Monday, May 2, 2011

The LA Times' George Skelton on Health Insurance Regulation

Last week, we wrote about Assembly Bill 52, which, if passed, would give California regulators broad authority to reject rate increases from health insurers if they deemed them excessive. One of our reasons for doing this was to try to get in front of the rampant stupidity we were sure would characterize public discussion of the bill. And today's LA Times editorial from George Skelton, sadly, does not disappoint.

George Skelton's latest column is available now!
While we'd love to go through Skelton's piece and address it point-for-point, the fact is that its messiness sort of precludes that. Maybe Skelton was out late celebrating bin Laden's death last night, but we're not entirely sure what his argument is. Ostensibly, of course, it's about why AB52 should become law. So, you'd think he'd start off with some anecdotes of shocking increases in health insurance premiums. Instead, he starts off by noting that Aetna, Blue Cross, and Anthem have recently backed off from proposed rate hikes in response to negative consumer feedback. We're not sure how that demonstrates a need for rate regulation, but that's where Skelton's going. But not before noting something even worse than having your premiums go up: "The policyholder is jacked around by some faceless clerk in a far-off corner of the continent, an HMO minion who is arbitrarily interpreting the fine print and denying a medical procedure, perhaps a life-or-death treatment". AB52 would, of course, do nothing to prevent that situation, a point that Skelton acknowledges in the next sentence.

From there he moves on to the law's pros and cons. Sort of. The pros of AB52, for Skelton, include:
  • Assembly Democrats want it
  • Health care and insurance lobbyists don't want it
  • It would regulate health insurance just like auto and homeowner's insurance
  • We wouldn't be leaving medical coverage "to the whims of the insurance industry"
Whereas the cons for Skelton look something like this:
  • The measure could hurt payments to doctors and hospitals (whose lobbyists are apparently less evil than those of the insurers), though they could just as easily demand a bigger cut of insurers' profits
  • Rate regulation could conflict with the rate negotiations that take place in the new insurance exchanges set up in compliance with Obamacare
We're not really sure what to make of this, and it seems like a waste of time to take on each point individually. We'll presume that Skelton, like many liberals, believes that access to medical care is a basic human right, because he's making the same error of assuming that it's costless to deliver it. At least, that's the only way we can explain his depiction of how insurance companies work. In Skelton's world, the prices of insurance premiums simply reflect the highest amount of dollars the insurer thinks it can gouge out of its members without provoking a backlash; it doesn't seem to occur to him that there are costs to insuring the medical care of large numbers of people. Yet once you concede that money changes hands in the provision of health care, the rate question boils down to this: can a bureaucrat with no stake in the outcome and no knowledge of the economics really set rates better than a private firm risking their own money on understanding the market well enough to choose correctly? George, if you're reading this, we'll assume you don't want to answer this question, so we'll let you get some rest.


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