It is time to toss the insurance companies out of Louisiana, and start a grand experiment in state-run insurance for health, homeowners and auto. I know, this sounds crazy - the state is not particularly good at running much of anything - but in all honesty, the insurance situation in Louisiana could not get any worse. Not even in the hands of our politicians. Here is why it will work.
First, nearly everyone in the state needs insurance for home, auto and health. However, all insurance companies are extremely selective and refuse coverage for those most often in the greatest need. Those with pre-existing health conditions, for example, most often have the hardest time getting decent health insurance. For homeowners in New Orleans, there is no way to get a new homeowners policy, unless it is through the state-run Citizens Corp. And we all know about the auto insurance debacle. In Louisiana we have one of the highest rates of uninsured motorists in the U.S.
Additionally, we pay some of the highest premiums in the U.S. for all three of these types of insurance policies. Here we are, living in a relatively small, poor state, and a large portion of people's (and corporate) income goes to insurance. Then, one small incident (a little roof damage from a wind storm, high blood pressure, a fender-bender) and your insurance company drops you like a hot-potato.
Potentially, without costing anyone any additional money (what you pay in premiums now to insurance companies would go to an insurance tax), and potentially with future reduction in insurance costs as risks get spread out, we could take over all of the homeowners, auto and health insurance in the state, and provide a comprehensive insurance plan that does not kick people out for any reason. The young and healthy help to keep the health insurance costs stable for the old and sick; hurricane-free Shreveport helps to reduce homeowners insurance costs for those in New Orleans.
Most importantly, by offering universal insurance coverage, especially health insurance, we would attract many businesses to Louisiana that currently pay very high premiums for their employees in other states. For example, if you are a corporation with a small presence in New Orleans and headquarters in Houston, but are paying on the average $500 per employee monthly for health insurance for your Texas employees, the free health insurance in Louisiana would be a big incentive to move a greater portion of your operations to New Orleans. If that same corporation moved 1000 employees from Texas to Louisiana, they would save $500,000 in health insurance costs monthly. And that is just health insurance; there would be considerable savings in auto and business insurance costs for that corporation as well. Companies that moved to Louisiana would become considerably more competitive globally as well as in the U.S.
Of course, there are legitimate concerns about the ability of the state to manage such a large system. But as bad as things are with the insurance industry in Louisiana, and in New Orleans in particular, it would be difficult to imagine creating a worse system. Big and progressive changes are needed for recovery and growth in South Louisiana. This single move - tossing out the private insurers that don't care about anything besides massive annual profits - could radically improve conditions in the state. Additionally, we would create such a better business environment that other states would be forced to do the same thing in order to keep their businesses from moving to Louisiana to become more globally competitive.
