ObamaCare: Insurers Need Permission to Survive; Citizens, to Live
Suppose our government declared that everyone had the "right" to a nice steak dinner. The government would require restaurants to sell $50 steak dinners to all comers. But to keep prices affordable, restaurants could only charge $25. No restaurant could survive long under such a scheme, and most Americans would be outraged at such a blatant violation of restaurant owners' rights.
But that is exactly what is happening with health insurance in Massachusetts. Events unfolding now in the Bay State should serve as a warning to the rest of America of the danger ObamaCare poses to our health insurance, our health care -- and ultimately our lives.
Since 2006, Massachusetts residents have lived under a system of "universal health care" similar to the recently passed ObamaCare plan. Insurers must cover patients regardless of pre-existing conditions. In return, individuals are required to purchase state-approved insurance. These mandatory policies include numerous benefits which many consumers may neither need nor want -- such as in vitro fertilization and chiropractor services -- but were included through the lobbying power of special interest groups.
Naturally, these mandated benefits raise the costs of insurance. However, insurers are not allowed to set prices based on market conditions, but must instead petition the state for rate increases.
Recently, the Massachusetts state insurance commissioner rejected 235 of 274 requested rate increases.
Insurers filed suit against the state, arguing that without these rate increases they would be forced to sell their services at a loss. The state then "delisted" the complaining insurers from the government-run exchange where residents purchase plans. Under government pressure, at least two insurers then agreed to resume sales under the old prices.
Insurance companies in Massachusetts are thus required to offer numerous benefits as determined by politicians and lobbyists, but they may only charge what government bureaucrats permit. It would be akin to the government requiring restaurants to sell $50 steak dinners, but only allowing them to charge $25.
When similar price controls and "guaranteed coverage" laws were imposed in South Dakota and Kentucky, many insurers left these states rather than be slowly bled to death. As similar laws are phased in nationally under ObamaCare, the government could drive private insurers out of business altogether, enabling it to herd unwilling Americans into a "public option."
ObamaCare thus places a noose around insurers' necks. Insurance companies will be allowed to survive only at the arbitrary pleasure of the government.
We've already caught a glimpse of how the federal government will exercise this arbitrary power. After ObamaCare was signed into law, some insurers pointed out that the law didn't require them to immediately cover certain children with pre-existing conditions. In response, Health and Human Services Secretary Sebelius threatened to issue regulations forcing them to do so regardless of the actual letter of the law.