Price controls for insurance companies

I'm confused by the recent discussions emanating from the Obama administration.  If something like the current proposals pass, and those proposals "work," low-risk individuals end up subsidizing the health care of high-risk individuals.  Prices for insurance won't need to go up at outrageous rates, or so we are told.

If current proposals fail to pass, insurance companies can still just dump people.  Forcing them to lower their prices will induce them to dump even more people and to have a tighter definition of preexisting conditions.

It seems to me this announcement is either just headline-seeking or an admission that, after the plan is passed, premia will continue to rise at high rates.  The latter case runs contrary to the narrative of how the plan will contain "the health insurance death spiral of the status quo."

Perhaps forthcoming details will clarify this matter.  (Is it for the transition period?)

Comments

It seems more likely that they are just continuing to stir up popular dislike for the health insurance companies in their quest to scapegoat them for high prices. Of course, driving people out of plans makes a government run plan that is allowed to lose money more popular.

"Premia". You just made my day.

Headline seeking. Or, put more charitably, a way to highlight that the current healthcare system is untenable in order to build support for his reforms and put pressure on Republicans who oppose them.

Problem: Lots of people without health insurance.
Solution: Force people to buy health insurance.

Problem: Health insurance is expensive.
Solution: Force health insurance companies to keep their prices low.

I can't wait to see Obama's solution to high unemployment.

While you have to hate Anthem of California for passing on such a massive rate hike, it seems blatantly obvious why they did it despite being in the middle of a huge economic downturn. It's because they knew the Obama administration would try and pass some economically insane idea like this price fixing so they're trying to blow their rates up as quick as possible before the government can stop them. In the case that the Obama administration tries to set rates directly, well at least the insurance companies made a few more bucks while they still could.

Maybe, just maybe, politicians are lying scumbags and they propose policies that they believe will get them elected. Maybe we can even give a name to this theory; something like 'public choice'?

Nah; whoever came up with that theory is a lying scumbag who couldn't care less about the truth, only self-promotion.

Classic case of misdirection.

Never forget, Obama's solution is to solve Obama's problems.

This has been done before. In 1988 voters in California forced a 20% rate roll back on property insurance.
"Proposition 103 (Section 1861.01 (a) of the California Insurance Code (CIC)) required that every insurer reduce its rates to at least 20% less than the rates that were in effect on November 8, 1987 unless such rollback would lead to a company's insolvency. "
Dire warnings by pro market economists to the contrary, studies of auto rates post Prop 103 show no harmful effects. Just saying.

My principal concern over interstate sales has to do with regulation. Allow unlimited interstate sales with no federal oversight and it is inevitable that some state, call it SD for convenience, will decide that the keys to the kingdom lie with essentially deregulating insurance cos.

At that point all health insurance companies will incorporate in SD, and all customers will be at the mercy of SD regulators, who will be non-existent for practical purposes. That's a recipe for utter disaster.

Before anyone starts, let me be clear that I understand all about how people are going to study the regulations, and the insurance cos' balance sheets and investment policies, and so on and so forth, so it won't matter - the market will magically fix it.

To which I say, first, BS, and second, that if you believe all that you are a fool who should get help before crossing the street.

I think Obama is just trying to get on the right side of people who are upset that Anthem tried to raise its rates so drastically, right before the summit. There's a pretty long history of insurance rate regulation, although not, of course, at a federal level, so it doesn't have to be a complete disaster.

What causes more expensive claims during recessions is fewer people to charge. Healthcare costs are not variable but fixed. Once employment and coverage rises though they are treated as though they are variable so there is no reduction in costs due to more efficient usage.

I think everyone is missing the point that Wellpoint/Anthem purposely announced extremely high premium increases when they did because they are alarmed that health reform is failing and the insurance market is going to totally fail with only the sick buying insurance if they can, and everyone else not buy insurance and depend on government for their health care expenses.

If you are under the age of 30, odds are you have no assets, so why buy health insurance because you will get health care without having to pay for it if you need it, one way or another, paid for by older people. And when you get older than 30, you will be dependent on free health care so you will demand government make it free to those over 30 and younger than 65.

By the way, did anyone note how Dick Cheney celebrated his rock star appearance at CPAC by choosing to have heart problems so he could check himself into a hospital and get lots of visits from doctors and lots of tests, paid for by someone else I'm sure. After all, his insurer will simply hike premiums for the fools who choose to be healthy and choose to buy health insurance.

More government spending.....higher costs.

Comments for this post are closed