Playing Chicken In The Bay State

Somebody, pass the popcorn. The Great Massachusetts Insurance War is getting intense.

As both Kim and I have been noting, there’s a drama going on in the Bay State that is providing a glimpse into the potential future of ObamaCare. A few years ago, the state decided that the health insurance biz needed some intense hands-on management that only the learned solons of elected office and their trusted hordes of bureaucrats can provide. First up, they decided that everyone had to have health insurance. Then, naturally, they had to start tightly regulating the insurance rates — after all, a captive clientele that has to buy a product is ripe for exploitation.

Well, the insurance companies saw that this captive market was a mixed blessing. The model the state was proposing would guarantee them profits, in theory, but also meant that those profits would be limited — and, if the state deemed it necessary, curtailed.

That theory went right out the window in short order. Last year, quite a few insurance companies ended up losing money doing business in Massachusetts last year. So they did what any company would do — they adjusted their rates and policies to avoid more shortfalls.

Which ran afoul of the state, which didn’t like the idea of having the rates go up — especially if they had to sign off on those increases. After all, the people who’d be paying those higher rates are the same people who decide whether those politicians get to keep their jobs. So they said no to the insurance companies — six out of seven of all the planned rate hikes went in the trash can. The insurers would just have to suck it up and keep losing money.

The insurers, not expecting such a rejection rate, had already posted the proposed new higher rates. So they yanked them down and put a hold on new policies while they sued the state, saying “you can’t really expect us to keep losing money indefinitely, can you?”

Stupid companies. Of course they can. The politicians are caught between the insurers and the insured. The insured can vote them out of office; the best the insurers can do is fork over bribes campaign donations. And if they’re already losing money, they probably have relatively little cash to fork over.

So the insurers have their big gun: they can walk away and simply stop playing the game.

It happened before. Years ago, when Massachusetts tightly regulated the auto insurance companies, the number of providers dropped year after year, and rates skyrocketed. It wasn’t until the state cut back on the regulations that providers returned, and rates plummeted under the power of revived competition.

But when was the last time a politician — especially a Massachusetts Democrat — actually learned from history?

Remember, folks, the Massachusetts health insurance plan is one of the most important models for ObamaCare. What’s happening there is a glimpse into what we all have to face in the very near future (the Massachusetts plan is only a couple of years old, and already falling apart).

Keep on keeping on, folks. We all know that chicken was just asking for it, dressing so scantily and acting so provocatively…

Hey, who knows? Maybe the chicken even likes it…

Union bosses look out for themselves; rank and file, not so much
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