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Critical Condition

NRO’s health-care blog.

A Fixed Insurance Market Is Still a Broken Insurance Market



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The New York Times is reporting that President Obama will be calling for new rules to prevent insurers from making “excessive” premium hikes as part of his new proposal on health care. While I am no fan of high premiums, and I believe that Anthem did itself and the opponents of the Democratic bills no favors by its recent proposed rate hikes, flat out forbidding rate hikes will not solve the underlying problems we face. 

Like wage and price controls, forbidding premium increases will just force insurers to seek savings elsewhere, most likely through unpopular service limitations. Furthermore, as the Times noted, it seems that this proposal opens the Democrats up to the criticism that “Mr. Obama and Democrats are anticipating the possibility of hefty price increases for health insurance even after their big legislation is adopted.” This new proposal may have some populist appeal, but will not provide much help for our system in the long run.



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