Can “Experts” Determine the Correct Health Insurance Premium?

This blog post by Timothy Terrell originally appeared on February 23, 2010 on the now-discontinued Market Process Blog, published by the Initiative for Public Choice and Market Process at the College of Charleston.

President Obama’s health insurance reform outlined Monday would, among many other things, create a Health Insurance Rate Authority, which “would provide an annual report to recommend to states whether certain rate increases should be approved, although the secretary could overrule state insurance regulators.”

Now, apart from the issue of federal regulators intervening in state affairs, there is the question of how the experts on this Rate Authority board would know what rates are best. How would they know when a proposed rate increase is too great? Remember that the Soviet economy was run by “experts.” They had far more economists in the USSR than the US had. And we all know where that kind of planning got them. Incidentally, they also had the world’s first universal health care plan: see “What Soviet Medicine Teaches Us,” by Yuri Maltsev.