Will ObamaCare's Consumer Protections Actually Protect Consumers?


The Obama administration claims that its new authority to "publicize excessive, unreasonable [health insurance] rates will be a major protection for consumers under President Obama's health care law," according to an article in yesterday's New York Times. Much of the rate review called for by last year's health care overhaul will take place at the state level. But the federal government is expected to take over the process in 10 states where, according the NYT, the administration believes that "state officials do not adequately regulate premiums for insurance sold to individuals or small businesses."

One federal umbrella for every seven people.

So, how exactly are consumers protected by the federal government's oversight of state insurance markets? For one possibility, we can look to Massachusetts, which last year provided a handy illustration of what tough government oversight of health insurance rates looks like.

At the beginning of 2010, the Bay State's insurance premiums had been rising for years, and the overhaul did nothing to quell the increase—and may have made the prices even higher. In August of 2009, The Commonwealth Fund, a health focused non-profit research group, reported that with an average family price of just over $13,000, the state's insurance premiums prices were the highest in the nation, and had risen 40 percent since 2003, compared to 33 percent nationwide.

And so, in February, 2010, Massachusetts' Democratic Governor, Deval Patrick, used an emergency rulemaking power to give his office what The Boston Globe described as "sweeping authority" to regulate health insurance rate increases within the state.

Insurers warned that the rules would lead to ugly court battles. But two months later, the governor's office rejected 235 of the 274 proposed rate increases for the year. The result was not just legal action, but a severe temporary disruption in the state's health insurance market. In April, 2010, just days after the rejections were announced, nearly all of the state's insurers refused to offer new insurance policies to individuals or small businesses. The reasoning? Without the proposed rate increases, insurers argued, they would be forced to operate at a loss. For a little over a week, the state existed in what The Boston Globe called a state of "market chaos."

How hard can this health insurance business really be?

A judge quickly ordered insurers to reopen for business, but there were still aftershocks to Patrick's aggressive regulatory push. For the first time ever, insurers in the state began to sell policies that prohibited consumers from receiving services at some of the state's most widely recognized, popular—and, naturally, expensive—hospitals. So the effect of the state-imposed price controls was not to increase efficiency so much as to reduce access to some of the state's best providers. Second, the insurer worries about operating expenses turned out to be correct: The state's four largest health insurers reported combined losses of more than $150 million for that quarter—with three of the insurers explicitly blaming their losses on the rate rejections.

Now, it's true that under ObamaCare, the federal government does not have the authority to deny rate hikes outright. But it might as well. Rather than flatly reject rate hikes, the administration reserves the right to ban insurers that demonstrate a "pattern" or "practice" of excessive rate hikes from the law's new health insurance exchanges, cutting these insurers off from a major potential source of business.

Health insurance rate regulations in Massachusetts made a mess of the market. But it's not clear how well they protected the state's consumers. When it comes to the federal rules, it's probably safe to expect the same.


NEXT: Is the Tea Party Crazy or Just Nuts?

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  1. No guy in a wheelchair in the picture above? No Indian in full head-dress?

    1. No orientals either. Our CPA is racist, and must be immediately stopped.

      1. hey gramps, the preferred term is Asian. like when you were a kid and used to play Asian-American Telephone.

        1. So “gooks” is right out?

          1. You’re gonna get JapSlapped if you’re not careful.

            1. Who can know why the Right doesn’t attract more support from the Asian community with gems like this?

              1. You know who else didn’t like minorities…

                1. You know who else didn’t like minorities…

                  The other minorities?

    2. The consumer protection is so great, it cures wheelchair dependency.

      1. No, Pigs killed him:

        Police Shoot Man in Wheelchair

        But nothing else happened.


        1. To be fair, he was slowly rolling toward them.

          1. He could have easily broken a toe or cause severe shin pain for a few hours. Fucking wheeled menace.

        2. So, the one time a taser might have been appropriate, the idiot cops pull handguns. I am assuming the shotgun was used for the beanbag and wasn’t loaded with 00 buck.

    3. Is the guy on the right a Sikh ? or a conquistador ?

      1. Why is a black man wearing a redneck trucker’s cap? If he’s black, the bill is supposed to be flat and all New Era stickers should still be on it.

