The interventionist dynamic, health care installment #2,074

The Obama administration said on Tuesday that it would require health insurance companies to disclose and justify any increases of 10 percent or more in the premiums they charge next year.

State or federal officials will review the increases to determine if they are unreasonable, the administration said in proposing regulations to enforce the requirement.

The article is here.  How long ago was it that we were told the health care reform would a) control costs, b) take care of adverse selection, and c) make the insurance market workable again.  Yet somehow such a policy is necessary.

Remind me again, what will happen to the quality of coverage and reimbursement, all factors included, following price controls?

Comments

I agree that this is pretty nutty, but if I'm not mistaken, this is only supposed to be in place while the reforms are being implemented. Since they're being phased in very slowly, the political people in the Obama administration are worried that rate hikes that pre-date the reforms will be blamed on the reforms. I hardly see that as a justification, but the good news if I'm right is that this policy is only temporary, not a permanent policy of price controls.

Hey Ram:

I've got a historic bridge for sale in America's largest city. Act now, and I'll throw in another more modern bridge for free. Interested?

As an insurance regulator for a State, this is just garbage that they are spewing for political reasons. In our state, ALL rate changes (increases or decreases) MUST be justified with supporting documentation. Our law (and the laws of most, if not all, other states) require it.

This is just political grandstanding. Until the source of the high costs is addressed, this will continue. The AMA needs to be knocked down a peg so restrictions on the number of residents allowed each year is unlimited, however they are very powerful and rich, so I don't see that happening. Additionally, the ABA has tied doctors hands but good luck getting a lawyer such as Obama to address that issue.

How could anyone possibly believe that the government could force insurers to cover the children of policyholders up to the age of 26 and accept people regardless of pre-existing conditions, along with imposing new reporting requirements and other coverage requirements on insurers, without causing them to raise their premiums?

And the government's answer to the inevitable premium increase is to impose even more costs on the insurers in the form of new reporting requirements for the premium increase.

This government is full of economic illiterates. Either that, or they understand the economics fine but they are simply scapegoating insurance companies to hide the fact that the rate increases are the result of their own legislation.

Remind me again why free-market health care proponents have egg on their face Tyler.

Well, to answer the posed question, we could look at the evidence from California.
"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. This provision was later changed by the California Supreme Court to allow companies a fair rate of return. Since 1989, the Rate Regulation Division has been responsible for negotiating with insurance companies to meet their rollback obligations."

With regard to the quality of the offered insurance, rates were pulled back a mighty 20% and nothing changed. Evidence based analysis suggests the same thing would happen here.

Tomrus,

Huh? Prop 103 was directed to automobile insurance and the rollback provision was struck down. How is that relevant?

I also find it comical that "evidence-based analysis" according to you means taking your word that "nothing changed" in one completely different situation, and therefore nothing would change in this situation.

I doubt the policy is necessary, but if it were necessary, it would only be because the health market reforms aren't implemented yet. It is similar to the flap over McDonald's and its low-cost, low-benefit policies; such policies won't exist once health reform is implemented (because they will be dominated by better policies) but it isn't 2014 yet and in the meantime there are problems that need or seem to need to be addressed.

Wait, didn't the president promise that every family was going have their premium reduced by $2500 a year?

http://www.barackobama.com/2007/06/23/a_politics_...

"I have made a solemn pledge that I will sign a universal health care bill into law by the end of my first term as president that will cover every American and cut the cost of a typical family's premiums by up to $2500 a year. That's not simply a matter of policy or ideology - it's a moral commitment."

Sethstorm,

Except the insurance industry supports the bill since Obama cut them a sweetheart deal...

Too bad we can't just let the insurance companies compete with one another for your business based on rates and service, that would be terrible.

How could anyone possibly believe that the government could force insurers to cover the children of policyholders up to the age of 26 and accept people regardless of pre-existing conditions, along with imposing new reporting requirements and other coverage requirements on insurers, without causing them to raise their premiums?

Anyone who compares the individual health insurance market with the Federal government run employer health benefit insurance market.

My guess is you think that the Federal government run employer benefit insurance market has higher average premiums for the same insurance benefit because of the government mandates related to coverage options, rating and underwriting restrictions, and all sorts of other government dictates that likely run thousands of pages in the Federal registry and requires thousands of lawyers in the insurance companies to deal with the Federal government.

Right?

The cost of policy coverage X in the individual market is much cheaper than the same coverage in a Federal regulated policy with coverage X.

Right?

"How could anyone possibly believe that the government could force insurers to cover the children of policyholders up to the age of 26 and accept people regardless of pre-existing conditions, along with imposing new reporting requirements and other coverage requirements on insurers, without causing them to raise their premiums?"

Probably because they were told this was true, over and over again, by NPR and the New York Times.

seriously, how is it even debatable anymore the entire point of this health care exercise was a back door government monopsony. the goal is drive create rules, regulations, etc to drive out all alternatives to the government. Similarly, this is how they will "bend the cost curve". Reimbursements will be cut to the point of driving out all imaging centers, capitated payments will incentivize your primary MD to sit on your cancer rather than work it up, as it will be money out of her pocket. Couple that with no tort reform and hugely expensive training and you'll have massive brain drain from the field. Thanks to Mr. 57 States we now have a frankenstein health care system; socialized physician payments, US legal system, and US funding for training. Better eat your veggies.

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