RSS Feed MenuEarlier this week, President Obama attacked health insurance companies for their new rate increases. My latest column for The Week points out that while Obama demonizes the industry, he continues to push health reforms which could force the government into another big bailout — this time of the insurance industry.
Over the past 30 days, health-insurance companies have announced shocking premium increases, headlined by a 39 percent increase for many Anthem/BlueCross policyholders in California. President Obama has slammed the insurance companies and redoubled his call for a new federal agency to roll back “excessive” rate increases. …
The insurance companies’ customer bases are growing older, sicker — and more expensive. Consequently, insurers must now cover approximately the same volume of claims, but do so out of the shrunken revenue that results from fewer premiums. As the youngest and healthiest customers exit the marketplace, insurers load more and more costs onto those customers who remain, driving even more customers — and revenue — away.
Given these pressures, what would happen if a federal agency now intervened to ban or reduce an insurance rate increase? If the insurer cannot recover the cost of care from its shrunken customer base, from whom will it recover that cost?
Click here to read the rest.
sinz54 // Mar 11, 2010 at 11:32 am
The Left has always wanted to get rid of private insurance and move us to a single-payer system. They knew that they couldn’t force American citizens to make that switch. So their method is to hamstring private insurers so much that they go out of business, after which the Government nationalizes the entire system.
This method worked successfully in New York City, which in the early 20th century had both private subway lines and private bus lines–but now has only city-run mass transit.
mlloyd // Mar 11, 2010 at 12:28 pm
But do the numbers really bear this out? You only have one quote from one guy in Wisconsin as a reason to believe that a bailout might be necessary; you need to show your work, and not just rely on the Cavuto mark. (http://www.newshounds.us/2006/09/14/jon_stewart_explains_the_cavuto_mark.php )
Elsewhere in the NYT article you allude to, but don’t link, we learn that “At least 27 states have “prior approval” requirements. In 12 other states, rates must be filed with regulators before their use, and regulators often have the authority to block increases.” Do those laws have insurance companies fighting for solvency and demanding a bailout? Why or why not? Cite specific examples.
jabbermule // Mar 11, 2010 at 1:50 pm
Only one part of the health care bill — forcing private insurance companies to insure people with pre-existing conditions — will be enough to put all private insurers out of business.
How? With the passage of this bill, all American citizens will be required to carry health insurance. If not, they’ll be forced to pay a fine. The fine will be a small percentage of of the annual cost of a health insurance policy, so many will opt out of insuring themselves (thus breaking the law), and instead pay the fine when they are caught without insurance.
Now, when these “scofflaws” actually come down with a serious medical condition, they’ll rush out and purchase health insurance with a low deductible, knowing full well that the government will force any insurance company to provide them with a policy. Sort of like driving around for years without an auto insurance policy, then totaling your car in an accident and applying for auto insurance the very next day.
There will be enough people gaming the system in this manner to put all private insurers out of business in a relatively short period of time, then voila! big government will step in and declare that the insurance companies need our help with a giant bailout a la GM, and wind up owning 60% of all private insurers in the country. The government will manage their businesses for awhile, until legislation is introduced to go to a single payer system, which will be passed immediately because of the emergency created by the “greedy and irresponsible” insurance companies. Which is what they wanted all along.