PA Government Hikes Insurance Premiums

An insurance company in Pennsylvania raised its premiums by 92% this year. Unlike the situation with Anthem Blue Cross in California, though, I have yet to hear anyone from the Obama Administration attacking this insurance company. You’d think this would be a ripe target for their ire, given that Anthem Blue Cross only raised its rates by 38%. What’s the difference? In Pennsylvania it’s the state government that raised insurance rates, not a private company.

The government-run health insurance plan in Pennsylvania, covering people who can’t get Medicaid but who are under 200% of the federal poverty level, has “become a magnet for the sickest people in the state, even as rising unemployment had driven more people to sign up,” according to state officials.

Those who run the program say that the only way to avoid this premium increase is to mandate that everyone must have insurance, so the cost can be “spread around.” This isn’t a way to control costs, though. It’s merely shifts the cost to other people.

Whether government-run insurance or private insurance, the pressure is the same to raise rates. It just seems that when it comes to scoring political points, private insurance gets singled out as the villain.

Health insurers’ ’sins’ don’t justify phony reform

Pajamas Media published my article today:

Health Insurers’ ‘Sins’ Don’t Justify Reform

Are health insurance companies evil? A web search for the phrase turns up almost a million hits. The common reasons for this passionate indictment are insurance company profits, denial of claims, and rescission of policies. But these do not justify the Democrats’ goal of expanding political control of health insurance. Rather, they call attention to existing controls that unfairly advantage insurers and limit competition that would keep insurers honest. They also suggest government’s failure to enforce contracts.

Read the rest of this article at Pajamas Media.

Thanks to Ari Armstrong and Paul Hsieh for their edits and suggestions!

Connecticut AG Seeks to Obscure Cost of “Public Option”

We need open and strong competition in health care, no doubt. But is getting government into the act of providing insurance the way to do that? A look at Connecticut shows one state in which politicians speak about competition, but prefer to rig the game for government programs.

You might say that Connecticut has a “public option” program of its own, the Charter Oak health plan. Anthem Blue Cross and Blue Shield wants hospitals to give it the lowest prices they give to other insurers.

The lowest-paying insurer?

Charter Oak, whose rates are so low that hospitals would be foolish to take, especially if that meant extending those rates to a very large insurance company.

This logic doesn’t appeal to the state’s chief legal officer. According to the Hartford Courant, “Charter Oak should be an exception because publicly subsidized plans, notably Medicare and Medicaid, typically pay less than commercial insurers, [Attorney General Richard] Blumenthal said.”

So what Blumenthal wants, it appears, is a built-in advantage over Anthem and any other commercial insurer.

Charter Oak wants a 60% discount over what commercial insurance companies pay, and Blumenthal wants to make sure that it keeps that.

If Connecticut wants to subsidize insurance plans for some of its citizens, have at it. At the least, however, it ought to pay hospitals commercial rates. That way, the true cost of the state program would be made more obvious.

The Public Option is Dead, Bad Reforms Aren’t

Is the “public option” dead? Michael F. Cannon thinks so, but calls it a “sideshow that helpfully distracted the Left, the Right, and the mainstream” from the individual mandate. The mandate, he says,  “gives government more (and more immediate) control over Americans’ health care than even the so-called “public option” would.”

Is market power bad for insurance companies?

John Buntin at Governing.com compared health insurance premium increases in various states with the the market concentration among insurers and found … higher concentration meant lower premium increases.

The “Public Option” in Florida’s Homeowners Insurance

When a unit of government creates a business, the business is going to (surprise!) reveal its political roots.

When lawmakers didn’t want Citizens to compete with private companies, they required it to charge high rates. When lawmakers wanted to give relief to hurricane-addled homeowners, they suppressed its rates.But here’s something to think about the next time politicians or customers debate whether premiums are too high or too low: Citizens has never charged the proper rates to insure homes.

The story is about property insurance, but it holds some lessons for health insurance as well.

Skip the Trigger

The Wall Street Journal points out the gimmickry that is a “trigger” for a “public option.” It says, “A provision that would trigger a public plan in certain circumstances has the appealing political benefit of allowing one group to say those circumstances will never occur and the other to say they probably will; both can declare victory.”

The article has an interesting graph, a map of the United States that colors states according to how much competition they have in insurance companies. I’m not sure what the parameters of the map include, but anytime that New York and Kansas are both listed as having a “competitive” market, the words “choice and competition” are meaningless. Ask an insurance broker who deals in multiple states, and you’ll find out that insurance in New York is, for an individual, unaffordable, while for someone in Kansas, it can be quite affordable.

In other words, the important factor is not the number of companies in the market–the factoid that might be used in any “trigger” clause–but how affordable insurance is. And that, in turn, depends in large measure on the regulatory environment of the state. Unlike Kansas, New York has the kind of regulatory restrictions on insurance that congressional Democrats would like to place on the nation.

The Ref’s in the Game

What happens when government “competes” against businesses and gets to be the referee?

The “public option” is not the only poison in the health “reform” bills in Congress; it’s only the most obvious one.

Opt In, Opt Out: A Question for Gubernatorial Candidates

Harry Reid’s state “opt-out” provision for yet another government-run health insurance plan is a wave of the pinky finger to federalist concerns that will surely disappear in conference committee. But it is having political effects of forcing politicians at the state level to respond.

It’s not exactly a fair fight, for as the New York Times reminds us, “States would be given the right to opt out of only the public plan not from the tax increases needed to subsidize coverage for the uninsured” within the new plan.

There’s no surprise, then, that “several state officials said that if Mr. Reid’s proposal carries the day, many governors are likely to accept the new plan rather than incite an ideological battle mirroring the fight in Congress.” Take the money and run, and if it runs out in a few years, well, you’ll be running for the U.S. Senate then, or sitting comfortably on some corporate boards.

One gubernatorial candidate, Bill McCollum of Florida, has two positions in one on the question

[He] said he believed a public option would “put the viability of private health insurance in grave question.” But Mr. McCollum also said he was not prepared to support opting out. He said he feared that once insurers could not deny coverage based on pre-existing conditions — a centerpiece of the Democratic legislation — private insurers might not survive without a government plan to share the riskiest customers.

Collective Neurosis in Maine: Big Government Bad, We Need Gargantuan Government

Gardiner Harris of the New York Times has a balanced feature on Maine’s experience with so-called “universal” health care.  It even cites the Maine Heritage Policy Center’s Tarren R. Bragdon, whose research should have long convinced anybody that government attempts to impose “universal” health coverage are a sure-fire recipe for spiralling costs and reduced coverage.

Unfortunately, Mr. Gardiner gives more than equal time for those who blame Maine’s failures not on government control, but a sick and poor population.  Talk about blaming the victim!  These folks also blame the fact that Maine has a single, dominant, health insurer – without recognizing the government policies that created this dominance, and ignoring Mr. Bragdon’s proposal that the New England states form a compact to allow their residents greater choices.

Unfortunately, these folks don’t recognize their own neurosis (which means doing the same thing again and again, despite the fact that it no longer works).  Big Government in Maine can’t solve the health crisis.  Gargantuan Government from Washington, DC can’t solve it either.