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surprise! Mass. Insurers headed down the tube

cpwill

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now if only i could think of that federal law thingy that so closely resembled MassCare........

what was its' name again? wasn't it supposed to solve our problems?

or at least not make them worse?

The Boston Globe is reporting that the four largest health insurers in Massachusetts — Blue Cross Blue Shield, Harvard Pilgrim Health Care, Tufts Health Plan, and Fallon Community Health Plan — lost a combined $152 million in the first quarter of 2010. The companies stated that $116 million of those losses were directly caused by the April 1 institution of price controls by the state’s insurance commissioner.
...
This news will cheer members of three overlapping groups: those who believe that profit is an offensive idea in the realm of health care; those who believe that corporate malfeasance is responsible for most social ills; and those who want the private insurance market to collapse, so that it can be replaced by a socialized model.

But for those who are unfortunate enough to have health insurance in Massachusetts, it is an alarming development. It is also one with national ramifications, as Obamacare rolls the Massachusetts model out across the country.
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Politicians’ claims that insurers were gouging consumers with reckless rate hikes have been exposed as untruthful. So now, the pols are trying a new line on for size: that insurers are greedily hoarding secret piles of excess cash. But insurers are required by law to hold assets in reserve, so that they can meet their future claims obligations without risking insolvency. The politicians are trying to let themselves off the hook, by demanding that insurers eat their near-term losses and deplete their long-term reserves.

The four insurers listed above — non-profits all — probably have enough in reserve to get through a few years of price controls. But after that, they will have to raise rates dramatically, in order to catch up with several years of health care inflation. If they can’t, they will go broke, and the Left will blame “market forces.”...
 

Dezaad

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So, does Obamacare have price controls on insurance companies?
 

RightinNYC

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So, does Obamacare have price controls on insurance companies?
MA:

The Associated Press is reporting today that Massachusetts insurance commissioner Joseph Murphy is effectively instituting insurance price controls statewide, forcing insurers to absorb health-care inflation by themselves (h/t Mike Shedlock):

Insurance Commissioner Joseph Murphy said he had rejected 235 of 274 proposed rate increases because they included “excessive increases and rates unreasonable relative to the benefits provided.”

Blue Cross Blue Shield of Massachusetts, the state’s largest private insurer, said in a statement: “We share concerns about the current rate of premium increases, but arbitrary government price controls will not solve the problem and will likely cause unintended harmful consequences.”

Michael Widmer, president of the Massachusetts Taxpayers Foundation, which represents insurers, health care providers and an array of area businesses, termed the action “arbitrary and capricious.”

Federal:


President Obama's new healthcare overhaul plan would give the federal government greater authority to stop rate increases imposed by health insurers, an administration official said late Sunday.

The proposal, to be posted on the White House website Monday, would give the Health and Human Services secretary power to block premium increases that were deemed excessive.

It also would set up a panel of experts charged with evaluating the healthcare market each year and determining what would constitute a reasonable rate increase. The board's members would include consumers, doctors, economists and insurers.

Under the president's plan, rate increases outside the reasonable boundaries established by the board could be overruled by the secretary, who would also have the power to require the insurer to revise its proposed rate changes or to order rebates for customers who overpaid.
The proposal was eventually weakened after the Parliamentarian said it couldn't get passed through reconciliation, but the same strong version has already been introduced as its own bill.
 

Dezaad

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MA:




Federal:




The proposal was eventually weakened after the Parliamentarian said it couldn't get passed through reconciliation, but the same strong version has already been introduced as its own bill.
So, as of right now, there are no price control mechanisms passed.
 

RightinNYC

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So, as of right now, there are no price control mechanisms passed.
As of now, the panel is only authorized to review rate hikes and make recommendations to state panels about whether or not to approve them. If President Obama and the sponsors of this bill get their way, there will be strong price controls.

Are you agreeing that strong price controls are bad, or are you just pointing out that they (unfortunately) haven't been enacted yet?
 

Dezaad

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As of now, the panel is only authorized to review rate hikes and make recommendations to state panels about whether or not to approve them. If President Obama and the sponsors of this bill get their way, there will be strong price controls.

Are you agreeing that strong price controls are bad, or are you just pointing out that they (unfortunately) haven't been enacted yet?
As of right now, I can't see any reason for price controls, and agree that they would generally be bad. However, I could be convinced that price controls are necessary if consolidation in the insurance industry has reached a point where too few players exist for price competition to be a major market force.

Insurance is one of those things that I would guess would have fairly inelastic demand. If price competition became weak or non-existent, insurers could easily truly gouge their customers, and rake in profits that a free market would not permit. I imagine that is the reason state panels exist in the first place.

As for this thread. It is disingenuous to criticize Obamacare in general (which is what this thread is doing), when the solution to the particular point raised would be to simply do away with price controls, or some other solution if that would lead to gouging. Except that we can't do that, because they don't exist yet! The approach, here, is obvious ideological hackery.

A better (and more honest) approach would be to start the thread with stating that Obamacare in combination with price controls would be disastrous. Then we could engage in the various merits or not of such a combination of elements. I know it's not as dramatic as ideologues would like, but that's the unfortunate reality I guess. Instead, we have to do this song and dance first, just to get past the ideological fog.
 

donsutherland1

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But after that, they will have to raise rates dramatically, in order to catch up with several years of health care inflation.
It is health care inflation that needs to be tackled in comprehensive health care reform. Unfortunately, the new law focused on expanded coverage but really did not begin to tackle the structural issues concerning medical inflation. Indeed, doing so would be far more controversial than the new law was. Yet, IMO, it is that omission that was the biggest defect by far in the new health care law. Ultimately, medical inflation will need to be addressed if the nation is to move onto a fiscally sustainable path.
 

Korimyr the Rat

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Unfortunately, the new law focused on expanded coverage but really did not begin to tackle the structural issues concerning medical inflation. Indeed, doing so would be far more controversial than the new law was. Yet, IMO, it is that omission that was the biggest defect by far in the new health care law.
And as I've complained before, expanded health insurance coverage is not the solution to our healthcare woes when health insurance itself is the root of many of our problems.
 
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