Limiting Choice in Health Insurance

During the campaign and over a year of debate and backroom deals to get Obamacare passed, much was made about expanding the number of choices consumers will have for health insurance. Like most promises from Washington, the facts don't live up to the hype.

The Christian Science Monitor reports that New Mexico may seek to limit choices by only showcasing certain plans on their Exchange.

New Mexico Gov. Bill Richardson recommended that the state establish an exchange that "assumes an active role in driving market reforms and protecting consumers."

The panel's report goes on to explain: "This could include restricting plans from the Exchange that would exceed specified premium growth levels or by requiring cost containment initiatives of plans participating in the Exchange.

That may sound well and good to a politician but it has no bearing on real life. Obamacare has absolutely NO impact on the cost of health care and health insurance companies only slightly more.

Health insurance companies are primarily bill payers, but they can have some impact on the cost of health care that is reimbursed under their policies. Network providers agree to accept negotiated pricing in exchange for increased foot traffic (patients) and prompt payment. This can hold down pricing which in turn leads to lower health care costs.

Another way to hold down the cost of health care is by monitoring treatment protocol and looking for ways to promote the most effective medical practices. This is usually done through plan design but may also be achieved on the reimbursement end by restructuring health care provider networks or drug formulary's.

Health insurance is a competitive market. There is no need for government interference in a free market product. If company A spends too much on overhead or claims the result will be higher premiums that are non-competitive. When state or federal government bodies thump their chest and talk about how they are going to protect the consumer by beating up the health insurance companies they really look stupid. Mandating loss ratio's, limiting premium increases, requiring certain levels of benefits achieve nothing in holding down the cost of health care and have a negligible effect on premiums.

Bill Richardson probably was looking for a political sound bite but he made a fool of himself if he thought limiting choice for consumers was a good thing.