Resolution on Negative Impact of Government-Mandated Rate Caps on Health Insurance Premiums

Summary

This resolution opposes government-mandated rate caps on health insurance premiums as they are a form of price control that negatively affects the cost and quality of healthcare by increasing costs for consumers and reducing competition.

Model Policy

WHEREAS, a variety of factors cause health insurance costs and premiums to rise, including soaring medical costs and expanding utilization;

WHEREAS, a number of changes associated with the Federal health care reform Law (Patient Protection and Affordable Care Act) will increase health care spending, and lead to greatly increased health insurance premiums to pay for expanding coverage, broadening and enriching benefit packages, and guaranteeing coverage for millions of people with preexisting conditions;

WHEREAS, people will be charged the same health insurance rates regardless of medical condition—so that a healthy person pays the same as someone with a chronic illness—which will further drive an increase in health insurance premiums;

WHEREAS, increasing health insurance costs and premiums have led to renewed calls for anti-competitive and anti-free market rate caps on health insurance premiums;

WHEREAS, such government-mandated rate caps are a form of price control that flies in the face of free market principles; and

WHEREAS, insurance premiums must be adequate to pay promised benefits, and the imposition of artificial rate caps could risk insurer solvency and harm consumers;

NOW THEREFORE BE IT RESOLVED, that government-mandated caps on health insurance premiums are a form of price control that negatively affects the costs and quality of healthcare by increasing costs for consumers and reducing competition.

BE IT FURTHER RESOLVED, that {insert state} encourages Governors as well as Members of Congress to consider that consumers would benefit from genuine market-based and consumer-oriented health insurance reforms, which simultaneously would control costs, improve quality, and expand access to health care for all Americans through free enterprise.

BE IT FURTHER RESOLVED, that copies of this resolution will be distributed to all Governors and members of the U.S. Senate and the U.S. House of Representatives.

Approved by the ALEC Legislative Board of Directors September 29, 2013.