Saturday, May 21, 2011

Price fixing is not Cost Control

Health insurance premiums have risen even faster since the PPACA became law. How does the government respond? With price controls. But price controls do not address costs and will lead to shortages. Economics 101. Unless you are a politician--then it leads to votes.

Insurers Told to Justify Rate Increases Over 10 Percent

In some states like New Hampshire, groups of more than 20 workers have experienced premium increases of around 20 percent this year, while smaller groups have seen increases of 40 percent or more. At the same time, insurance agents say, coverage is shrinking as deductibles have increased and insurers limit the choice of hospitals.

To ensure that “consumers get value for their dollars,” the new health care law required annual reviews of “unreasonable increases in premiums...”

Under the new rule, federal and state officials will review rates in the individual and small-group insurance markets...

Federal officials acknowledged that they did not have the authority to block rates that were found to be unjustified. But they said many states had such authority, and the federal government is providing $250 million to states to strengthen their capacity.

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