RATIONING IN THE REID BILL - ISSUE BY ISSUE - Price Controls

Rationing Issues with the Reid Senate Bill:
With the various concerns related to rationing and euthanasia, we will post a series of concerns - the following analysis being one among several.

Price Controls

In the Reid bill, a new provision –Section 1003 -- will allow the government to impose price controls.[1] With minor modifications, Section 1003, adopts the House bill provision allowing an exchange to exclude “particular health insurance issuers ... based on a pattern or practice of excessive or unjustified premium increases.” The provision, like in the House bill, will allow an exchange to exclude “particular health insurance issuers ... based on a pattern or practice of excessive or unjustified premium increases”[2]

The ability of Americans to choose to use their own money to obtain insurance policies less likely to ration in the exchanges would be destroyed. Originally, state-based "exchanges" were designed to allow comparison shopping among all insurance plans that provided the basic benefits. Now, however, the exchanges will limit the value of the insurance policies that Americans using the exchanges may purchase.

Not only will the exchanges be allowed to exclude policies when government authorities do not agree with the premiums, but they will be able to look at any increases plans charge, outside the exchange – and remove those insurers from the exchange. This would effectively allow the imposition of price controls, even outside of the exchange, limiting consumers’ access to adequate and unrationed health care. People would be limited in their ability to use their own money to save their own lives.

When the government limits by law what can be charged for health insurance, it limits what people are allowed to pay for medical treatment. While everyone would prefer to pay less – or nothing – for health care (as for anything else), government price controls in fact prevent access to lifesaving medical treatment that costs more to supply than the price set by the government.

Under a scheme of premium price controls, health insurance companies will ration lifesaving medical treatment as they are squeezed more and more tightly each year by the declining “real” (that is, adjusted for health care inflation ) value of the premiums they take in. These day-to-day rationing decisions will have the most direct and visible impact on the lives – and deaths – of people with a poor “quality of life.”

[1] Section 1003 creates a new Section 2794 of the Public Health Service Act (pp. 37-40)
[2] Ironically, Section 1311(e)(B)(ii) (p.143) retains the provision, added in the HELP committee, barring an exchange from excluding health plans “through the imposition of premium price controls.” Presumably the two provisions would be construed together to prevent the imposition of specific, explicit premium price control while allowing exclusion of insurers whose premiums the exchange deems to have a “pattern or practice” of being too high.

In addition, Section 1001, creating Section 2718(b) of the Public Health Service Act (pp. 31-32), mandates that group plans spend no more than 20%, and individual plans no more than 25% of their premium revenue on non-claims costs, limiting what can be used for administration, marketing, and profit. (The individual plan percentage may be increased in a state if the HHS Secretary determines that it would “destabilize” the individual market there.)