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Obama Plan to Cap Health Insurance Premiums Is Foolish

February 22, 2010

President Obama is set to propose limits and rollbacks on health insurance premium increases this week. This is stupid policy for a lot of reasons. For starters, insurers have to pass along increases in what they pay in claims. The way to reduce those claims isn’t to cap premiums but to encourage more efficiencies in the healthcare system.

I get it that people are pissed off about paying more in premiums. But insurance companies are in business and have to make a profit. Their profits aren’t obscene — they operate on slim margins as it is. They are not fleecing consumers.

Capping the limits will lead to consequences that Obama and his economically-retarded advisors won’t want. Insurers will have to use even more scrutiny in paying (make that denying) claims. They’ll also have to be more cautious about risks they assume, meaning they’ll tighten underwriting so that it’s more difficult to get coverage unless you’re in perfect health. Or even, where states allow them, adjust benefits accordingly — which means decreases in the amount of coverage and increased liabilities to the insured.

Judge these things by the results, not the intentions. Just as when state officials try to cap the price of any good or service, the result isn’t good for consumers — it invariably leads to a shortage. In this case, it will be a shortage of claims payments, benefits, or even available coverage for people with “routine” maladies for which underwriting otherwise wouldn’t be problematic. That’s no way to get more people covered in this country.

It’s time for the Democrats to get over their bizarre obsession with trying to micromanage our healthcare system and our health insurance sector. When are they going to do something meaningful to create an environment in which people actually want to grow their businesses and expand our economy? And when the fuck are they going to take a serious look at their own handiwork in growing and expanding government — which is much more egregious than the 3.4% margins health insurance companies are “guilty”? How about a goddamn cap on the growth rate of your government flunkies and their inflated pensions at all levels, Democrats?

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One Comment leave one →
  1. February 22, 2010 12:44 pm

    Lucky, I totally agree. Right now we are in a serious struggle to keep our economy alive. What I don’t understand about the plan to cap premiums on Health Insurance Plans is how this is NOT going to effect the health insurance industry in a negative way. If it does, then how is the economy NOT going to be effected? When people start losing their jobs in the Healthcare industry, the rest of the economy falls suit. We have an organic system, every industry effects another, especially one such as Healthcare.

    Look at what happened at Jackson Memorial Hospital here in Florida just Recently. Hundreds of layoffs because it was the only hospital where the uninsured could go for treatment. People abused it and now they have shut down the ER and fired nurses and staff. It’s getting bad. Insurance needs to be affordable yea, but it can’t be damn near free otherwise the system is going to collapse.

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