Rising insurance costs crimping companies' plans

Western New York's three big health insurers are again seeking to jack up rates by significant amounts in some cases - and some employers are taking desperate measures as a result.

BlueCross BlueShield of Western New York is asking for double-digit hikes for most plans, while Independent Health Association and Univera Healthcare are seeking increases of mostly less than 10 percent.

The price hikes, detailed in the carriers' filings with the state Department of Financial Services, mark another year in which premiums are rising much faster than the rate of inflation or household income.

Already, that's crimped any plans for growing his company, Buffalo-based commercial real estate developer Plaza Group, which has 11 employees. Between health and workers compensation insurance, the costs of adding staff are prohibitive. "I wouldn't consider hiring anybody else now, anybody who would need health insurance. It just isn't worth it," he said.

He turned to Buffalo-based HR Benefit Advisors to find a less expensive provider for the half-dozen employees that get coverage. "I've had enough. It's just lunacy," he said. "I want him to look into something that's going to put a cap on this nonsense."

The main culprit is lack of a national market for health insurance, which would greatly increase competition and thus lower costs to the consumer.

In turn, the main culprit for the lack of a national market is the 1945 McCarren-Ferguson Act, which exempted health-insurance providers from federal anti-trust regulation so long as the individual states took on the task of such regulation. The rhetoric and intent of the Act might have been consideration of the Tenth Amendment, but the effect has been different. The upshot has been to disempower consumers by making them, in effect, captive customers in their respective states; the wildly varying intrastate regulations providing an extremely powerful incentive to merge and “cartelize” within the individual states, while providing no incentive to trade between them. The lack of antitrust oversight, in turn, encourages, all those practices the feds claim they hate: price-fixing, rate-setting, and, in general, “restraint of trade” for the purpose of keeping prices high.

In principle, I’m not in favor of federal anti-trust legislation, as its history proves it usually hinders competition rather than promotes it. However, in the case of health insurance, I would certainly approve of a situation in which federal regulation at least made everything uniform so that an insurer in Wisconsin could seek a buyer in New Jersey without the insurer’s having to adjust his entire business operations to New Jersey state insurance law. The out-of-state policy could be regulated by New Jersey law in terms of possible situations like abuse, breach of contract, etc.; but the point is, the coverage of the policy wouldn’t have to adjust to New Jersey law and its particular special interests, lobbyists, etc.

It’s not ideal, but it’s better than the existing situation — which caused insurers to become, effectively, a state monopoly; and certainly much better than the ObamaCare alternative — which will incentivize health insurance to become a federal monopoly. Neither McCarren-Ferguson nor ObamaCare promotes INTER-state commerce, and neither does a thing for promoting or increasing competition.

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