10 March 2010

Proposed Health Care Reform Has A Flaw

NY Times: State Insurance Experts See Flaw in Obama’s Plan to Curb Health Premiums

At the heart of President Obama’s drive to rein in health costs is a proposal for federal review and regulation of health insurance premiums, with a new agency empowered to block excessive rate increases.

The proposal has great political appeal. But experts see a serious potential problem: Federal officials will focus on holding down premiums while state officials focus on the solvency of insurers, the ultimate consumer protection.

Economists say that holding down premiums does not necessarily hold down the cost of care, which reflects the prices charged by doctors and hospitals and the volume of services.

State officials worry that they would be left to police the solvency of health insurance companies while federal officials pressured insurers to reduce premiums, as Mr. Obama has done in recent days.

Insurance commissioners said they fully supported efforts to expand coverage and rein in health costs. But they said it would be risky to hold down premiums before costs were under control. And they do not expect the federal legislation to drive down costs anytime soon.

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