Seriously, is the Columbus Dispatch’s editorial board high? Today, the Dispatch is crying over the plight of health insurers due to the health care reform law.
And what mandates does the Dispatch complain about?
- The federal government’s regulators will investigate any health insurance premium increase above 10% for “reasonableness” to examine if there is a legitimate underwriting basis for the increase and that the insurance companies aren’t just engaged in price gouging to drive up their profit margins.
- Health insurers must spend 80% of the amount they collect in premiums on health care benefits, leaving only 20% for overhead, marketing, etc.
Medicare uses only 3% of the revenues it receives in overhead. During the health care debate, most critics of this figure admit that the average overhead cost for private insurers is in 15%-20% range. In other words, what the Dispatch leaves out is that most health insurers were already able to satisfy this “mandate” before the health care law took effect, so this “mandate” isn’t as onerous and hostile to the industry as the Dispatch tries to portray.
And why shouldn’t the federal government question a double digit increase in premiums as potentially excessive? The regulations don’t say a health insurance company cannot do it, but just that they better be prepared to justify such an increase to regulators. Given that the federal government is mandating that everyone buy private health insurance, doesn’t the federal government have an obligation to protect its citizens from potential price gouging of a captive market? The Dispatch, apparently, says no.
The rest of the Dispatch’s editorial features such overly simplistic economic “thinking” you’d think it was written by a college freshman. Insurance works, economically, more like a tax base than a lemonade stand. The broader the base of the pool of insureds, the more the insurance company can evenly spread the costs of the pool’s overall health care cost and the lower the premium would be for the same level of care of a smaller, more narrower pool. That’s why those with pre-existing conditions want to be included in the rest of the insurance pool instead of forced into high-cost, smaller “at-risk” insurance pools; the difference between premiums for the same level of coverage is staggeringly huge.
The Dispatch naively believes that folks without health insurance presently don’t get any health care services. And if that economic assumption were correct, then their simplistic supply/demand argument would hold water. But we already know that it’s a foolish, naive assumption that is directly contradicted by the actual realities of the market.
Right now, our system encourages people without insurance to avoid preventive care and only seeking medical care in expensive ERs or wait until they must undergo catastrophic care. Because those people are unable to pay and have no insurance, the hospitals and medical provides spread the economic loss from that uncollectable debt to… the insured.
By requiring everyone to have insurance, the health care law aims to break the cycle and encourages people to seek lower-cost preventive care to reduce the number of folks who don’t get medical treatment until it requires high-cost catastrophic medical care.
I always thought of the Dispatch as a Republican paper, but, to me, it’s taken an amazing right-wing turn in the past year from Rockefeller, “country club” style Republicanism, to misinformed, anti-intellectualism conservative Glenn Beck-style “thinking.”
It’s not often you see an Ohio paper attack government regulations to combat price gouging, though. So, I guess today’s editorial is somewhat historical.