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OpenMarket: Insurance

  • The GOP and the Health Insurance Mandate

    February 2, 2011
    With the health insurance individual purchase mandate looking more vulnerable than ever, Democrats are trying desperately to get some mileage out of the fact that it was Republicans who first proposed the idea. Washington Post blogger Ezra Klein posted an interview yesterday afternoon with University of Pennsylvania economist Mark Pauly, who is sometimes identified as the "father of the individual mandate." Klein writes:
    "Pauly was the lead author...
  • Obamacare Struck Down by Florida Judge; Properly Applies Severability Principles to Invalidate Whole Law

    January 31, 2011
    A judge in Florida just declared the health care law known as "Obamacare" unconstitutional, ruling it void in its entirety. Judge Vinson rightly declared the health care law’s individual mandate unconstitutional, since the inactivity of not buying health insurance is not an "economic activity" that Congress has the power to regulate under the Interstate Commerce Clause. (Under the Supreme Court's decision in United States v. Morrison (2000), which I helped litigate, only "economic activity" can be regulated under the Commerce Clause, with the possible exception of those non-...
  • Driver Monitoring Increases Accuracy, Lowers Insurance Costs

    December 29, 2010
    Believe it or not, insurance companies do not want to overcharge you. They want to charge just the right amount -- as little as possible -- just enough to cover any potential claims you are likely to file. Insurers want to charge the least they possibly can without losing money so that they can compete with other insurance companies for your business. To a large degree, what makes an insurance company successful is its ability to accurately predict your future accidents, illness, and catastrophes. The more they know about their customers' risk factors, the less they can charge. If an insurer knows little or nothing about the risks of his customer, then he must "pad" the premium to account for all possible catastrophes that the insurance company will have to pay for. On the other hand, if an insurer knows with relative certainty the likelihood of his customer getting into a car accident...
  • Why Insurance Rates Rise in Calm Seasons

    December 9, 2010
    This year's hurricane season, which officially ended at the beginning of this month, was the third most active season on record for the Atlantic. However, few of those hurricanes made landfall and thus the U.S. experienced little damage in the unusually active season. Despite none of the 19 named storms making landfall in the U.S., homeowners in coastal states are seeing their premiums rise. Particularly in Florida, where the government has to approve rate increases, people are asking why rates should rise when the state hasn't had a major storm in five years. What some observers fail to understand or choose to disbelieve is that insurance companies, particularly in states with rate controls, are still playing catch-up from the years of charging rates that were far too low. In addition,...
  • Beach House Bummer: State-Run Insurance Fuels Risky Coastal Development

    November 1, 2010
    Wouldn't we all like to have a beach house? A large number of Americans have a dream of living near the sea, but few of them have the financial ability to purchase a home along the pricey coast. For one thing, there is the cost of buying property in such a high-demand market with such a limited availability of space. In addition, there's the high cost of insuring a home that is built in an area where it is likely to be damaged by natural catastrophes. It is expensive to purchase insurance along a coast and there is a legitimate reason for that: homes built within a stone's throw of the sea, or other large bodies of water, are far more likely to experience damage -- damage that insurers ultimately pay to repair. So, in order to cover their likely costs of repairing homes after storms, insurers attempt to charge "actuarially sound rates," or the amount of money they will likely need to...
  • Hospital Cost-Shifting Leads to More Expensive Car Insurance

    October 29, 2010
    Lawmakers' policies are making your car insurance higher than it should be. Rather than solving the problems that government intervention is causing, however, politicians would rather blame "greedy" insurance companies and institute more interventionist policies. For Michigan residents, the situation is particularly precarious. In the last decade the state has lost nearly a million residents, lost thousands of businesses, and likely witnessed greater economic rot than many other states throughout the economic downturn. In CEI's newly released joint study with the Mackinac Center, "Reforming Michigan's Auto Insurance Industry,"...
  • Insurance Lessons from Alabama

    October 25, 2010
    While Alabama certainly has some ambiguous laws and archaic regulations, the federal government ought to take a lesson from Alabama when it comes to property insurance. In an effort to keep the state's insurer of last resort solvent (meaning it will have enough money to pay the claims people are likely to file), Bob Groves, manager of the state-run insurer, announced that they will no longer issue policies for homes built over or standing in water.
    People who currently hold policies on a building in or over water can...
  • Obamacare Results in 47 Percent Premium Hike

    October 17, 2010
    Obamacare has just led to a 47 percent increase in some health insurance premium rates in Connecticut:
    The state’s largest insurer has been approved to raise health premium rates by 41 percent to 47 percent for some of its policies sold to individual buyers, in the largest price hikes yet seen in Connecticut since the adoption of national health care reform… The reason for the increases is the new federal health reform mandates, according to Anthem and the state Department of Insurance.
    This is the exact opposite of what Americans were promised by the sponsors of Obamacare, which was deceptively billed as the Affordable Care Act. Earlier, a judge in Florida ...
  • Judge Rejects Obama Administration's Motion to Dismiss Challenge to Obamacare

    October 15, 2010
    A judge in Florida has rejected the Obama administration's motion to dismiss challenges to Obamacare brought by 20 state attorneys general and the National Federation of Independent Business. U.S. District Judge Roger Vinson found that the attorneys general had made a plausible argument that Obamacare is in excess of Congress's power under the Commerce Clause and in violation of the Tenth Amendment -- indeed, he said it wasn't even "a close call." The judge gave a green light to a challenge to Obamacare's requirement that all citizens buy federally-...
  • If You Like Your Health Plan, You May Lose It Anyway

    October 5, 2010
    Another major employer, 3M, has decided to "eventually stop offering its health insurance plan to retirees, citing the federal health overhaul as a factor." As Reason's Peter Suderman notes, "despite the Obama administration's repeated promises to the contrary, many people and employers will not, in fact, be able to stick with their current health care plans and arrangements. The White House had to sell the public -- a large majority of whom were actually pretty happy with their existing health insurance -- on the virtues of their plan while promising that it wouldn’t upset existing arrangements that people liked. That was obvious nonsense...

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