Thursday, June 10, 2010

New York Squeeze Play

The boys of summer are back and in New York the squeeze play is on. Only this involves state regulators and insurance carriers, not baseball teams.

Lame duck coach David Paterson is in the dugout and with two strikes on his constituents has signaled for a suicide squeeze play.

New York already has some of the highest health insurance premiums in the country, thanks to extreme regulation which stifles competition. Health insurance premiums are community rated (strike one) and guaranteed issue (strike two) . . . a deadly combination.

Community rating has variations but basically it boils down to charging healthy people more, a LOT more, to subsidize the high cost associated with extending coverage to those with expensive medical conditions. New York is also a guaranteed issue state. Health insurance carriers are therefore required to issue coverage to anyone who can fog a mirror.

This is like telling banks they must make a loan to anyone who walks in the door and charge the guy with "A" credit the same rate as the fellow with a string of loan defaults and is out of work.

So what is NY doing to make it harder for residents to find health insurance at any price?

Gov. David A. Paterson has signed legislation that gives the state the power to block what it deems unreasonably high health insurance premium increases for millions of New Yorkers.

The new law, which covers about three million people enrolled in small-employer or individually purchased plans, requires insurance companies to apply to the state Insurance Department before they can raise premiums. The state then has 60 days to determine whether the rates are justified.

To the casual observer this may seem like a victory for consumers. In reality, it is even more justification for the handful of carriers offering health insurance in NY to exit the market.

The governor and consumer advocates said the law would slow down rampant premium increases, which they said had forced many small businesses and individual policyholders to drop their insurance, driving prices higher as costs were spread over a smaller pool of customers who tended to have high health care needs.

The governor is an idiot and so are the "consumer groups" that support this measure.

This is like the state telling hospitals and doctors they cannot raise their rates without prior approval. Wonder how many medical practitioners would close their doors and move to another state if that happened?

This is an incredibly stupid move by Coach Paterson. What he has done is call for a suicide squeeze when his team is trailing in the bottom of the 9th and there are two outs.
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