Tuesday, February 12, 2008

Must Be an Election Year

[Welcome Industry Radar readers! Please take a look around the site]

Seems like every time politicians gear up for the election the manure gets spread around with great ease. Say anything, just to get elected.

The current topic du jour seems to be the economy and health care on the national front. Here in Georgia we have our own politico's promising everything short of free happy hour.

The latest salvo comes in the form of a News Release from our current (elected) insurance commissioner.

The memo starts out "Recently I have had new legislation introduced . . . (which will result in) increased scrutiny (of health insurance carriers) and require them to JUSTIFY their rates."

Sounds great, right?

What is wrong with requiring carriers to submit supporting documentation regarding their rate structure?

Nothing, but it won't accomplish anything that isn't already happening in the free market.

Health insurance carriers do not operate in a vacuum. A carrier cannot simply wake up one day and decide they want a bigger home office and double bonuses for everyone and pass that on to their clients with impunity. To do so would make them UNCOMPETITIVE which would result in LOWER revenues.

Just the opposite of what was intended.

Back to the stables . . .

"These bills are an important first step in bringing health insurance costs under control."


How so?

Nothing in the memo is addressing the underlying COST of health care. Rather the legislation is an attempt to actually drive up the costs by creating an extra step in the rate making process.

"House Bill 923 and Senate Bill 380 will bring much needed sunlight to the health insurance rate making process and makes sure that health rates are in line with market realities."

So what is he smoking?

Rates are ALREADY in line with the market.

Does anyone really BELIEVE this garbage?

"The bills further benefits Georgians by increasing competition in the individual marketplace (by requiring carrier who sell group insurance to offer Georgians) at least two (individual) policy options)."

So carriers who are in the group market now will either (1) exit that market or (2) comply with a product that meets the letter of the law.

Many carriers purposely avoid the individual market because they do not have the staff to serve that market effectively. Plus requiring a carrier to offer a product in one state that is not offered in other states is not feasible.

So the end result will be fewer carriers in the Georgia group market.

Will someone please tell me why these bills are a good thing?

Oh yeah. So someone can get elected.

There is a pony in there somewhere.
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