Tuesday, May 31, 2011

Shecantbeserious steps in it, jumps up and down

I don't understand why the various states' Departments of Insurance aren't up in arms about ObamaCare©'s blatant flaunting of McCarran-Ferguson:

"Today [May 19th, 2011], The Department of Health and Human Services (HHS) issued a final regulation to ensure that large health insurance premium increases will be thoroughly reviewed... In 2011, this will mean rate increases of 10-percent or more must be reviewed by state or federal officials."

A few months ago, Mike averred that this would, in fact, be good news:

"HHS has once again underestimated the intelligence of the American public ... The increase to premiums year over year, and over many years, tracks exactly with the increase in the cost of medical benefits paid."

That is, he offers proof of our oft-repeated claim that the increasing cost of health care drives the increasing cost of health insurance.

I think he's right, but I think there's another point here that's gone unremarked. Some of us are old enough to remember the early 70's, when gasoline became subject to price controls. The result was, at first, longer lines at the pump, and eventually rationing (ie you could fill up only every other day). Health insurance companies can't ration health care, of course, but they certainly can ration health insurance. I've already noticed a significant tightening in underwriting, and much higher than "normal" rate increases (particularly in small group).

To illustrate this point, imagine that Washington imposes strict new safety and efficiency requirements on automobile manufacturers, and then limits how much they can charge for new cars. Does this make any sense?

But that's exactly what's happening with health insurance: new mandated benefits, and a cap on how much more insurers can charge for providing them.

There are two points to be made here. First, as regards McCarran-Ferguson, why aren't state DOI's asserting their jurisdiction over rate increases? Why have they ceded that function to HHS and the minions of Secretary Shecantbeserious?

Second, it's apparently not just legacy media types who don't "get" simple, basic economic principles. The one in operation here is supply and demand: when you add "freebies" to insurance policies (routine exams, mammograms and colonoscopies, to name a few), people will go get them. Problem is, there are only so many providers, which means that there will be waiting lines and higher costs.

Of course, Ms Shecantbeserious (as well as Barry, Harry and Nancy) would probably view those as features, not bugs.
blog comments powered by Disqus