Friday, February 19, 2010

McCarran-Ferguson vs Sebelius

Once again, our dim-bulb Secretary of Health and Human Services has failed her civics test:

"Over the last year, America's largest insurance companies haverequested premium increases of 56 percent in Michigan, 24 percent inConnecticut, 23 percent in Maine, 20 percent in Oregon, and 16 percentin Rhode Island, to name just a few states."

So what?

That's a problem, obviously, for insured folks in those states; who are, fortunately, protected by their states' department of insurance. And that's the beauty of the system: if you don't like how that department's working (or not working), then you vote the suckers out. At some level, they're accountable to the electorate.

Furthermore, she can huff and puff all she wants but, at the end of the day, she has exactly as much authority over the carriers as they're willing to cede to her. It astounds me that their CEO's don't just tell her (and her congressional enablers) that they have zero authority to regulate at this level.

Of course, I'm just an insurance industry shill (but not a shameless one!), so I'm merely touting the company line, right?

Not at all:

"This spat deserves more attention, because its real lesson is what will happen to health insurance costs around the country if ObamaCare passes." [emphasis in original]

Really? How's that?

"Wellpoint's rate hikes are the direct result of the Golden State's insurance regulations—the kind that Democrats want to impose on all 50 states."

Case in point: COBRA subsidies (about which we've written extensively). Prior to ARRA, few people elected COBRA, most opting for individually underwritten (and usually much cheaper) health plans. ARRA essentially paid folks to keep their insurance, and run up claims. This had two major, negative effects: it increased carriers' loss ratios (thereby driving up health insurance costs) and accelerated health care spending (thereby driving up health care costs, which in turn increased health insurance costs). Wow, a two-fer.

Lost in all the publicity-mongering in DC is the fundamental disconnect the policitcal class has with even basic level economics: profits aren't profit margins, and it's the latter that truly count. Does this mean that carriers can't work harder to avoid dramatic premium increases? Of course not, but as long as the public demands first dollar coverage for strep tests and bruised knees, instead of considering high deductible plans, there's not a lot of wiggle room.

As Bob often points out, we don't expect our car insurance to pay for wiper blades and oil changes; just imagine how expensive it would be if it did. I would add only that one needn't imagine the result, one need only look at the current state of health insurance.
blog comments powered by Disqus