Obamacare

Health Insurance Rate Hikes: Unreasonable if Excessive, Excessive if Unreasonable

|

Unreasonable!

A lawyer friend once joked to me that every time the government passed a regulation based around the word "reasonable," it meant full employment for another class of lawyers. Between the FCC—which earlier today gave itself the right to determine what counts as "unreasonable" network management on the Internet—and a new rule governing health insurance rate increases released by the Department of Health and Human Services, the government put a lot of lawyers to work today. As The New York Times reports:

The new health care law, signed in March by President Obama, calls for the annual review of "unreasonable increases in premiums for health insurance coverage." The law did not define unreasonable.

But HHS did! If a health insurer proposes a rate hike of more than 10 percent, the rate review process kicks in. That doesn't mean, however, that there's a bright line to determine what counts as unreasonable.

Under the new regulation, a federal health official said, "we are not setting an absolute numerical standard for whether a rate is unreasonable." Instead, the proposed rule lays out factors to be considered. It says that a rate increase will be considered unreasonable if it is excessive, unjustified or "unfairly discriminatory."

A

An unreasonable ride.

rate increase is defined as excessive if it "causes the premium charged for the health insurance coverage to be unreasonably high in relation to the benefits provided."

In addition, under the rules, the assumptions used in calculating a rate increase must be based on "substantial evidence."

Thanks to this clarifying list of descriptors, it's all makes sense now: A rate hike is unreasonable if it's excessive. It's excessive if it's "unreasonably high." If you're worried that this sounds circular, then let me suggest that you hop on the Gravitron, start spinning, and let me know when you can't tell which way is up.

Whatever. HHS might as well have just declared that "they're unreasonable when they're too damn high, and that's whenever we say so. The end!" These regulatory definitions are all spin, and they're all mostly worthless; evidence becomes "substantial" whenever HHS says it does, based on whatever it wants: legal criteria, regulatory intuition, coin-toss, or the winner of a three-out-of-five Twister tournament.

A long night at HHS.

Earlier this year, when a group of state insurance commissioners was putting together recommendations to HHS for a different regulations, one of them noted its potential impact and said very earnestly that "we don't want to drive companies out of business by being arbitrary."

That's a nice sentiment, but it's more than a little clueless: When writing guidelines for essentially discretionary rules like those we saw today, the entire regulatory process is arbitrary. There's no reason that insurers should be forced to spend some specific percentage of their premium revenue on clinical expenses, no correct definition for what counts as a clinical expense or an administrative expense, and no matter how many unpleasant-sounding adjectives you pack into your regulatory definition book, no non-arbitrary way to determine which rate hikes are unreasonable.   

NEXT: Free Speech and the "White Nationalist" Radio Host

Editor's Note: We invite comments and request that they be civil and on-topic. We do not moderate or assume any responsibility for comments, which are owned by the readers who post them. Comments do not represent the views of Reason.com or Reason Foundation. We reserve the right to delete any comment for any reason at any time. Report abuses.

  1. Does that headline mean a great big DRINK! for all of us?

  2. I’ve stated this in previous threads, but for my provider rollover this year they DOUBLED the price of our PPO premiums. Most of us went to HSA accounts because the premiums are that much cheaper.

    If anyone seriously believes that HHS is going to find an Insurance provider who didn’t do their due diligence in determining what will pass under the “reasonable” clause in this clusterfark of a healthcare bill, I also have a bridge to sell them.

  3. A rate hike is unreasonable if it’s excessive. It’s excessive if it’s “unreasonably high.”

    You’ve been Sebeliused. Congratulations.

  4. Why the fuck can’t they just call “CALVINBALL” and be done with it?

    1. This would be funny if it weren’t so true.

    2. You win the internets.

      1. No. They are mine!!!!

  5. I wouldn’t mind the rate hikes if they would just bring back the Quaalude.

  6. no non-arbitrary way to determine which rate hikes are unreasonable.

    They’re unreasonable if the customer chooses to cancel the coverage. Anything else — anything by the government — is arbitrary.

  7. The Gravitron- the best carnival ride there is!

    But not when it comes to politics.

  8. In fact, under new health care reform your health insurance company will no longer be allowed to cancel your policy if you get sick, we should be doing this already! search online “Wise Health Insurance” it is a good place to find insurance if you have illness like me.

  9. In the 1st picture it says
    “Zombies vs Robots” an incredible and intriguing thought.

    Sadly the article was lacking of zombies or robots, and certainly of robots vs zombies.
    My two favorite existential threats to humanity.

    (Though one is fictional, and even if real would never really be a threat to humanity, and the other is real, inevitable, and probably in the end not vulnerable to firearms.)

  10. Thanks for share such nice informative information really very nice article ..

  11. “When writing guidelines for essentially discretionary rules like those we saw today, the entire regulatory process is arbitrary.”

    That’s the result of putting people in charge who think the world is too complicated to put everything in black & white and the world is really shades of gray. There’s some truth to that, but law that is not black & white is arbitrary, capricious and subject to corrupt manipulation.

