Massachusetts Leading the Way For Better or Worse Examiner.com
Governor Deval Patrick of Massachusetts announced this week that he was rejecting all rate increase applications submitted by the health insurance companies that backstop the state's "public option," aka Commonwealth Care. As Isaac Newton might have put it, for every action there is an opposite and equal reaction. Actually, the governer's shot will be followed by more than one carom.
First, we have seen this movie before. Predictably, the governor's spokesman cited "relief for working families and small businesses" as the motivation. Coming in an election year, this action says more about the perceived need to strengthen Governor Patrick's re-election prospects. More importantly, capping insurance premiums for political gain brings to mind New Jersey's experience with auto insurance in the eighties, when well over half the Garden State's drivers were assigned to a "high risk pool" by the insurers as a mechanism to get around caps. A similar response by the insurance industry occurred in Florida relative to writing homeowners policies in the nineties. Essentially, the insurers simply stop selling unprofitable lines in order to protect their ability to operate (see: wage and price controls under the Nixon administration).
