May 8, 2008
By Linda Gorman
Colorado legislators say they want to fix the roads and cut health care costs. What they actually do is divert money from roads to increase health care costs.
This strategy is good for government but bad for people. It allows government and its fellow travelers to create new programs and to campaign for more tax money to support them. Government officials like having more tax money to spend, but they do not like to spend it on invisible maintenance. It is far more fun to promise new programs and spend time with stakeholders who are grateful that you helped them get their hands on other people’s money.
Letting the infrastructure crumble also facilitates an implied threat: if citizens don’t ante up by rescinding TABOR as House Speaker Andrew Romanoff wants, or by paying $100 more to register their cars, as Governor Ritter proposes, then they have brought falling pieces of highways or collapsing bridges on their own head.
To see how this works in miniature, consider Senate Bill 217. It creates yet another Commission to study raising Colorado health care costs by importing the failing Massachusetts health care reform plan. According to the revised April 26th fiscal impact statement accompanying the bill, this Commission will cost taxpayers at least $519,300 over the next two years. Part of that money, an estimated $15,900 in FY 2008-9, will be diverted from funds that would otherwise be used to fix the roads.
If the $519,300 were earmarked for roads rather than yet another health care study, the Legislature could liberate almost 5,200 drivers from Governor Ritter’s proposed $100 car tax.
Another of the bills that takes money from roads to increase health care costs is HB 1389, a bill giving the state Department of Insurance carte blanche to put price controls on health insurance. The authors of the bill dispute this, of course. Their public relations releases say that it simply guarantees Fair and Accountable Insurance Rates.
But the bill says that the Department of Insurance can deny a rate increase if it believes that the rate is unreasonable relative to the benefits, unfair, unjust, inequitable, discriminatory, excessive, or inadequate. In short, it can deny a rate increase for any reason at all. There is nothing fair about legislation that allows regulation by whim.
Colorado health insurance purchasers will pay more because the bill makes companies justify their price increases. Never mind what their customers think, they must use resources to defend themselves to bureaucrats who may be hostile to private enterprise and who are specifically authorized to deny rate increases if they find something to dislike in company profits, dividends, annual rate reports, annual financial statements, subrogation funds credited, investment income or losses, unearned premium and loss reserves, surpluses, executive salaries, or benefits ratios.
According to the fiscal impact statement of April 21, the state currently spends a half hour reviewing rate filings. Department actuaries then spend about 3.5 hours reviewing the average filing. Under HB 1389, the initial review time will increase by 1,000 percent, to an estimated 5.5 hours. The actuarial review time will increase about 186 percent, from 3.5 hours to 10 hours per filing.
If the state is spending more time on rate reviews, insurers will have to spend more time on defending themselves against them. This increases the cost of selling insurance in Colorado. And when insurer costs go up, people who buy health insurance either pay more or go without.
From FY2008-2009 to FY 2009-2010, HB 1389 will increase state government costs by $620,652. The fiscal note says that it will be funded by reducing “the annual diversion to the Highway Users Tax Fund” by $419,583 in FY 2008-2009.
In other words, roads will not be repaired so that the Department of Insurance can spend $419,583 to increase health insurance premiums for Colorado health insurance buyers.
If the legislature had simply left health insurers alone, almost 6,210 drivers could have been liberated from Governor Ritter’s $100 car tax and Colorado residents would be paying less for health insurance.
If actions speak louder than words, it is clear that the people currently in charge of Colorado government think that road repair is less important than repetitive health care studies and increases unnecessary regulation that increases the cost of health insurance.
These actions also show that a lot of Colorado legislators see nothing wrong with wasting a lot of money. Until they demonstrate the ability to show some responsibility and to make good choices, giving them more tax money and power is, in the immortal words of P.J. O’Rourke, about as wise as giving whiskey and car keys to teenage boys.