  12. It’s fine to increase its rates and fees, just as long it also compensate my needs and have an excellent service.
    We help Americans find jobs and prosperity in Asia. Visit http://www.pathtoasia.com/jobs/ for details

  13. Unfortunately too many are naive to three points: (1) Medical prices (the key driver of health insurance prices) are not set by insurers. They are set by medical providers and have been largely a proverbial Nantucket sleighride for decades. (2) Health insurer profits, though they often sound large in “dollar terms”, are quite low in percentage terms compared to any other investment-grade industry. The BS rhetoric vented against “fat insurer profits”, “obscene spending by top management on its own entertainment’ and the like is simply not accurate, as good as it may make frustrated people feel. (3) The health insurance rate increase standards were developed for exactly the purpose suggested by the article: To open up unlimited private lawsuits against insurers who raise rates – regardless of their actual legitimacy – a cute strategy by Sec Sebellius to force private health insurers out of the market. Having failed to accomplish this by erecting a tax-subsidized “public option” health plan, she and the administration have provided themselves another strategic avenue to the same destination.

    The result will be that far fewer private insurers remain willing to risk the investment needed to continue selling health insurance. Why should they? Under the circumstances, there are more prudent things for them to do with their stockholders’ money.

    Bear all this in mind if your thoughts happen to wander to Obama’s endless claims that “you can keep your health plan”. Cynicism manipulation masqueraded for kindly paternalism – well, it was in everyone’s best interest – right?

    On the Congressional side, we heard Mm. Pelosi tell us we will “like it once we understand it”. We were told what we wanted to hear in order simply to quell resistance. When do we realize we’ve really been told, “Quit whining, you’ll get over it. Once you see how great a publicly run and controlled health system is, you’ll understand it’s better for everybody.”?

    Now, back in real time, Sec Sebellius is neither stupid, nor working contrary to the desires of the President. She is simply moving ahead with a calculated strategy to clear obstacles facing the march toward governmentization of health care.

    1. Absolutley correct.

      Wait until the other shoe drops and the government begins to tell providers what they can do to “help” you and what they will be allowed to accept in payment.

    2. Shorter version: regulate health insurance to death, then, when it finally dies, call the death a “market failure” which justifies a complete government takeover. Use “market failure” BS to deny claims of socialism. Lather, rinse, repeat.

  14. I challenge anyone to show me a legal medical expense policy from any state that currently allows the insurer to “cancel your policy if you get sick.” If they do exist, it is the fault of the state, not the insurance company, and didn’t require a federal Frankenstein creation to fix it.

  15. The entire issue of what comprises a “reasonable” rate increase should be left in the hands of actuaries. You can define what comprises “reasonable,” while it is very difficult to define the negative other than to say “it’s not reasonable.” It certainly shouldn’t be in the hands of regulators at either the federal or state level, as they have neither the training nor intelligence, usually, to understand the complexities of the subject matter, unless, of course, they happen to be full fledged actuaries themselves, in which case they are not functioning as such in their current position, and so should disqualify themselves from acting in an actuarial capacity in that decision process.

  16. I challenge anyone to show me a legal medical expense policy from any state that currently allows the insurer to “cancel your policy if you get sick.”

    So true. They can raise your rates, but they can’t cancel your policy just because you got sick.

    Now, if you were already sick and lied about it to get the policy, they can (and should) cancel your policy.

    1. But what about my basic human right to buy “insurance” to pay for treatment of a pre-existing condition?

  17. Sebelius is directly responsible for the murder of over 60,000 unborn innocents. The legislature and Voters in the state of Kansas wanted to close down the death factories, what ‘feminist’ call ‘Women’s clinics”
    The Scary, Skeletal, Social X-Ray Sebelius would not allow that to happen because her NUMBER 1 political contributor, George ‘The Baby Killer’
    Tiller, made all his money killing babies. Sebelius would basically funnel taxpayer money to Tiller and he would then KICK IT BACK to her under the guise of “Campaign Contributions”
    Tiller has been sentenced to Hell for Eternity and this fucking cunt deserves the same fate.What a piece of
    absolute human shit she is.

  18. Sebelius is directly responsible for the murder of over 60,000 unborn innocents. The legislature and Voters in the state of Kansas wanted to close down the death factories, what ‘feminist’ call ‘Women’s clinics”
    The Scary, Skeletal, Social X-Ray Sebelius would not allow that to happen because her NUMBER 1 political contributor, George ‘The Baby Killer’
    Tiller, made all his money killing babies. Sebelius would basically funnel taxpayer money to Tiller and he would then KICK IT BACK to her under the guise of “Campaign Contributions”
    Tiller has been sentenced to Hell for Eternity and this fucking cunt deserves the same fate.What a piece of
    absolute human shit she is.

  19. What, just 60,000? Ha, ha! Let’s shatter that record in 2011!

  20. Accumulating much producing technology, Moncler Jackets have been popularized in many areas. We can find many Moncler Shop in different countries of the world.

  21. Do you know Vibram Five Fingers shoes? Vibram fivefingeres kso men and FiveFingers Women’s For the fashion design,top quality. http://www.getvibramfivefingers.com

  22. They’re unreasonable if the customer chooses to cancel the coverage. Anything else — anything by the government — is arbitrary.

  23. The Health Aegis Agency has warned added efforts accept to be fabricated to barrier the problem.

  24. Bob starred to stand up and jostled the table, spilling his coffee over his notes. “How embarrassing. I am getting so clumsy in my old age.”

Please to post comments

Comments are closed.