Rhode Island’s Lesson for America
It’s been an education in the future of healthcare in the United States to watch Rhode Island’s three insurers seek rate increases from the state as the Democrats have forced their legislation through Congress. On Thursday, the state health insurance commissioner, Christopher Koller “slashed” proposed premium increases and:
… that’s not the only effect: Koller also reallocated how insurers should spend their premium dollars.
He ordered Blue Cross & Blue Shield of Rhode Island and UnitedHealthcare of New England to spend less than they had proposed on hospital care — a decision that could pressure insurers to negotiate lower payments to hospitals, at a time when hospitals are losing money.
The usual suspects are demagoguing about ruthless insurance companies and their endless rate increases, and Mr. Koller is bringing up “troubling trends,” such as the unexplained fact that the average age of people receiving health coverage through work is going up, adding to premiums. Nobody is questioning the wisdom of allowing an unelected bureaucrat to manage every insurer in the state:
Koller does not merely rule on the total premium, but examines the factors that the insurers say underlie their need for more money — the costs of hospital care, medications, primary care, administration and profits. His only changes were: reducing inpatient and outpatient hospital costs at both Blue Cross and United, increasing United’s primary-care costs, and slightly cutting the administration and profits at Blue Cross. …
“We need to make the status quo as uncomfortable for insurers and providers as it is for employers, the people who are paying the bill,” he said.
Is a healthcare system built upon mutual discomfort really the most effective approach? Artificially suppressing prices doesn’t affect the factors driving those prices up, and however much provider and insurer greed may play a role, the limited number of choices, the disguising of costs within broad premiums and through government subsidies, and the requirements and restrictions that the state government places on the market are exponentially greater factors.
If we wish to bring down costs, we’re going to have to increase the degree to which consumers must consider the price of each service. Unfortunately, our government — convinced of its own need for more power — is moving in the other direction. With the intention of taking decisions out of the hands of insurers, government operatives are pulling them into their own.
At least if consumers were unhappy with the deals offered by Blue Cross, they could switch to United (and now Tufts). What are our options supposed to be if we’re not happy with the decisions of Mr. Koller? And why would additional companies choose to operate within a state (or nation) in which such a functionary ultimately runs their operations?