyone else—especially consumers—gets left behind.

Doctors Are the New Scarce Resource

You want to talk about “widgets” in the economy? In health care, the widget is the doctor’s time. Unlike tires or fan belts, you can’t just manufacture more doctors overnight. And we’re running out of them.

My wife is a family physician, just like Nick’s dad. I’ve seen firsthand how demoralized medical professionals have become. They’re overworked, underpaid, and buried in paperwork. Many retired early after COVID. Fewer students are going into med school. And in the meantime, the need for care keeps growing.

That makes innovation all the more urgent. We need smarter, faster, leaner systems—driven by data and powered by AI. If a radiologist in Kentucky can read a scan for a patient in Alaska, we ought to make that happen. Cross-state licensing should be the norm, not the exception.

But again, the bureaucracy gets in the way. Credentialing, reimbursement rules, scope-of-practice laws—it’s all designed to protect the status quo, not patients.

Real Reform, One Bite at a Time

Here’s what it comes down to: there’s no silver bullet. But that doesn’t mean we shouldn’t act.

We need to tackle this like we tackle any big problem—one bite at a time. Start with cross-state insurance. Modernize licensing laws. Cut the mandates that drive up costs. Let new carriers enter the market. And above all, give consumers real choices.

It won’t solve everything overnight. But as Nick noted, even a 20% savings across a $5 trillion system adds up fast. That’s hundreds of billions of dollars that could be used to pay doctors more, recruit new providers, fund innovation, or simply lower premiums for working families.

That’s not some academic theory. That’s real relief for real people.

The Bottom Line

Health care is personal. And the decisions about it should be personal too—not made by bureaucrats in D.C., not by one-size-fits-all mandates, and not by insurance monopolies shielded from competition.

If we want better outcomes, we need better incentives. If we want lower costs, we need more choice. And if we want true innovation, we’ve got to get government out of the way.

At the Coalition Against Socialized Medicine, we’ll keep fighting to restore market principles to health care—because patients deserve better than the broken system we’ve got today.

Let insurers compete. Let consumers choose. And let freedom—not bureaucracy—lead the way.