Wednesday, February 29, 2012

As Maine Goes, So Goes the Nation . . .

An offshoot of Obamaneycrap is the battle over how much regulation can be imposed on insurance carriers that operate in a free market. One of the side battles addresses premium rate increases.

We have long maintained that government intervention and price oversight is unnecessary in a competitive market. Health insurance premiums are self regulating.

If a carrier charges too much for a product, they lose market share to competitors. It really is that simple.

Of course the DC know-it-all's, many who have never held a real job much less managed a payroll, believe the only way to protect the consumer is through price controls.

Yeah, the Nixon wage-price controls worked so well . . .

Anthem Blue Cross in Maine wanted a premium increase. The Dept of Insurance said no. Included in their request for increase was a profit margin of 3.2%.

Not a guaranteed profit mind you, but if everything falls in place as expected, after all bills are paid (including claims), about $3 out of every $100 in revenue, would remain to pay stockholders AND taxes.

Bear in mind that a 3% profit margin is not excessive. Banks have a 5% margin. Retail food services operate off a 5 - 6% margin. Household products, an 8% margin. So 3% is not a lot of money.

The Maine Dept. of Insurance said 1% was fair and that was supposed to be the end of it.

So Anthem appealed to the state Supreme Court and this is what happened.

In its ruling, the Supreme Judicial Court said that Maine’s insurance superintendent had “properly balanced the competing interests” in arriving at an approved rate increase of 5.2 percent. The insurer, a unit of Wellpoint, the nation’s largest insurer, had sought a 3 percent profit margin as part of an overall 9.2 percent increase in health insurance rates for policies sold to individuals in 2011. It argued that state regulators’ decision to grant a 1 percent profit margin violated state law and the U.S. Constitution by depriving the company of a “fair and reasonable return.”

Anthem can appeal the decision and ask the court to reconsider their decision or file an appeal with the U.S. Supreme Court.

But that's a bit silly don't you think?

Now consider this comment.

“This is great news for consumers because it reaffirms that a state insurance regulator, when they have the authority, can do a balanced, comprehensive review of rates,” Kofman, now a researcher at Georgetown University’s Health Policy Institute.

Whoopee. The consumers can save 2% on their premiums.

But what if Anthem decides they no longer want to play ball and they pull out of the state? Maine is one of those unique places where over regulation has resulted in most health insurance carriers pulling out of the state.

In Maine, health insurance is subject to both guaranteed issue rules and community rating. The result is health insurance premiums that are some of the highest in the country and the market is dominated by essentially one carrier . . . Anthem.

My guess is Maine needs Anthem more than Anthem needs Maine.

The Grinch may end up stealing any opportunity for citizens of Maine to purchase health insurance from any source.
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