Insurance as a Utility

Yesterday the White House released it's version of health care which the President expects Congress to pass as is. This is largely based on the Senate version and probably on what was being written in the secret reconciliation meetings in January. One notable section would regulate insurance rate increases.

Strengthen Oversight of Insurance Premium Increases. Both the House and Senate bills include significant reforms to make insurance fair, accessible, and affordable to all people, regardless of pre-existing conditions. One essential policy is "rate review" meaning that health insurers must submit their proposed premium increases to the State authority or Secretary for review. The President's Proposal strengthens this policy by ensuring that, if a rate increase is unreasonable and unjustified, health insurers must lower premiums, provide rebates, or take other actions to make premiums affordable. A new Health Insurance Rate Authority will be created to provide needed oversight at the Federal level and help States determine how rate review will be enforced and monitor insurance market behavior.

This continues the movement to turn medical coverage into a regulated utility. Is this a good thing? The justification was the recent announcement that insurance companies in four states are planning sharp increases in their rates with one company raising their rates 39%. Will the White House plan stop such increases?

History says no. Regulated utilities are allowed to charge rates that cover their expenses and make a prescribed profit. If the insurance companies are being honest about their rising costs then they will be allowed to raise their rates.