Obama Either Is Too Stupid To Understand Economics, or He Does and He is Just Trying to Wreck the Healthcare System

Obama is now endorsing a new Health Insurance Rate Authority, which would effectively regulate health insurance premiums. I think that if he has this introduced in Congress as a separate bill, it has a good chance of passing. It would be very hard politically for some of the Republicans to vote against it because they it will look like they are completely in the pocket of industry and won't vote any even the simplest measure to improve healthcare in America.

However, from a simple economic point of view, this measure will probably not actually control healthcare cost increases very much, but would instead hurt quality and possibly access. Let's say the healthcare costs that the insurer pays goes up 8% in a year. Is there any guarantee that this government committee will allow them to increase premiums by 8%? I'd say that chances are the answer will be "no" and the insurance companies will try to make up for those lost premiums in other ways. Remember, profits are revenues minus expenses, so if they can't increase revenues they will have to go after expenses. First, they will restrict access to the more expensive medicines and therapies, making it more difficult for the sick to get the access they need. Basically, expect a bigger headache if anything every goes wrong in your life. Second, they will make it even tougher for high risk patients to ever get an individual policy. So in other words, Obama's little committee will likely be hurting the quality of care and hurting access, two things that he claims to be against but maybe he understands that if he does that, people are more likely to want a government run healthcare system.