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Health Care Plan Rebates Have Hidden Costs : Roll Call Opinion

One of economist Frédéric Bastiat’s best contributions is to explain the “seen and the unseen” in government meddling in economic matters.  Recently Bob Semro of the Bell Policy Center (Colorado) relates only the “seen” part of an ObamaCare command that, under certain conditions, requires insurers to send rebates to policy holders.  Sounds good, right?

Christopher Conover and Jerry Ellig explain the unseen downside:

What people don’t realize is that there’s a catch to this “free” money. The rebates are required by an obscure regulation in the health care law, called the “minimum loss ratio,” which also contains longer-term incentives for health insurers to increase costs that will be passed along to all of us. Instead of rushing to spend these extra dollars, rebate recipients are better off pocketing it to pay for higher premiums in the future. …

Although health insurers will pay some rebates this year, the cash should be treated as a short-term benefit with a long-term cost. Rebates will likely disappear in the future as the companies become more familiar with the regulation and learn how to game it.

Read more: Conover and Ellig: Health Care Plan Rebates Have Hidden Costs : Roll Call Opinion.