        1. Who can know why the Right doesn’t attract more support from the black community with gems like this?

          1. You so funny! Me rike you! Lide burrett tlain to Tokyo and meet Mr. Gaijin and lock out at karaoke, I tell you!

          2. and these are “the reasonable” gop’ers

        2. PWN’ED!

    4. Also, are any of those people Gay, Lesbian, Bi, Trans Gendered or “Other”? Cause it’s not immediately apparent that any of those people is Gay, Lesbian, Bi, Trans Gendered or “Other”.

      Therefore, RACIST!

      1. Clearly we are all racists, since none of this is at all funny or a joke. Thank Jeebus MNG and Tacos set us straight on that so we could mend our evil ways.

      2. I accidently watched Bill Maher a day early last week (before Nick’s appearance). Liberal comedian Mark Maron, to his credit, was mocking the audience he used to get on Air America. He said it got tiresome to discuss an issue, and then have callers complain that he hadn’t addressed the effect,say, on the trans-gender community.

        So your point about GLBT is funny, because it’s TRUE.

        1. I accidently watched Bill Maher

          GOOD LORD! I’m glad you survived and are still with us, Mainer.


      3. My gaydar tells me that the balding man on the left, who is scoping out the kid with the soccer ball’s crotch is gay.

  2. Jesus. Where is that guy in the brown shirt sticking his hand? That girl looks traumatized.

    1. And purple dress lady has the weirdest boobs ever. Are they concave? Are there four of them? Or are they just really saggy, thus representing aging consumers most in need of protection?

      1. The Federal Wondergirdle? lawsuit is surely coming. Assuming Francisco Pizarro, right behind her doesn’t claim her malformed body for Spain…

        1. Who can know why the Right doesn’t attract more support from the Spanish community with gems like this?

          1. I like when misguided concern troll is concerned on more than one thread, and multiple times within the same thread.

            1. Misguided Troll is misguided. But amusing.

            2. Misguided Troll is misguided. But amusing.

              1. Will this Consumer Protection board protect us from reason‘s server squirrels?

            3. It is making fun of MNG. Who is so ludicrous as to be outside the bounds of normal, human mockery.

              1. MNG had a comment like that in a thread earlier today, so I agree.

              2. So you’re sayin I’ve been PWN’ED!


            4. Misguided concern troll is actually making fun of MNG who went nuts about a joke I made in the morning links thread.

              1. You were quite niggardly in your humor

        2. I am in need of Consumer Protection from bad and patronizingly PC cartoonists. Oh wait THAT IS A LOAD OF SHIT.

  3. Will ObamaCare’s Consumer Protections Actually Protect Consumers?

    Let me tell you: NO.

    We’ve had in Mexico a Consumer Protection agency for better part of 30 years, created by one of the least effective presidents we ever suffered. The agency simply became (and that was the joke back then) an employment agency for left-leaning politicians, professors and catoonists (the agency publishes a monthly magazine that limited itself to criticizing people’s spending habits and TV ads.)

    Oh, you think YOUR agency is going to be different because this is America Rah-Rah?

    1. Who protects consumers from the government?

      1. Re: Pro Libertate,

        Haven’t you heard??? ANY attack on the institution of government is an attack on the democratic power of the people!

        Tony told me so just a few creepy posts ago!

        1. The Founders built in as many safeguards against majoritarian tyranny as they did against the tyranny of one man. Interesting, huh? Though I’ll say this–they didn’t go far enough.

          1. Absolutely. The limitations on democracy, to be frank, must be stretched to currently unimaginable extremes to achieve just government.

            1. It’s not that the government shouldn’t be accountable to the people, or that its very existence isn’t based on our tacit approval, but we have to have the sense to realize that giving the majority absolute power over everyone is a bad, bad idea.

              Liberty is a greater value than democracy. We can have a great deal of democratic elements in our system, but, unrestrained, it’s as dangerous as a mad tyrant.

          2. Eh. Without the 17th Amendment, I think you have a much different country.

            1. That’s one check that we should’ve kept.

              1. You are an ignorant racist who wants to bring back slavery!

      2. The government and the consumer are one and the same. There is no need to protect you from yourself. That’s something even libertarians believe.

