President’s New Health Care Plan Creates Poor Starting Point for Bipartisanship

The Health Care Summit kicks off tomorrow and President Obama already unveiled his new health care proposal earlier this week.  The Summit is meant to be bipartisan meeting between Republicans and Democrats and an opportunity to find common ground and share reform ideas.

That sounds lovely.  However it will certainly be difficult to find any common ground in the President’s latest plan.

Among the proposals included in the plan is a measure to create a Health Insurance Rate Authority, a body in charge of capping premium rates insurance companies can charge.

Why is it that every government solution begins with the creation of a new bureaucratic entity?

A true solution to the growing problem of rising health insurance premiums would begin with the recognition of the underlying problem.  One of the reasons private health insurance premiums continue to rise is that Medicare and Medicaid do not pay full reimbursement rates to hospitals and health care providers.  The result is hospitals and providers charge private insurers higher rates in order to meet their operating costs.  Those higher rates are passed on to policy holders through higher premiums.

The proposed solution to cap premium rates does not address this problem.  It does not address the rising cost of health care or the increased use of medical services.  It also does not address the unfunded liabilities of government programs such as Medicare and Medicaid. Since the government won’t change the rate at which providers are reimbursed by Medicare and Medicaid – because that would mean a direct and unpopular tax increase, then the only alternative outcome is insolvency and ultimately bankruptcy for private health insurance companies.

Additionally many states have already created measures to regulate private health insurance companies.  Health insurers often have to request permission from the state before they increase premiums.  Hence this measure would remove authority from the state and transfer it directly to the federal government, rendering an already ineffective process substantially more inefficient.