Saturday, August 28, 2004

Low Prices - Good or Bad? Both apparently...

It never ceases to amaze me how this country can both love and hate low prices in the same breath. You can observe this interesting irony in a recent article in the Honolulu Advertiser in Hawaii, where the writer lauds the omniscient state's oversight of prices on the market as a new insurer comes to town. In order for Tempe, Ariz.-based Summerlin Insurance to move in, they must submit a premium pricing plan to the state for approval.

In doing so, get this: the government will ensure low prices for consumers by making sure that Summerlin does not drop its premium prices too low.

Read on if you don't believe me:

Since the state began regulating health insurance premiums in 2003, insurers must get approval for their rates. They cannot charge low premiums that effectively would keep out competition, he said. Before state oversight, insurers could charge any premiums they wished.

"Today's playing field is much more level with the oversight law," Tom said.

Mona Tracy, a retiree living in Mililani who pays for her own health insurance, is eager to see Summerlin go head-to-head with HMSA and Kaiser.

"We'll have more competition," she said. "That's what we need."

No, what you need is a government that doesn't have a policy of banning low prices in order to have low prices.

I like this paragraph in particular:

In the mid-1990s, Hawai'i had as many as 10 health insurers. But many couldn't compete because nonprofit insurers dropped their prices low enough to make it hard for newcomers to gain market share, Tom said.

Those damn non-profit organizations. Always looking for the quick buck.

By the way, the writer decided to just gloss over this little tidbit:

Travelers and Aetna had a tougher time because they paid the state's 4.265 percent tax levied on for-profit health insurers. Summerlin faces the same problem because a bill to waive the tax didn't make it through the Legislature in April.

Oh yeah. Taxes. I'll be damned.


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