Regulating Rates

In the lead up to today’s health-care summit, President Obama’s new health-care “reform” proposal has been touted by the White House as putting “American families and small business owners in control of their own health care.” In politics, however, rhetoric is often substituted for reality. The real control is given to government in Obama’s plan.

Take for example, the president’s plan to give the federal government oversight power for insurance rates (read: price controls). That means government dictating what it views to be acceptable or unacceptable rate increases. Forget what the actual costs to provide health care are.

That type of artificial pricing will invariably lead to where all government price-control measures lead: less supply and less quality. Prices are the market’s way of allocating resources. When they are artificially capped, the efficiency of that allocation is hindered. The result is less people getting the resource (and/or lessened quality of product). Remember the gas shortages and long lines back in the 1970s thanks to price controls on gasoline? The same artificial scarcity can happen with other products and resources like health insurance.

This is not to even mention the federal government’s utter lack of constitutional authority to regulate health-insurance rates — especially since allowing the sale of insurance policies across state lines (an activity that would fall under the commerce clause) is not part of the “reform.”

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One Response to Regulating Rates

  1. […] given health service is not going to lower through Congress simply decreeing it so. Price controls often lead to less supply, longer waits and reduced […]

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