Promoted from the Diaries by Jeff.

Under former Governor Mitt Romney, the state of Massachusetts undertook the largest single step towards single payer health care of any government entity in the United States to date.  It has created a myriad of problems, chief of which is a massive headache for those who are now forced to pay for insurance that they never wanted or can’t afford.  The plan, in a nutshell, requires all Massachusetts residents to purchase a state approved private health insurance plan or pay into a state run plan.  This mandatory purchase law, with concurrent restrictions on what qualifies as “insurance”, has lead to the nation’s largest increases in premium.

Instead of recognizing that insurance premiums are rising because of the state’s laws, current Governor Deval Patrick is set to double down on the squeeze that health care costs are putting on his state’s citizens.

Patrick said officials are considering using state insurance regulations to block excessive healthcare premiums.

It certainly doesn’t take a rocket scientist to understand that by “block excessive healthcare premiums” Patrick means that he is going to institute tighter control over premiums [Every state's insurance regulatory body already reviews and approves rate increases annually based on each state's formula for ho much they feel the insurance company has to pay in benefits on each dollar of premium before they are allowed to raise premiums.  Note that this formula doesn't take any account as to whether the company is profitable as there are other expenses beside the actual costs of the claims.]  The folly of price controls will not solve Massachussetts problems.  Price controls will simply introduce new problems [while admittely keeping the price of insurance lower]:

1. An environment where a company feels that it cannot make a profit in return for the money it invests in the market will lead to less choice in insurance companies.  This will eventually lead to a quasi-state sponsored oligopoly where a few large players, who will have lots of ties to the officials overseeing the industry, will be able to exert control over the  entire system.  This is very bad for consumers as both choice and quality would decrease.
2. Even before enough companies decide that the math doesn’t work for their continued existence in the state, many of them will have begun extremely aggressive measures to reduce their costs in order to remain sufficiently profitable for as long as possible.  [There will be a desire amongst most players to remain in the game long enough to become one of the few left standing.]  The costs that will most likely be cut are the reimbursements to health care providers.  Considering the already alarming trend of the loss of primary care physicians, these cuts would place a great deal of consumers in Massachusetts in the position of having fewer quality doctors to pick from.  If they thought their wait times for a visit were long now, wait until more doctors get fed up and leave their practices.  This will likely mean that more Massachusetts consumers will forgo basic medical treatment, despite having insurance that covers the visits for a low copay, because the time to wait for the appointment will become to great.
3. In countries that have instituted price controls for health care, the have had to step in and exert greater government control over the supply of health care.  For example, in Canada you can wait months for a needed surgery [such as life saving open heart surgery].  In Spain, you are assigned a doctor by the government based on where you live.  This has led to the same phenomenon we experience in the states with respect to moving into the quality school districts as Spaniards try to move to neighborhoods with the best doctors.  How would you like to be the one that can’t afford to move into a neighborhood that has anything resembling a good doctor.

Try as we will, this type of logic will be lost on the most fervent advocates of further increased government control over the health care market.  I fear for my friends in Massachusetts.  The state was offered evidence that their experiment is failing.  As of yet, they have not recognized the warning signs.