Over at BNet, Ken Terry argues that while capping insurance rates may help reduce the number of outrageous rate increases and keep issuers from making those rather embarrassing mathematical errors, policy makers will have to address increasing costs on the provider side to really get spending under control:
Insurance companies do raise rates by ridiculous amounts; their executives earn too much; and the national companies, in particular, are hugely profitable. But it’s also true that, especially in Massachusetts, some hospitals and physician groups have held up insurers and employers for ridiculous payment increases. And there is no doubt that as the economy worsens and fewer people can afford insurance, more healthy people are dropping out of the insurance pool, driving up rates for those who remain covered.
Clearly, we need a new deal in healthcare. Just capping insurance rates won’t do it.
None of this takes away from the importance of ensuring that health premiums are reasonable or pressing for some kind of federal rate review authority, but since premiums are closely tied to the underlying cost of services, we’re going to have to get a hold of spending on the provider side.
Democrats and advocacy groups like HCAN do a commendable job in publicizing the access of some large insurers and a lot of that same energy could also be extended to pressing providers or lobbying for the relevant cost control measures. Stronger rate review provisions will help control costs over the short term and vilifying insurers can reap some political dividends, but we’re gonna have to look very closely at things like reimbursing for outcomes if we’re going to bring costs down over the long haul.