Hamzy: Rate hikes inevitable following health care changes

Column by state Rep. Bill Hamzy, a Plymouth Republican whose 78th District includes northwestern Bristol:

Connecticut’s Health Care Reform Balancing Act

I was somewhat amused to read that our federal delegation, including Congressman Chris Murphy, instructed our state Insurance Commissioner to be “vigilant” in reviewing proposed rate increases being requested by health insurance companies as a result of his vote in favor of the healthcare “reform” bill.

Let’s say you run a household with a spouse and two kids.  Children are expensive enough, but now imagine the government mandates that you pay not only their college tuition, but also all their expenses well into their adulthood.  Your likely response?  After the shock and indignation, you start worrying about where the money is going to come from.

That’s analogous to what’s going on with Connecticut health insurers.

Insurers are sizing up so-called healthcare “reform” and its sweeping legal requirement to provide medical care to millions of under-insured people, and actuaries are concluding that – surprise – they will need more money to cover the expected expense surge in the individual health plan market. They cast around for ways to raise those funds and – surprise again– they decide that at least a portion of those new expenses will be paid by the mechanism through which they typically cover expenses: the rates that are charged for individual health plans.

The hue and cry over the proposed increase in rates for individual insurance plans by our Democratic federal delegation, while more than a tad disingenuous, is reminiscent of Capt. Renault’s famous line from Casablanca;  “I'm shocked, shocked to find that gambling is going on in here,’’ Renault says, knowing full well gambling is commonplace at the bar.

Insurance companies are responding to the increased costs imposed by the healthcare “reform” law as businesses do – and as you would in your own household.  Unlike the federal government, these companies function in the real world where costs must be covered, where bills must be paid, and where the law must be followed.  As our government is learning, the real world is sometimes an uncomfortable place where Connecticut citizens have the legal right to expect that insurance companies will keep themselves on sound financial footing as they balance the new federal obligations while providing for the medical needs of millions of Americans.

The calculus is fairly simple: Congress and the President mandate that insurers expand services and provide new services to millions of additional people; insurers know that will cost money and they go out and raise it. Unlike the government, businesses can’t survive with a perpetual deficit.

Some Connecticut insurers are raising their rates for individual plans by single digits, others by more.  Either way, our Democratic federal legislators don’t seem to understand that insurance companies have a legally binding financial responsibility to ensure that the cost of claims incurred is offset by the premiums collected.

On Sept. 23, health insurers in the state will be required to comply with the health care “reform” law passed six months ago that dramatically expanded benefits.  These are wonderful new benefits for Connecticut citizens, but they are not free.  Unfortunately, the healthcare “reform” package approved by Congress and signed into law by President Obama, did nothing to address the real drivers of healthcare prices: the surging costs of medical care, frivolous lawsuits, and the lack of competition in the healthcare industry. 

Instead of supporting a government takeover of the healthcare industry, our Democratic federal delegation could have provided these benefits by voting for a system which introduced more competition into the system such as expanding Health Savings Accounts and allowing for the purchase of health insurance across state lines and by reforming our legal system to weed out frivolous lawsuits.  But they chose not to do this and now they are reaping what they sowed. 

So their instructions to the state Insurance Commissioner to be “vigilant” is akin to setting fire to a building and then criticizing the fire department for not putting it out in the manner they deemed to be appropriate.

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Copyright 2010. All rights reserved. Contact Steve Collins at scollins@bristolpress.com