        1. Re: Truth Will Out,

          The government and the consumer are one and the same.

          Ha ha ha! That’s funny!

          Oh my God, you’re serious….

          HA HA HA HA HA HA HA HA HA HA HA HA!!!!

        2. I could stop trying to stop myself from smoking pot, even to the point of threatening myself with jail, confiscation of my property, burdened with a criminal record?

          Stop me! Somebody stop me from hitting myself!

      3. “Who protects consumers from the government?”

        Smith & Wesson.

        1. Nice comment, Jared Loughner. This kind of violent rhetoric caused the right wing attack in Tucson.

  4. Silly goose.

    This is OBAMAcare. Everything will be perfect this time. Big government always gets it right.

    1. They’ll put some fresh meat in charge.

      Top. Sirloin.

      1. Mmmmmmm….

  5. Judging by the comments, this illustration is the best Friday Funny EVER!

    Thanks, Peter!

    1. +100

      1. Everyone needs to run out and get Peter Bagge’s book of all his cartoons from Reason Magazine. I got a copy last week,* and it brought back so many stories and topics I had long forgotten.

        *thanks, Mr. Cavanaugh, for the time and the swag you gave me when I dropped in last week.

        1. Ooooo – sloopy’s all name droppin’ and hangin’ with Cavanaugh and pickin’ up swag….

          Yeah, I’m JEALOUS

          1. If he had to go to Cali to get it, I’m not.

            1. Haha. I was down the street and I had yet to make my annual donation. I also thought it would be cool for my kids to see The Jacket in it’s vault. Alas, no Jacket viewing, but got a tour from Tim himself, and had a nice chat as well.

              Don’t be hatin’. Be appreciatin’.

  6. The Commonwealth Fund, a health focused non-profit research group, reported that with an average family price of just over $13,000, the state’s insurance premiums prices were the highest in the nation, and had risen 40 percent since 2003, compared to 33 percent nationwide.

    Bullshit, California wins that prize

  7. Tony’s contemptible infatuation with democracy is a component of many of his arguments.

    “People elect dudes. The laws and regulations and other shit the dudes propose and pass are the will of the people, obviously, because some people voted for him, and the fact that he was elected means imposing tyranny of all brands is perfectly justifiable.”

    That’s basically what his hellishly retarded argument constitutes.

    Perhaps he’s forgotten, in the fray of conjuring all of that copious bullshit, that there is a reason this country was founded as a republic, or, even entirely independent of that, why republicanism (in my view, at least) is just, and democracy is not.

    1. If you bring up Tony, does that mean you are trolling-by-proxy ?

      1. 10 points for the good joke, but I’m honestly enraged at how morons like him can honestly say the shit they say. It’s just unbelievable, and yet it permeates every aspect of our society.

        1. …you know, he may say that shit just to enrage you…

          Tony|7.12.11 @ 1:18PM|#
          …often I’m merely playing devil’s advocate. I try not to have too many deeply held beliefs, if I can help it.

          He’s playing you, and he’s not even here.

          1. Yes, Tony LOOMS LARGE.

  8. Speaking of consumer protection, 3700 post offices may be closing. They’re talking about staying competitive and all this rot. How about they make it legal for private shipping companies to deliver on weekends?

  9. Insurance rates should be public information, along with doctor and hospital fees. Why is consumer information ever wrong?

  10. It looks like they are still trying to come up with a free lunch. Ain’t no such thing. If people are injured or diseased it will cost a certain amount of money to care for them. The better the care, the more it generally costs.

    They can try to act like the law of supply-and-demand doesnt exist. It’s like the law of gravity–you can dislike it but it still exists and it applies to all of us. As the real estate collapse demonstrated, you may stall a free market for a while, but you can’t avoid it forever.

    1. Funny you should say that, I just sold my house today, and the price I got SUCKED. Free market libertarianism smacked me good and hard. Good think I have principles.

    2. There’s no truth to quality driving price, none, not in economics.

      There is one, true, great invariant law that drives the whole of economics — the Law of Prices. The Law of Prices holds that the winning bids of demand in the face of supply set the price.

