It has come to Wonks Anonymous attention that he may have been less than fair in his treatment of John McCain's health policy proposals. Specifically he has not considered the improvements in quality and decreases in price that increased competition in the health insurance marketplace is sure to bring about. Which competition will be introduced by allowing the sale of health insurance policies across state lines.

After all, Wonks Anonymous claims to be an economist but he acts as if he has never read Free To Choose. Which he has not, but believes that he can take a pass on this one having read practically everything else that Mr. Friedman ever wrote.

At any rate Wonks Anonymous view of health insurance deregulation is colored by his liberal mindset and also by his somewhat intimate knowledge of the health insurance industry.

Most state health insurance regulation accomplishes three things:

• Companies are regulated to make sure that they offer the consumer a complete product that actually covers most things that would cause a reasonable person would seek medical care. Companies may be forced to cover maternity, diabetes, drug and alcohol treatment and such.
• Companies are regulated to prevent fraud and misrepresentation in their sales efforts and unfair cancellations of contracts when customers get sick.
• Companies are regulated to insure that they are financially sound. They must hold sufficient reserves to actually pay claims made under their policies.

Senator McCain imagines that regulations that force insurers to cover unreasonable events, like childbirth and so on, are a major contributor to health insurance costs. We would all agree that California is a highly regulated state - unlike that free market paradise Alaska - yet Wonks Anonymous knows of several companies in California that are offering policies that do not cover various conditions. You just need to pick the proper corporate structure, covered by a less stringent regulatory body.

As the law currently stands all states allow exclusion of preexisting conditions on individual polices and refusal of coverage.

Indeed the greatest regulatory burden faced by health insurers is regulation that prevents creative marketing and that requires companies to carry reserves adequate to the policies that they have written.

A McCain health care reform would probably unleash unheard of private creativity. Wonks Anonymous sees a not too distant future where companies operating under the Alaska insurance commission spread out across the land to offer consumers new health policies that cost exactly $2,500 for an individual and $5,000 for a family. Better yet, to facilitate the spread of health insurance, the McCain plan will probably allow consumers to direct the IRS to pay their rebate check to any one of these companies.

Wonks Anonymous would not be surprised if the language of these policies were obscure to the point of incomprehensibility. He would expect that many common conditions would be carved out - i.e. not covered - and that these conditions would be listed using fine medical Latin. He would look to see verbal representations of the policies that were not entirely the same as the actual written policy.

Wonks Anonymous would also expect to see these new insurance companies take full advantage of leverage and hold "efficient" reserves against claims. He imagines they will follow the example of AIG and other companies that sold Credit Default Swaps.

It is likely that many of these companies would spring up like mushrooms after the rains and, like mushrooms, would vanish before the year was out. Some people would make a a large amount of money and the rest of us would be left holding the bag. Those who were defrauded or left without coverage could naturally pursue criminal charges or sue. This works really well, as we have seen in the case of ENRON.

Now Wonks Anonymous likes to be right just as much as the next person but he really would rather not try this particular dreary experiment. He believes that you know what to do with this information.