California think they have found the answer.
“The bill in question is AB 52, introduced by Assemblyman Mike Feuer (D-Los Angeles). It would prevent health insurance premium increases from going into effect without the prior approval of the commissioner of insurance or the director of the Department of Managed Health Care, who share jurisdiction over health insurers.
The bill would give insurance regulators the same prior-approval authority they were given over auto and homeowner policies by Proposition 103 in 1988. Under current law, California health insurance regulators can’t reject a rate increase even if they think it’s unreasonable — they can only try to jawbone the insurance company or shame it with a public objection.”
Small business support this measure. That is likely because small business care more about cost control than the quality of health care.
If the state forces insurance companies to cut premiums, however, something has to give. Likely there will be more rationing, physician and hospital payments will be cut, and the quality of care will decrease. Although there is much waste in healthcare, cutting spending with such a blunt tool as AB52 will decrease the quality of health care. At this point, however, reducing (or simply holding constant) health plan premiums may be a more important goal than improving quality.