Another approach to health insurance: deregulation

In 1993 Maine enacted health insurance regulations that, among other things, told insurance companies that they pretty much had to charge the same premiums to all who applied.  This concept is called “community rating”, and it is an essential piece of Obamacare. 

There is only one problem.  Older people tend to have more medical claims than the young, and women tend to have more medical claims than men.  But, in Maine, the actuarial tables were thrown out per state regulation. 

However, in doing so, the state caused 4 of the top 5 insurers to leave the state.  And, premiums skyrocketed. 

…the state entered an insurance ‘death spiral’ in which premiums didn’t cover underlying medical costs.  That leads to higher premiums, consumers dropping coverage as a result, and still higher premiums in turn.

Beginning in 2013 that will change.  People will now have a choice.

…a married couple age 40 to 44 with one child will pay $1919 a month…in 2013 if they chose to re-up their current policy.  If the same family switches to the new health plan, or buys the plan for the first time, their premium will fall to $920, a 52% decrease.  A couple over 60 could buy the same policy for $1290, down from $2466 under the old system.

Why, you ask?  It’s simple.  Think of your auto insurance.

If the same regulations applied to it, and the auto insurer couldn’t charge more for a driver who had 5 DUI’s than they could for a driver with a clean record, guess what would happen to the premiums of the driver with a clean record, particularly if the driver with the 5 DUI’s could drop into and out of the market at will.

Policies under the new law in Maine are not identical to those under the old plan so an exact comparison is difficult.  But, the citizens of Maine now have a choice, and choices lower prices.

Of course, Obamacare will change all of that, not only for the folks in Maine, but for all of us.

 

7 replies
  1. sammy22
    sammy22 says:

    If you want deregulation, as stated in the title, check how well deregulation has worked for the airlines and public utilities.

    • GdavidH
      GdavidH says:

      I would still rather not keep insurers of multiple DUI drivers in business with increases in my premiums. Use logic, rather than emotion, ?for a change.

  2. Plainvillian
    Plainvillian says:

    Here’s my question about Obamacare:? How is healthcare insurance interstate commerce if I, as a resident of Connecticut, I cannot buy the same policy provided to a resident of, say Wyoming, provided by a Wyoming insurer??

    • Lynn
      Lynn says:

      You can only buy a policy as provided by your state’s licensing presently under Obamacare. The Gop presented a plan to sell policies across state lines. President Obama listened to Paul Ryan and others, smiled, nodded and left the room.??That is the end of that story.

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