Last week the Denver Post reported:
Health-care reform has given the state the power and resources to slap down the kind of insurance-premium hikes that infuriate consumers, with advocacy groups pointing to a failed 24 percent increase request by Cigna.
Read the whole article here: Colorado gains power, resources to reject infuriating premium hikes.
Such rate review is an example of price controls. Like all price controls, they have negative consequences, which I summarized in an earlier post critical of the Colorado Consumer Health Initiative and Progress Now. Summary:
- States with rate review have had the same premium increases as those without
- “Like other types of price controls, they require firms to sell products for less than they otherwise would. Just as rent control of apartments encourages landlords to become slumlords, insurance price controlswill likely do the same to health plans. For examples, insurers would reduce costs by cutting back on customer service.”
- writes: “Insurers can’t endure state-mandated losses forever. Eventually, they’ll have to shed jobs or exit the market entirely. Consumers would be left with fewer choices.”
- Insurers’ profit margins are very small. “$136 in profit per member per year.”
- See Health Insurance Rate Hikes: Unreasonable if Excessive, Excessive if Unreasonable. ‘s article