President Obama’s favorite explanation for why his health-care reform plan is unpopular is that he needs to explain it “more clearly.” Explain it more clearly? After dozens of presidential health-care speeches and town halls, and even a bipartisan “summit,” people understand Obamacare quite well. They just don’t like it. In the latest Rasmussen polls, 53 percent of voters oppose the legislation, and 57 percentthink it will hurt the economy if it becomes law. Clarity is killing Obamacare because voters understand that it will raise health-care costs and explode the deficit, creating a permanent new drain on the economy.
Desperate Democrats have decided that if they can’t sell their plan, they’ll just attack the Evil Insurance Companies. Hence the president’s latest proposal for a federal regulator that would have the power to approve (read: deny) insurance-premium rate increases that are considered “excessive,” a ploy based on Anthem’s recent announcement that it will raise rates for individual plans in California by up to 39 percent.
Obama’s plan is a bad, poll-driven idea that would wreak havoc on the individual insurance market. State insurance experts interviewed in the New York Times this week explained why: Rate reviews at the state level are primarily designed to make sure that insurers will remain solvent and can pay their claims. The experts called this the “ultimate consumer protection.”
“You’re not necessarily helping the consumer if you keep the rates artificially low,” one state regulator told the Times. “What’s worse for the consumer: having a premium increase or having to pay the full amount of a medical expense because the company is out of business?”
The president also ignores the logic of competitive markets: If one insurer raises rates above what is justified by underlying costs, competitors will undercut them, shaving off market share and profits.
For instance, according to eHealthInsurance.com, a 40-year-old single male resident of Santa Monica, Calif., has 124 plans to choose from, starting at $88 a month for an Anthem Blue Cross plan. If a 39 percent increase hit this plan, its new cost would be about $122 a month — leaving it vulnerable to competition from Kaiser Permanente or Aetna.
A 2009 survey from eHealthInsurance also found that individual health-insurance premiums are less expensive in California than the national average: $150 a month versus $161. New York — a state with many of the health-care regulations found in Obamacare — was more than twice as expensive as the national average: $339. Individual insurance markets undoubtedly need more competition, but the Democrats’ embrace of heavy-handed regulations and mandates would drive prices up, not down.