Obamacare: The Price Controls Begin

The Department of Health and Human Services announced Tuesday that, starting next year, health insurance companies must receive permission from the Obama administration before they can raise rates higher than 10%.

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As we warned before Obamacare even became law, this is a form of price control, a government intervention that has a long and well established history of failure.

Way back in 1993, Heritage Foundation scholar Heritage’s Ed Haislmaier was detailing the shortcomings of price controls in health care:

Price controls would not work in health care because they attack the symptoms of runaway costs, not the cause. Medical costs today are soaring because consumers are largely insulated from them…and because the tax system discourages consumers from seeking good value for money in health care.
Most policy makers who favor health care price controls view them as a way to curb rapid medical inflation. But most of the blame for that same inflation can be traced directly to previous government health care policies that they support or maintain. Health care price controls also are attractive to Members of Congress because they provide a benefit (cheaper medical care) to a favored constituency (health care consumers) at the expense of less favored constituencies (doctors, hospitals, pharmaceutical manufacturers, and insurance companies). This is why some Members of Congress are so quick to blame the health care industry for escalating medical costs, when in fact it is largely government laws, regulations, and policies that are responsible.

The entire health care discussion is totally misguided because of the disregard of why insurance exists. Insurance is to provide a safety net for unacticipated catastrophies. The continued argument is that people have to get auto insurance. It’s true if you choose to drive. That aside, insurance doesn’t provide for maintenance: oil and filter changes, new wiper blades, new tires. The owner is responsible. If auto insurance was mandated to cover these things, imagine what the cost would be. Health insurance is no different. Unfortunately, most people with health insurance don’t understand or appreciate the costs: low or no co-pays, low deductibles, coverage for elective surgeries and questionable drugs i.e.Viagra. I’ve been with companies that had extensive health insurance. Employees took children to the Doctor for anything and everything – $5 co-pay.

Obamacare was designed to put health insurance companies out of business and set the stage fo Medicare for all, the Progressives’s dream. Unfortunately, they think everyone can have a Cadillac plan on a Yugo budget.

Source material can be found at this site.

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