Politicians understand that simply telling the public how concerned they are about solving a ubiquitous burden can get them positive traction. A meticulous person knows that saying and doing are two very different things.
Three prominent politicians highlight the lowbrow ways of feigning concern before exacerbating big problems.
Republican President Richard Nixon promised to curb rising fuel prices. He tried to keep that promise by controlling the price of oil. This reduced the willingness to produce, led to gas shortages, hours, and increased reliance on the United States and its enemies. A failed policy defines an “unintended consequence.”
Democratic President Jimmy Carter constantly talked about his plans to lower the “Misery Index” during his campaign and on his first day in office. The Misery Index, devised by economist Arthur Melvin “Art” Okun, measures inflation and unemployment over the past 12 months.
Carter inherited the 12.66% misery index from President Gerald Ford in 1976. By the time Carter ended overtaxing and overregulating the market, he left Republican President Ronald Reagan with a misery index of 19.72%. This meant nearly 20% of the population was clearly miserable until President Reagan cut taxes, eased regulations, and lowered his index to 9.72% by 1988.
Just as Nixon and Carter were embarrassed by exacerbating the problems they promised to solve, Democratic Governor Jared Polis of Colorado faces the same dilemma. Mr. Polis has promised to reduce the cost of his health insurance before each of his two gubernatorial elections and throughout his six-year term.
In 2021, Police & Company tried to overthrow President Nixon and introduce price controls in insurance. House Bill 21-1232 requires each insurer to offer state standard plans “adjusted for medical inflation and at least 5 percentage points lower than the premium rate of the medical benefit plan offered by the insurer in calendar year 2021.”
The “adjusted for medical inflation” clause negates this requirement because rising medical costs and “medical inflation” are the same thing. Even if this requirement were a challenge, it wouldn’t make sense. No one gets into the insurance business for fun. So it’s safe to say that no insurer is willing to take a loss to comply with state pricing mandates. Businesses, including non-profits, cannot survive with losses.
In addition to price controls, the Police and other Democrats imposed political obligations on insurance companies. One is to force all insurance to fully cover abortion without out-of-pocket or other forms of patient cost. That’s why insurance companies are trying to sell policies that cover the cost of potential abortions to those who would never seek abortion coverage, such as the elderly, singles, nuns, gays and infertile couples. Another obligation requires all policies to cover the full cost of fertility treatment.
Every political mandate raises premiums for Colorados, even though the law requires them to lower premiums.
Insurance companies that cannot make a profit under state regulation simply shut down, pack their bags and walk away. Doing so will reduce competition in the insurance market and further increase “medical inflation”.
The first half of 2023 saw the outflows of Bright Health, Humana, Oscar Health and Friday Health Plan. That means more than 40% of the companies that offered insurance across Colorado last year lost money. Less competition means less pressure to offer competitive prices, resulting in more inflation in health insurance.
Given this overregulation and shrinking provider market, it’s no surprise that Colorado insurers recently presented to the Colorado Department of Insurance plans to raise premiums by 11% in 2024. So-called “state option plans” (plans designed by the state and mandated by insurers) could be raised by 8%. State option plans cover 12-14% of the market.
The Department of Health could try to push insurers to keep prices 5% below 2021 rates, saying they have “adjusted for medical inflation.” Over the past 12 months, US healthcare inflation has averaged 0.1%. In Colorado, overall U.S. inflation leads the country, hovering between 7% and 8%, and even higher in some areas. If insurance companies keep prices like they are in 2021, they will go bankrupt.
The Police and Congress’ promise to make health care affordable will impose new costs on insurers, which will be passed directly on to consumers. If the price gets too high, consumers will get a pass and it will cause insurers to pull out. We can’t afford to lose any more, so the Department of Health will do a disservice to Coloradoans by refusing the proposed price increase.
Everyone listens to politicians, but few see the big picture and know that politicians do. That’s why they talk about a good game and then refute the word and push the bill on the consumer.
