How can we be sure? Start with the fine print. Media reports make it sound as if President Obama will now be the supercop of health insurance. But the text of the President’s own proposal merely promises that “the state or the Secretary (of Health)” will review increases. A new Health Insurance Rate Authority will “provide needed oversight at the federal level and help states determine how rate review will be enforced and monitor insurance market behavior.” In other words, Washington will create a new, redundant bureaucracy to help the states to do what many of them do already.
This brings us to the third problem. Twenty-five states formally review health insurance premium increases. What happened to premiums in those states over the last decade? You already know the answer: they went up. Liberals insist this was because of a “lack of political will,” or the “lack of resources” - as if iron will or federal resources are needed to an unpopular premium increase.
The truth is more complicated. Take Massachusetts. The state has already implemented universal health reforms closely resembling ObamaCare. And, yes, state bureaucrats already review private sector rate increases. Yet premiums didn’t just rise since the 2006 reforms – they’ve risen much faster than average.
Two explanations stand out. First, rates rose because demand rose. Massachusetts now has universal coverage, so the insurance pool expanded substantially. And growing rates of preventable illness mean Massachusetts - like America - isn’t as healthy as it used to be. Also, new technologies increased basic costs.
Premiums also rose because lawmakers imposed dozens of insurance benefit mandates on Massachusetts consumers as a gift to provider lobbies. If the law says every consumer must buy gold-plated coverage, how can state officials say no to premium increases linked to those increased benefits?
ObamaCare already includes several federal benefit mandates, so the cycle will repeat itself nationally if the plan becomes law. Worse, the President is now appeasing Democratic senators with fifty state health exchanges instead of one national market. State benefit mandates will create cost pressure side-by-side with federal mandates, forcing federal bureaucrats to plow through overlapping regulatory systems to decide what’s fair and what isn’t.
Like so many features of the President’s plan, the tougher “new” rate review authority means more bureaucracy, more regulation, and more confusion, without much promise of better care, lower prices, or better access.