Limiting Insurance Rate Increases

Back to Health Care Reform.

I have a question for you. Who should have the say over how much an insurance company can raise their rates: the Federal Government, the State Government, or no one? This question comes after President Barack Obama stated that the Federal Government should have the power to reject health insurance rate increases that they deem to be excessive.

If the Federal Government had control, then that means they could have the say over insurance companies that only operate within one state. This would supercede the authority states would have within their own borders, or as Pennsylvania Insurance Commissioner Joel Ario stated, “It could end up as a ‘who’s on first and what’s on second’ problem.”

In my view, this violates the Commerce Clause of the Constitution. Article I, Section 8 states:

The Congress shall have power to … regulate commerce with foreign nations, and among the several states, and with the Indian tribes.

This would mean the State Government should have control, but that control would only last until the company expands the state borders. That is no different than any other company who grows and expands their business. But what happens if no one oversees the rate increases? You’ll be left with a handful of local monopolies that are able to increase their rates with consumers having no alternatives to turn to, meaning they either have to pay the higher rates or drop their coverage.

In my view, competition is probably the best way to keep rates in check. If one company starts to increase their rates (for whatever reason), the alternative becomes more appealing. By lowering the artificial barriers to competition, and start allowing companies from across the country to start competing for the business for every resident in the United States, not only will you see the growth in insurance rates slow, you might actually find yourself paying less for the same coverage. And when you start providing tools where rates and benefits of various insurance companies are posted online, customers can do side-by-side comparisons to find the best coverage for their needs and in their price range.