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.”