Reform We Can Use

IBD Editorials ^ | August 27, 27, 2010 | Investors Business Daily staff

[Kaslin]

Health Insurance: Forty percent of all individual policyholders in California will soon be stuck with higher premiums. They could shop around for a better deal, but government has severely limited their options.

State regulators last week approved rate hikes for Anthem Blue Cross and Blue Shield of California that had previously been blocked because they were considered too big. But when both carriers were able to show that 70% of their premiums after the increases would be spent on medical care, the California Department of Insurance could not stop the higher rates.

More than 1 million individual policyholders out of a total market of 2.5 million in the state will be affected by the increases. Rates for the nearly 800,000 Anthem customers will go up by an average of 13.5%. The 250,000 Blue Shield policyholders will be subject to increases averaging 18.8%. Both will take effect Sept. 1.

For some, the increases will be unaffordable. Of course they could change insurers. But Aetna and Health Net Inc. are also in line to increase their premiums, pending the outcome of the regulators' reviews of their rate requests. With prices headed higher for the four companies that make up 90% of the California individual health care insurance market, options are few — especially when individual policies cannot be sold across state lines.

This is not due to federal law. The marketplace is restricted — and the competition that brings down prices is barred — because of an agreement among the states. What we have is a dysfunctional system of 50 markets in which prices differ wildly and competition is light in some states because insurers aren't interested in doing business where regulations are unreasonably high

[kingu]

As always, it is the regulation of markets that harms markets, not the lack of regulation. The only thing these insurance commissions ensure is that rates will NEVER go down. It will never be an open competition, letting the market determine the price. I love it when people snort and say I've got bad insurance, that my deductibles are way, way too high. And I sit down with them and show that while I'll pay $800 a year for health care, they'll pay $800 a month to get exactly the same service. Sure, I have to pay for my own prescriptions - for $5 at Walmart while their required copay is $12 a prescription. I'll pay $60 for an office visit on a weekend with an hour's notice that I'm coming in, they'll pay $45 copay with a two week wait to lose half a day's worth of work to sit in a doctor's office.

When I try to explain to people the difference between health insurance and health coverage, I ask if their auto insurance includes visits to the mechanic or oil changes, or even every fill up at the station. They automatically say that'd be insane, insurance would cost too much, and maybe half of them will realize, gosh, that's exactly why health coverage is too expensive.

[calcowgirl]

When I try to explain to people the difference between health insurance and health coverage, I ask if their auto insurance includes visits to the mechanic or oil changes, or even every fill up at the station. They automatically say that'd be insane, insurance would cost too much, and maybe half of them will realize, gosh, that's exactly why health coverage is too expensive.

Excellent analogy.

My cousin is married to a legal Mexican immigrant. Both of them are liberal and think open borders sounds like a great idea. I asked them if they would feel the same way if millions of illegal Chinese immigrants were invading their state. They looked dumbfounded.