Insurance price controls hurt the sick
January 15th, 2010 | by Brian Schwartz |A Cato podcast on the insurance company price controls in the House and Senate health care bills:
As I summarized in a previous article, when government forces insurers to issue policies to high-risk customers (guaranteed issue), but to also charge the same premiums as they to lower-risk customers, bad things happen:
Insurers will strive to make their products unattractive to those who need insurance most: those with high expected medical costs. After all, why would insurers want to attract the sick if politicians prohibit them from charging them higher premiums? Expect insurers to skimp on what’s most important to those who make insurance claims: comprehensive coverage, clear explanation of benefits, and minimal bureaucratic obstacles to doctor-recommended treatments.
The controls also result in higher premiums and more insured: Guaranteed issue & community rating backfire.
tags: community rating, price controls, unintended consequences
