Yesterday, SRN News reported that the Commonwealth of Massachusetts has instituted its first set of price controls on the health insurance industry. The article states:
"Insurance Commissioner Joseph Murphy said he had rejected 235 of 274 proposed rate increases because they included "excessive increases and rates unreasonable relative to the benefits provided.""
The insurers have responded by stating that caps on the premiums they charge are only justified if their are also caps on the costs that the health care providers--doctors, hospitals, etc.-- charge them. The article further points out:
"The announcement had political overtones: Gov. Deval Patrick, a Democrat, is seeking re-election this fall against a field that includes Republican Charles Baker, the former president of Harvard Pilgrim Health Care.
"Patrick is staking himself out as the guardian of small businesses and middle-class voters, and trying to cast Baker as an industry protector. The governor argues that small businesses are limiting their hiring because they cannot cope with double-digit health care premium increases."
Health insurance premiums are part of a much bigger picture. Health insurance (and other types of insurance) are based on actuary tables. This is a business model that has worked well for a considerable amount of time. In contrast, the 'business model' of government control or takeover of a private industry is one that has almost always been a disaster--see AMTRAK, the US Post Office (in contrast to FedEx and UPS), etc.
The rejection of rate increases needed by insurance companies (partially needed due to the lack of tort reform, the lack of competition across state lines, and the fact that hospitals and doctors are charging private patients more because government reimbursements under Medicare and Medicaid are totally insufficient) will lead to less healthcare. Even the most dedicated doctor is not going to keep his office open if he is continually losing money. If the insurance companies cannot get the premiums they need to stay in business, they have no incentive to remain in business. At that point, we have government health insurance, which will result in less quality healthcare for everyone.
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