Author Archives: SEH

Why Obamacare’s health insurance price controls are bad policy and what to do about it

The Patient Protection and Affordable Care Act imposes two new forms of price controls on health insurance effective January 1, 2011, requiring health insurers both to meet minimum medical loss ratio thresholds and to justify “unreasonable” rate increases to the Department of Health and Human Services.  My December 2008 monograph, Regime Change for Health Insurance Regulation: Rethinking Rate Review, Medical Loss Ratios, and Informed Competition, published by the American Enterprise Institute, explains the controls in detail, how they misdiagnose the causes of high health insurance premiums, and how they will reduce competition and consumer choice without reducing medical costs and health insurance premiums.  The study also outlines a pro-competitive system of disclosure and regulation that would promote informed competition and increase consumer choice.

For a succinct treatment of why the law’s rate review regulations are a bad idea, see the December 22 WSJ op-ed “Sebelius’s Price Controls.”

The omnibus spending bill: the voters win

Given public and private pressure on many Senators, Senator Reid pulled the omnibus spending bill, agreeing to a measure to continue spending at current levels until February.  This represents good news — at last — from the 111th Congress.  (WSJ columnist Kimberly Strassel aptly calls the accomplishment of Republican leader Senator Mitch McConnell a mini Christmas miracle.)  The 111th should now defer debate on the START treaty and the DREAM Act and go home.

The omnibus spending bill: what did we expect?

Senator Harry Reid’s push for the omnibus spending bill rather than a resolution to continue current spending until the new Congress begins is unsurprising.  Pushing (rushing) this and other major legislation in a lame duck session continues the disgraceful record of the Senate under Mr. Reid.  He and his colleagues don’t respect the median voter.  They view the electorate as a giant piggy bank that can be tapped to spend billions and billions on projects for their supporters.   We should amend the constitution to prevent such lame duck mischief.  But that won’t happen.

President Obama could score some points with independents if he were to quash the omnibus spending bill and put off consideration of the START treaty until the new Congress is in session.  He’ll need those points in 2012.