Obama wants price controls on insurance -- watch your rates soar 

An ominous story in this morning's New York Times -- "Obama to Urge Oversight of Insurers’ Rate Increases":

President Obama will propose on Monday giving the federal government new power to block excessive rate increases by health insurance companies, as he rolls out comprehensive legislation to revamp the nation’s health care system, White House officials said Sunday.

The president’s legislation aims to bridge differences between the bills adopted by the House and Senate late last year, and to frame his debate with Republicans over health policy at a televised meeting on Thursday.

By focusing on the effort to tighten regulation of insurance costs, a new element not included in either the House or Senate bills, Mr. Obama is seizing on outrage over recent premium increases of up to 39 percent announced by Anthem Blue Cross of California and moving to portray the Democrats’ health overhaul as a way to protect Americans from profiteering insurers.

Congressional Republicans have long denounced the Democrats’ legislation as a “government takeover” of health care. And while they are likely to resist any expansion of federal authority over existing state regulators, they will face a tough balancing act at the meeting with the president to avoid appearing as if they are willing to allow steep premium increases like those by Anthem.

One of the major issues making health insurance more expensive is the onerous level of government regulation that drives the price up. In fact, this is exactly the issue undergirding Anthem Blue Cross' 39 percent hike in California. But rather than deal with the regulatory issue, the Obama administration wants to dictate prices? This is, to put it mildy, a very bad idea.

If there's one thing axiomatic in economics it's that artificially imposed government price controls make things more expensive over time. If you can't profit, you ration. If you ration, the supply decreases and scarcity increases prices.

If federal government gains power to block rate increases, the cost of insurance will go from very bad to worse. Just because the president wants to manipulate populist outrage in an election year, doesn't mean he can negate the laws of economics.

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Mark Hemingway

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