Never trust a computer you can't throw out a window - Steve Wozniak

The Cost Of Care

by West Virginia Rebel

You will be shocked-shocked, I say-to learn that forcing insurance companies to lower their prices actually makes it more expensive for the rest of us.

New research shows that the cost of health insurance for a typical family increases about $100 per month when state governments limit price adjustments based on factors like age, health or risky behaviors such as smoking.

The finding by Brigham Young University economist Mark Showalter is one of several examples of how one state’s set of rules can result in widely different prices than what’s found in the state next door. Perhaps the most eye-opening contrast exists in Trenton, New Jersey, where premiums cost about twice as much as those sold across the Delaware River in Pennsylvania…

Seven states prevent insurers from adjusting prices based on one or more factors like age, health status or risky behavior. The researchers found such rules - known as community ratings - increased family premiums between 21 and 33 percent.

The rule is intended to promote equity but may consequently make insurance too expensive for healthy people. The study found New Jersey’s strict form of community ratings responsible for premiums set two to three times higher than if the requirement were not in place.

Yet another lesson on theory versus reality. But theory always sounds easier to try out.

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