When the Popular Thing Isn’t the Right Thing

In order to boost public support for its health reform push, the White House added a new wrinkle to the Senate-passed reform bill it has, by and large, embraced.  The White House proposes to create a new federal agency with the power to review, regulate and, if it so wishes, block health insurance rate increases.

It’s not difficult to see the political strategy involved here.  With health insurance premium increases in the news as of late, the health reform debate has been cast as a heroes-versus-villains morality play.  A new federal rate commission will save vulnerable Americans from the health insurance industry and its, as one Administration spokesman termed them, “wildly excessive rate increases.”

But, as veteran health policy journalist Robert Pear writes in today’s New York Times, there are serious flaws with this populist initiative.

For one, health insurance premiums are already regulated by the states.  As Sean Dilweg, Wisconsin’s insurance commissioner, said, “The federal proposal would be a huge pre-emption of decisions that states have made over their history.”

It’s important to note here the difference between what states actually do and the new federal responsibilities being proposed.  When states analyze proposed insurance rate increases, they look at the entire picture.  What are overall healthcare costs?  How much of an increase can consumers reasonably absorb?  What is essential to keep health insurers solvent?

In Pear’s story, Kansas insurance commissioner Sandy Praeger put it this way, “You are not necessarily helping the consumer if you keep rates artificially low.  What’s worse for the consumer:  having a premium increase or having to pay the full amount of a medical expense because the company is out of business?”

State insurance commissions work without fanfare, making their decisions on the basis of objective data and analysis.  A federal rate commission would be under a harsher spotlight and under greater pressure to reject rate increases, regardless of their merit and necessity.

This issue is another indicator of how the health reform debate has lost its essential focus.  When we should be discussing how to implement delivery reforms to improve both the quality and cost-effectiveness of care, as well as steps to expand the accessibility of private insurance, instead a disproportionate amount of attention is being devote to excessive hyperbole about insurance companies and proposed “solutions” that could make those companies less solvent and, thus, less available to those who need coverage.  Consumers are not being well served by the direction of this debate.