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Column: Controlling health insurance premiums could force companies out of business

Government taxes not enough to cover new claims.

A new agency established under the Obama Administration’s healthcare proposal would control premium hikes like those experienced recently in California.

One unintended effect of this Health Insurance Rate Authority may be to reduce services covered by private insurers, according to a recent column in the Christian Science Monitor. Higher medical costs paired with inflation and increasing demand could cause these insurers to go out of business.

“The likely process is a different sort of death spiral: as private insurers go out of business, the government will take their place,” the column said.

The government would be forced to raise taxes significantly to cover claims, which would increase under a universal healthcare plan that forced healthy individuals – many of whom choose to save money by not purchasing insurance – to join. Taxes currently included the bill are inadequate to cover these costs, according to the column.

Census Bureau statistics show that the percentage of Americans covered by government health insurance in 2007 was 27.8 percent, compared to 27 percent the previous year. About 39.6 million people received Medicaid, up from 38.3 million in 2006. ADNFCR-2378-ID-19638487-ADNFCR

Posted: February 25, 2010

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