Roper: Insurance hikes aren’t rate increases, they’re tax increases

By Rob Roper

Earlier this month the Green Mountain Care Board (GMCB) approved insurance rate hikes of 12.4% for Blue Cross Blue Shield and 10.1% for MVP. GMCB chairman Kevin Mullin admitted this is “unaffordable” for consumers, buuuut what ‘r’ ya’ gonna do? At what point will Vermonters (or everybody for that matter) wake up to the fact that allowing government involvement in health care is a very expensive mistake?

It will probably be a while because ratepayers, I suspect, aren’t as angry with the politicians as they are with the insurance companies, and this isn’t really fair.

Rob Roper

Rob Roper is the president of the Ethan Allen Institute.

Why is the cost of private insurance going up so much? According to VPR, “Mullin said the cost shift is the result of years of underfunding in the Vermont Medicaid program. Medicaid reimbursement rates, Mullin said, no longer come close to covering the cost of care for the low-income patients that qualify for the program,” which means those costs get shifted onto your BCBS or MVP bills — it’s a hidden, stealth tax on health care premiums the pols never have to levy or vote on.

This is as devious as it is unfair, but that’s sadly the objective: take your money to spend on programs (buy votes) without having to suffer accountability for taking your money (lose votes). It gets even worse because the anger being successfully deflected onto the insurance providers means the politicians get to campaign for greater power and regulation over those companies, which just perpetuates the problem. It’s brilliant. Evil, but brilliant.

Imagine if the headlines were more truthful: “Legislature approves 12% tax increase on private health insurance policies to subsidize Medicaid.” That might ripple through the public mindset a little differently and put pressure on politicians to actually fix the root cause of high high prices — themselves.

This is not to let the insurance companies completely off the hook. These 12.4% annual rate increases are pretty good compensation for taking a little heat, especially when the folks you’re taking the heat for vote to mandate that citizens buy your product.

Rob Roper is president of the Ethan Allen Institute. Reprinted with permission from the Ethan Allen Institute Blog.

Images courtesy of Flickr/401kcalculator.org and Rob Roper

5 thoughts on “Roper: Insurance hikes aren’t rate increases, they’re tax increases

  1. At what point will Vermonters (or everybody for that matter) wake up to the fact that allowing government involvement in health care, education and social services is a very expensive mistake?

    When they figure out their legislature is acting unconstitutionally.

    Article 9, CONSTITUTION OF THE STATE OF VERMONT : “….previous to any law being made to raise a tax, the purpose for which it is to be raised ought to appear evident to the Legislature to be of more service to community than the money would be if not collected.”

    Not!

    • We can address this issue best by starting at the root cause of its infestation – the public school monopoly. Our children are not learning about the benefits of private property regulated by a free market economy. In fact, they are being taught that only government can provide for them – a fallacy of monumental proportion. Start with the education system. Insist on School Choice.

  2. It’s not a necessarily a srelth tax Rob. I suggest it’s better described as redistribution of wealth. If I understand this correctly, the premium increases are a result of the need to fund short falls in Medicaid. And Medicaid is designed to provide affordable care for the lower income folks. Since the higher income families are the ones paying higher prices for the same service, it would stand to reason that they are paying for the short falls in Medicaid.

    • Mike, while your logic is based on the premise that high income families should pay for the services provided to low income families, it ignores Mr. Roper’s contention that government may not (likely is not) the best way for society to provide that support.

      What Mr. Roper is saying is that the evidence should be more than clear in this regard. After all, why would anyone presume that government has been doing a good job so far. From welfare to the minimum wage, and from healthcare to my pet peeve, the public education monopoly, costs to taxpayers have been increasing faster than inflation while the return on the investment has been declining.

      This is the discussion we should be having. Consider the Pilgrims epiphany in 1623 for starters. They are the 1st in the Americas to realize the benefits of private property rights in a free market economy over that of a ‘commonwealth’.

      “Government, even in its best state, is but a necessary evil; in its worst state, an intolerable one.” Thomas Paine

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