Monday, November 27, 2006

Price Fixing

A leading state lawmaker says it’s time to consider re-regulating health insurance premiums.

In Syracuse this afternoon, the chairman of the Assembly Insurance Committee told a hearing that insurance companies appear to be in a “get it while we can” mentality, hiking rates now, before the state returns to a system of approving future increases.

Assemblyman Pete Grannis said insurance companies are paying less in claims, and charging more in premiums.

He labeled those trends “unsustainable” and blasted what he called “extraordinarily one-sided contracts” between health insurance companies and health care providers.

Government controlled pricing is great election year rhetoric but has a 100% failure rate, no matter what the industry.

When government opts to regulate prices there is less competition. If carriers are not allowed to receive a reasonable rate on their investment they cease to write new business and eventually withdraw completely from the market place.

As this happens it becomes more difficult, and eventually more pricey, for individuals to secure the coverage they desire. Carriers who remain in the business turn to other methods to sustain profitability such as only offering a limited number of plans, making underwriting more challenging, tightening claims approval and restricting benefits.

Glad I don't live in NY.
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