Home > Uncategorized > Health Insurers Plan Hikes

Health Insurers Plan Hikes

That was today’s WSJ headline.  So I have a few points.  First, with regard to my earlier comments about the government making it excessively difficult to be productive without working for a large company or the government, notice this quote.

The rate increases largely apply to policies for individuals and small businesses and don’t include people covered by a big employer or Medicare.

And second, recall that they blamed all the supposed problems with healthcare in this country on the free market when you read things like this.

Aetna Inc., some BlueCross BlueShield plans and other smaller carriers have asked for premium increases of between 1% and 9% to pay for extra benefits required under the law, according to filings with state regulators. (emphasis added)

… the White House contacted company officials and accused them of inaccurately justifying the increase.

About half of all states have the power to deny rate increases. Ms. DeParle pointed out that the law awards states $250 million to bolster their scrutiny of insurance-rate proposals, saying that will eventually curb premiums for people.

Some regulators say not all insurers have adequately justified their increases. “A lot of it is guesswork for companies,” said Tom Abel, supervisor at the Colorado Division of Insurance. “I was anticipating the carriers to be more uniform.”

This is nothing even remotely resembling a competitive industry.  It is a government-run industry and it has been for decades.  If you want to know how free and unregulated the health insurance market was before this bill here is a paper from 2006.

Finally, these people who are doing this, if they are not just flat-out lying to us, seem to have no idea how a market works.  Listen to this.

“I would have real deep concerns that the kinds of rate increases that you’re quoting… are justified,” said Nancy-Ann DeParle, the White House’s top health official. She said that for insurers, raising rates was “already their modus operandi before the bill” passed. “We believe consumers will see through this,” she said.

They think that they can force companies to give away more services and it won’t cost anything?  Really?  I can’t tell whether they think we’re idiots or they actually are idiots.  This seems to stem from a belief that all big companies make excess evil capitalist profits and therefore, they can always be squeezed by the strong arm of government to provide something for nothing.  This is simply not the case though, even with all of their anti-competitive regulation in the healthcare industry the rate of profit is below average. They think that companies are always trying to raise their prices arbitrarily and the only thing keeping them from doing so is government.  The idea of competition is apparently completely foreign to these people.  Furthermore consider the simple-minded approach they take to letting you keep your plan if you like it.

While the increases apply mostly to the new policies insurers write after Oct. 1, consumers could be subject to the higher rates if they modify their existing plans and cause them to lose grandfathered status.

Did this guarantee come from a careful analysis of the effects of the bill on the insurance market?  Of course not, they just wrote into the bill that insurance companies couldn’t change your plan.  They think the answer to everything is to make a law.  This is crazy.  There is always a way around these kinds of laws.  In a few years there will hardly be anyone left with “grandfather” status and the ones who do have it will probably be sacrificing other things that they would have gotten otherwise but had to give up to keep that status.  Any competent economist could have told you that this healthcare business made no sense and could only be a disaster.  Oh by the way, as a competent economist I can tell what the next shoe to drop will have to be.  Here’s a hint.

Massachusetts, which enacted universal insurance coverage several years ago, also has seen steadily rising insurance premiums since then. Proponents of that plan attribute the hikes there to an overall increase in medical costs, while insurers cite it as a cautionary example of what can happen when new mandates to improve benefits aren’t coupled with a strong enough provision to force healthy people to buy coverage. (emphasis added)

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