**Posted by Phineas
Sometimes I think one of the greatest acts of charity I could perform would be to buy progressives each a copy of Thomas Sowell’s “Basic Economics: A Common Sense Guide to the Economy,” because they clearly were not paying attention in high school or college:
The practice of offering relatively inexpensive health plans with bare-bones provider networks has created tension between making health care affordable and keeping it accessible. It’s set to come to a head this week in Olympia.
The growth of “narrow networks” in Washington comes as the Affordable Care Act limits the ability of insurance companies to control their costs. That’s made it harder to offer plans at a range of prices — something the companies want to do as they compete for comparison shoppers on the health exchanges.
Many companies figured out they could sell cheaper plans that offer consumers fewer choices of where to get care. That caught some consumers, and Washington’s insurance commissioner, by surprise.
Commissioner Mike Kreidler says companies need to justify those narrow networks.
Mr. Kreidler wants insurance companies to prove they need to narrow their networks; after all, under Obamacare, they’re not really allowed to run their own businesses anymore. So he’s proposing new rules, regulations, and reporting requirements that have even the people running Washington’s exchange screaming that this will increase costs to the consumer and hinder companies from providing effective service. Kreidler, however, like many other fans of bureaucracy, just doesn’t get it:
Kreidler says he doesn’t believe prices will increase. He sees himself as walking a fine line, but with his compass oriented decidedly toward the consumer.
“Oriented” like a missile aimed straight at their wallets, he means.
Moe Lane provides a succinct explanation of why, to put it kindly, Mr. Kreidler’s belief is… “ignorant:”
There are three major elements to healthcare plan decisions:
- Cost: How much does it cost per month or year, just to have it?
- Deductible: How much does the consumer have to kick in for any given procedure?
- Network: Who is willing to take you on as a patient, if you use that plan?
With me so far? Good. What Obamacare does is turn all of this into a zero-sum game: it mandates an across-the-board, let’s-slap-something-together, we-don’t-care-about-your-stinking-special-circumstances product and doesn’t really care how insurers and consumers cope with the situation. So the insurers are left with a quandary: if they want to keep the networks intact, thanks to the various mandated procedures and general bureaucratic detritus either the total cost will go up, individual plan deductibles will, or both. And the same is true for the other two categories: push one down and the other two rise. All the good intentions in the world will not alter this calculation.
To use another example, the three legs of Obamacare mentioned above are like a balloon: squeeze one portion, and another must expand. It’s a law of physics, just as the cost to do business and the consequent price of insurance policies are subject to immutable laws of economics.
But technocrats like Mike Kreidler think they can control complex economies with a flourish of their pen, without there being any consequences for others. Perhaps along with a good book on economics, he should learn a lesson in humility and study the parable of King Canute.
Meanwhile, Washington voters should think of Mr. Kreidler and his “compass” as their premiums go up. They elected him with 58% of the vote in 2012; 2016 would be a good time to undo that mistake.
(Crossposted at Public Secrets)