ABOUT THOSE LOWER INSURANCE COSTS WE PROMISED

April 26, 2010

When President Obama signed his health care reform last month, he declared it will "lower costs for families and for businesses and for the federal government."  So why, barely a month later, are Democrats scrambling to pass a new bill that would impose price controls on insurance, asks the Wall Street Journal? 

In now-they-tell-us hearings on Tuesday, the Senate health committee debated a bill that would give states the power to reject premium increases that state regulators determine are "unreasonable."  The White House proposed this just before the final ObamaCare scramble, but it couldn't be included because it violated the procedural rules that Democrats abused to pass the bill, says the Journal. 

  • Some 27 states currently have some form of rate review in the individual and small-business markets, but they generally don't leverage it in a political way because insolvent insurers are expensive for states and bankruptcies limit consumer choices.
  • One exception is Massachusetts; Gov. Deval Patrick is now using this regulatory power to create de facto price controls and assail the state's insurers as cover for the explosive costs resulting from the ObamaCare prototype the Bay State passed in 2006. 

National Democrats now want the power to do the same across the country, because they know how unrealistic their cost-control claims really are.  Democrats are petrified they'll get the blame they deserve when insurance costs inevitably spike.  So the purpose of this latest Senate bill is to have a pre-emptive political response on hand, says the Journal. 

ObamaCare includes several new cost-driving mandates that take effect immediately, including expanding family coverage for children as old as 26 and banning consumer co-payments for preventive care.  Democrats are bragging about these "benefits," but they aren't free and their cost will be built into premiums.  And those are merely teasers for the many Washington-created dysfunctions that will soon distort insurance markets, says the Journal. 

In Massachusetts, Gov. Patrick says his price-control sally will be followed by reviewing what doctors and hospitals charge -- or in other words for price controls on the medical services that make up most health spending.  ObamaCare will gradually move in the same direction, says the Journal. 

Source: Editorial, "ObamaCare Mulligan; About those lower insurance costs we promised . . .," Wall Street Journal, April 26, 2010. 

For text:

http://online.wsj.com/article/SB10001424052748704133804575198322718759844.html

 

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