Did Your Insurance Premiums Go Up by Nine Percent?
Sharing a graph this evening on Twitter, I prompted a response from a friend and Ricochet member who noted that his insurance premiums were rising by 9 percent this year. "We're looking almost 4 bills a month now," he said.
He's at least the seventh or eighth person who's informed me of a premium hike in that range, but still in single digits. This doesn't surprise me. After all, one of Obamacare's many consequences was giving U.S. Dept. of Health and Human Services Sec. Kathleen Sebelius the power to "review" and increases she deems "unreasonable" - and the threshold for that review kicks in at 10 percent.
“For too long, when it came to health insurance, consumers were left in the dark. In the past, insurance companies could often raise your rates without any transparency or accountability. Many insurers were under no obligation to give you any explanation as to why they felt an increase was necessary,” Sebelius said in a statement. “This year, in every State and for the first time ever, the Affordable Care Act requires insurance companies to publicly justify their actions if they want to raise rates by 10 percent or more.”
You've seen The Price is Right, so I'm sure you know how this goes.
As you might expect, insurers are already trying to avoid that threshold as much as possible, shifting costs to other states to make up for the difference. Some of them have run afoul of it. But keep in mind: Sebelius has no actual power to do anything. This is just a shaming exercise, and since insurers are becoming more and more like public utilities, they generally don't want to play that game.
But what would happen if Sebelius actually had the power to put some teeth behind her threat? Back in January, I asked you to consider such a possibility:
Imagine a marketplace where you have to receive government approval for setting prices on your product, where you have to show your math for every decision made, and where you are "granted" the ability to increase the cost of your product only after first being approved by government bureaucrats.
Welcome to Massachusetts, where Governor Deval Patrick and Attorney General Martha Coakley are concerned about the continued rise in costs under their health care system. But don’t worry, they have a plan - double down on more price controls:
Attorney General Martha Coakley’s office is quietly circulating a proposal to more tightly regulate hospitals and doctors and the prices they are paid to care for patients. Coakley’s staff has drafted legislation and has briefed providers, business leaders, key legislators, and the governor’s office on the plan to contain health care spending…
Legislative leaders have been promising for months to file cost-control legislation, but the timing and details are still unclear. Governor Deval Patrick filed a bill more than a year ago to rein in health care costs and has since urged the Legislature to take up the issue quickly…
Unlike the governor’s proposal, Coakley’s plan would give patients specific information in advance about how much they would be required to pay out-of-pocket for a particular test or treatment. They generally would not be responsible to pay more than the disclosed amount.
Similar to the governor’s plan, Coakley wants to give the Division of Insurance the explicit authority to review the prices insurers pay to providers and reject them if they are “excessive, inadequate, unreasonable, or predatory.’’ After Jan. 1, 2015, rates that are more than 15 percent above or 15 percent below average would be disapproved; after Jan. 1, 2017, the range would decrease to 10 percent above or 10 percent below average.
While insurers in Massachusetts already are heavily regulated, Coakley wants to increase provider regulations. The public health department, for example, could initiate a market impact review if it believes a provider is engaged in unfair competition.
What’s happening in Massachusetts is nothing less than a total government crackdown on the insurance/provider relationship, and it foreshadows a future should Obamacare survive even in part. Not content to merely regulate insurers out of the marketplace, Coakley now intends to regulate providers to a greater degree—eventually reaching a point where the government has total and unmitigated say over what providers can charge and what insurers can charge, turning the entire spectrum into the equivalent of a public utility. They will set prices on both ends, and competition will disappear.
As Reason's Peter Suderman commented when I cited this: "Subsidize buyers. Mandate purchase. Control premiums. Control industry prices. But don't call it a government takeover!"
There's something more, too. Coakley’s actions are certainly objectionable, but they’re consistent with the statist ideology of the left, where no market forces have any place, and Dr. Berwick's "leaders with plans" always know best. It’s an inevitable consequence of an approach that promised vague cost-savings without actually delivering anything of the sort, and sought to solve the mythical free rider problem through methods that invested the taxpayers in a process where high health care costs put greater and greater strains on state budgets.
On the whole, this incident illustrates the danger of a technocratic approach, even with good intentions. History is littered with examples of failed technocracy, systems arranged by smart people who have no concept of the blowback from increasing the power of government and leaving tools for the anti-market, anti-liberty left to use toward the ends of their choosing. This is why expansionist government policies used for “conservative ends” have no extended life within an electoral system. The tools are left in place for perversion by the next crew in power, and they are used with gusto. The only way to stop this overreach is to destroy the tools themselves, taking power back from the hands of those in Washington or the statehouse and putting them in the hands of the people themselves.