So Simple Even a Cave Man Can Do It

Why do people always think that the answer to a business that raises rates on a product is to have government step in and regulate the price? No where is this more evident than in the health insurance industry and the issue is particularly timely in California, where Anthem Blue Cross is raising some rates up to 39%.

In today's local fishwrap, also known as the LA Times, they have an article about how the California Assembly in Sacramento passed a bill out of the Health Committee that would require health insurance companies to justify their rate increases.

Health insurance companies and most preferred provider organizations would have to get approval from the Department of Insurance, while HMOs would have to get an OK from the Department of Managed Health Care. The state agencies would be charged with determining that premium increases are "not excessive, inadequate or unfairly discriminatory," according to the bill.

Well, what is "excessive?" According to the article, more than 7% is excessive. Really? How did they arrive at that number? Did they just pick it out of thin air? The article doesn't say. But this proposed law has one Woodland Hills mother enthusiastic about it.

But Laurel Kaufer, a Woodland Hills mother, complained that her biggest problem was a recent 34% rate increase to $1,100 a month from her insurer, Anthem Blue Cross.

"I am required to seek prior approval before I can expect to receive coverage from my insurance company," she said. "There is no good reason why Blue Cross should be allowed to raise my rates without prior approval."

Hey, Laurel, they actually do have to get your approval to raise your rates. They send you a letter saying that your rates will go up unless you opt out. I know because I'm with Anthem Blue Cross and I got a letter.

But back to this new law they're proposing and the power it will give to government bureaucrats. How do we know that these Government agencies are always looking out for us and not them? That side has lobbyists too and they can write big checks. Who is to say that a little money spread around the capital by Anthem Blue Cross or Kaiser will allow them to raise rates as high as they want? Why should we give government more control over this? Why shouldn't the people have more control over this?

My suggestion is for California to open up the state to other insurance providers. Legally, there is nothing stopping them from doing this as the state insurance commissioner already has this power. That way, you could go find another health plan that would cost less per month. Gee, wouldn't it be great if we could shop around for health insurance just like we shop around for auto insurance? That's an idea so simple even a cave man would get it.

Unfortunately, we seem to have the neanderthals running government.