      There is no such law as the law of supply and demand. Markets move on winning bids. It is the Law of Prices that drives markets.

      Whether any activity yields profit (i.e., is productive) depends on whether the intensity of demand and limitation of supply are such that the sum of sales of thing exceeds its cost of production.

      It’s illusory that “higher quality” medical care costs more because its “higher quality.”

      Rather because the incidence of many diseases and accidents are so low that bidders must bid high enough to induce others to become material capitalists in medicine and medical care as well as induce money capitalists to lend to these material capitalists such that interested parties can gain a return on investment to produce another day, i.e., earn a profit.

  11. Tigger resigning to spend more time with 18 year old daughters of friends.

    1. Now that whole “tops are made of rubber, bottoms made of springs” thing about Tiggers has taken on a much kinkier tone.

      I think the quick resignation usually means not only are the allegations true, but there is way dirtier stuff out there on them.

      1. The guy is crazy as a rat in lead paint factory. I mean, seriously seems to have irrational thoughts and behavioral control issues. At all times, not just in private.

      2. Another punk.
        Another cop-out.
        Another notch on my belt.

        1. this sounds like lyrics to a Black Flag song.

          1. That’s right. Just stay joking on the sidelines, punks. You do not want a taste of this.

      3. What amazes me is that these old congressional would-be internet regulators would have an affair with a twittering, facebooking, myspacing, text-blasting teenager.

        1. I’m not sure pushing a girl into not-quite-nonconsensual sex with you once counts as an affair.

          1. Fair enough… why do these old congressional would-be internet regulators force themselves on a twittering, facebooking, myspacing, text-blasting teenager?

            1. Maybe they fear death.

  12. Israeli orchestra to play Wagner in Germany


    1. scares the hell outta the slopes

      1. It’s gooks, you moron.

        1. Has zipper-head gone completely out of fashion since the end of the Vietnam War?

          1. damn you!!!!!

            1. You too srow. I raff at you!

        2. i thought it was zipperhead, no?

    2. So they’re playing some tunes where some batty, rotund broad sings about killing a wabbit… what’s the big deal?

  13. There is zero chance, absolutely no chance, that any government oversight of any industry will result in a better deal for consumers, much less trying to impose price controls on health insurance.

    Good god these people (obama administration) are morons.

  14. The Massachusetts example reveals market failure.

    It should be obvious that the market failed to respond to regulators in the ways their limited minds could only imagine.

    Because bureaucrats and technocrats don’t get the Science of Profit, they can’t imagine why any firm can’t keep operating at a loss, forever. They can’t imagine why money capitalists stop turning over cash to the firm’s executives to get converted into material capital only to see no return on investment.

    1. One scene from Atlas Shrugged that I found memorable was Hank Reardon asking the gathered government officials how their plan for the steel market could work when it meant he lost money on every ton poured. And their reply, you’ll find a way, you always do stunned him to the realization of their twisted thinking.

      I call that scene Reardon’s Epiphany.

    2. That’s a splendid name for it Mainer. The scene describes exactly what is the problem.

  15. Facts about the Federal rate review are helpful.

    10/50 states, 20% of the US, have no rate review authority and often expertise. So 1/5th of the US have no one looking after 1/6th of their states GDP and their financial wellbeing as taxpayers and consumers.

    As you said, the Feds have NO ability to force any rate changes. NONE, They are requiring insurers to put their rate increase over 10% for public view on a website. That is all. The idea is that sunshine will help mitigate insurer behavior and also let us all see the details of insurers.

    So yes the Feds can ban insurers who show a pattern of bad behavior from the Exchange market. That is fine with me.

    Insurers know what the rules are and they can decide to follow them or not play.

    The major carriers aren’t the problem here it is the Mega Life, Golden Rule and others that have sold limited policies, with high commissions and high expense ratios.

    The medical loss ratio (MLR)of 80% for individual plans and 85% for large group that insurers need to follow will help a lot. Some insurers operate at 60, 70, 75% which means they spend to much on admin and revenues and less on care.

    As a consumer I look forward to insurers being accountable to prove their case on needing more premiums. If they deserve them then give it to them. If not then consumers win.

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