By Paul Gessing: Guest columnist
There has recently been a great deal of consternation and concern over the rate increase enacted by Blue Cross Blue Shield New Mexico (BCBS).
The company, a “mutual” firm legally obligated to re-invest any profits back into the company, had originally requested a 24.6 percent rate increase. Then, just as the Public Regulatory Commission (PRC) was holding public hearings on the issue, an agreement was reached that allowed Blue Cross to raise rates by 21 percent this year.
Approval of the rate hike, absent public input, generated a public outcry.
But I believe anger at Blue Cross is misplaced. It is our political leaders in Washington and Santa Fe who have gotten us into this mess. Given the recently signed health care law in Washington, they are continuing to make the situation worse.
The problem we face in New Mexico (and nationwide) is the rapid rise in health care costs. The truly unfortunate thing is that Washington’s “reform” bill will do nothing to mitigate this problem and is actually designed to make the situation worse.
Notably, the rate hike agreement applies to individual plans, but not group plans. I happen to own an individual health savings account plan and will be among the 40,000 New Mexicans impacted under this rate hike. My insurance costs will rise despite the fact that health savings accounts like mine actually reduce health care costs.
In Indiana, for example, the state government has given government workers a health savings account option. Participants in the new plan ran up only $65 in cost for every $100 incurred by their associates under the old coverage.
Not only are these “consumer-driven” plans not encouraged in the health care bill, the new law is actually going to make consumer-driven plans like my health savings account less attractive through additional, onerous rules and regulations.
Consumer-driven plans are just one possible solution, however. In a competitive health care market, there would be no need for the PRC to hold hearings on rate hikes, nor there a need for government-enforced transparency.
Take the car insurance marketplace, for example. There are dozens of companies competing to provide New Mexicans with the best, lowest cost car insurance. Why is that? The single biggest difference is car owners pay for their insurance and they have incentives to both shop around and not over-use their insurance.
What can be done? The simple fact is that at this point, if we want to control health care costs, we need to rely on the courts to abandon ObamaCare. This is a real possibility as the federal government has never forced Americans to purchase any product in the past, so there are real Constitutional questions here.
Obama’s health care plan is doomed to fail because, by mandating that individuals purchase health insurance, it only reinforces the third-party payment system and further reduces incentives for people to be responsible and care what they spend on health care.