Charlotte mentioned in a post today that HHS Secretary, Kathleen Sebelius, has a piece in today’s Wall Street Journal defending her department recent actions, including implicit threats of insurers who dare to blame the new health care law for rate hikes, as a necessary part of overseeing the insurance industry. She implies that the choice is between greater government control of the health care sector or insurance companies that “run wild with no accountability,” charging policyholders confiscatory rates and denying services, writing:
These critics seem to believe that any oversight of the insurance industry is too much, and that consumers would be better off in a system where they have few rights or protections.
Over the past decade, Americans have seen what happens when insurance companies have free rein. The cost of health insurance has more than doubled, while millions of hard-working Americans lost their coverage or drained their savings to keep up with premiums. Employers-big and small-have struggled mightily to absorb these cost increases and have been losing the fight.
But is government micromanaging prices of all insurance companies really the best way to create accountability? There’s clearly a better alternative. It’s the same process that we use to make sure that grocery stories and handymen don’t “run wild” charging all of us hostage customers exorbitant fees and providing poor service-market-based competition. If insurance companies really have been able to take advantage of consumers (and given that the industry’s profit margins are comparatively low, it’s not clear that they really have been exploiting anyone) it’s because of a lack of market discipline in the insurance field.
Think about it: if your auto insurance company hiked premiums in a way you thought was inappropriate or wasn’t honoring it’s contractual obligations, you’d go online and get bids from the dozens of other companies that want to sell you auto insurance. It doesn’t work that way with health insurance for numerous reasons, most of which have their root in bad government policy. Correcting those policies and creating a more robust health care marketplace is the best way to prevent insurance companies from “running wild,” not turning over control of the health care system to bureaucrats like Sebelius.