HB 1389: Curtailing profits at gunpoint
April 22nd, 2008 | by admin |Follow up to: Colorado House Bill 1389: Having cake & eating it, too.
In the above post I noted how existing government controls drive up insurance premium costs and price controls are likely to exacerbate the problem by discouraging insurance companies from offering products. Over at Colorado Health Insurance Insider , which offers quotes on insurance policies from competing companies, Ryan Henry leaves a very insightful comment about this bill:
I don’t know how you would even think about supporting this bill. For my zip code (Littleton), I saw plans from 10 different health insurance companies on your quote engine. Those 10 companies are all competing against each other for market share. They need to have the best combination of low prices and good coverage to sell a policy to consumers over the other companies. The actuaries for these companies are going to make sure they have the lowest possible prices to get an edge. This bill would just be more wasteful bureaucracy.
Of course, insurance companies would be more responsive to consumers if the federal tax code didn’t encourage our employer-based insurance market, which essentially requires most people with insurance to change jobs if they want to change plans.
In any case, this reminds me of the following passage in Ayn Rand’s Atlas Shrugged , where industrialist Hank Rearden is on trial:
“Are we to understand that if the public deems it necessary to curtail your profits, you do not recognize its right to do so?”
“Why, yes, I do. The public may curtail my profits any time it wishes-by refusing to buy my product.”
“We are speaking of . . . other methods.”
“Any other method of curtailing profits is the method of looters -and I recognize it as such.”
The, ahem, elected officials who are sponsoring HB 1389 are Representative Morgan Carroll and Senator Paula Sandoval . Carroll has blogged about it here .
Coincidentally, I am not the first to think of this passage in connection with price controls on insurance. Peter Schwartz (no relation) at the Ayn Rand Institute cited it concerning a 1988 California law .
tags: Ayn Rand, Colorado health care, HB 08-1389, Morgan Carroll, price controls
