Remember that economics class you took that talked about how in a free market the price of goods and services would be determined by supply and demand? The free market model tells us that consumers will allocate their resources, or money, on products and services that provide the highest utility to them.
Unfortunately, the health insurance market place lacks some fundamental components to allow consumers to make informed and free choices with their resources. Both in the individual and employer group market consumers are restrained from considering all of their available options because of employment, access to comparable information, pre-existing conditions and a host of government regulations to name a few.
Consequently, individuals, families and employers have little recourse when health insurance companies raise rates. I have worked with countless people trying to find more affordable insurance plans. Inevitably there is always some barrier that prevents them from changing plans. Typical obstacles include pre-existing conditions, family or employee considerations, or the shear hassle of underwriting and employee enrollment.
Most folks understand that their rates will increase with age and there will undoubtedly be some price increases attributable to increased costs. But people are tired of seeing health insurance rates increase with an accompanying decrease in covered benefits and escalating deductibles and coinsurance. There is a real sense that because consumers have limited options to change health insurance plans, health insurance companies are able to increase rates without valid justification.
The Healthcare Insurance Rate Change Initiative will require health insurance rate changes to be approved by Insurance Commissioner before taking effect. This measure seems like an appropriate intervention for the State of California because the health insurance market place is so distorted.
Under the new rules of the Accountable Care Act, insurers will have to rebate premium amounts if they fail to meet the Medical Loss Ratios. While this is nice, I would rather have my money in my account than to get a rebate or credit at the end of the year from my health insurance company.
I don’t want government involved in the free exchange of goods and services unless it is absolutely necessary. Because of the restricted market place for health insurance and the increasing costs of insurance to families and companies, we need addition monitoring to make sure that consumers are paying a fair price for their health insurance.
You can download and sign the petition here http://www.justifyrates.org/
Ventura County Star: Initiative to regulate health insurance hikes sparks big debate. Initiative would regulate health care