The misnamed Patient Protection and Affordability Act, aka ObamaCare, wasn’t supposed to be a national take-over of health care, but partisans on both sides agreed that it is headed in that direction. Another shoe fell in that vein Dec. 22 when Kathleen Sebelius announced that the Obama Administration will give close scrutiny to premium increases by health insurance companies. Any increase of more than 10% will be subject to her oversight and pressure. Heretofore, regulation of health insurance was accomplished at the state level. It is true that health care is unlike any other industry in terms of price discipline. It has little, because there is neither market discipline nor effective stage regulation of prices. Most industries have one ore the other at work. Several revelations are imbedded in the Sebelius position. First, it is an acknowledgement one more time that the Obama team has little use for the marketplace as a tool for price discipline and containment. Second, it is a loud and clear admission that costs/prices are still soaring out of control — 10% or more in many cases. Sebelius and company have signaled their preference for top down regulation of insurers. The better answer is an army of consumers equipped with good information on health care value — quality metrics, transparent all-in prices and service. When consumers move their health business to the best and most cost effective providers, the market is crated and price discipline occurs. Why would anyone pay $50,000 for a hip replacement when a good one can be bought for $20,000 in the same regional market.? They do, because there is no transparency on all-in prices. Instead of beating on insurers with a big stick, she should go to work on value transparency. Real reform comes from the ground up, not from the top down.
National ‘Take-Over” Begins, Reveals
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