“Fearing that health insurance premiums may shoot up in the next few years, Senate Democrats laid a foundation on Tuesday for federal regulation of rates, four weeks after President Obama signed a law intended to rein in soaring health costs.”
In other words, they realize the bill they passed will skyrocket insurance rates (40% estimated increase in individual premiums, above the already expected increase) and now they want to control premiums now, too.
Let’s pretend you’re a company with a, say, 2% profit margin. Let’s say one line item of expenses (health care claims) equals 84% of your revenue. Now, say those costs go up…by 40%. How much does your revenue need to increase to cover those higher expenses?
That’s right, your premiums will have to increase 33.6% to cover that increase in costs. Do you think the federal regulator will approve that increase? Here’s a hint:
“After a hearing on the issue, the chairman of the Senate health committee, Tom Harkin, Democrat of Iowa, said he intended to move this year on legislation that would ‘provide an important check on unjustified premiums.'”
Since the politicians keep linking insurance premiums to GDP growth, what if they only approved rate increases that were at par with GDP growth? What a company’s profit margin be then?
-27.6% in year 1.
-41.1% in year 2.
Somewhere between years 5 and 6, they have a 100% loss.
Before that happens, you will not be able to buy individual health insurance, except for from the government.
Which is what Obama and the Democrats have wanted all along.
Soon, the government will be telling you what to eat, what outdoor activities you can do and what medicine you can and can’t take.