Here’s a letter to the Wall Street Journal:
You report that the Obama administration seeks “legislation that would give the federal government the power to reject unreasonable rate increases” by health insurers (“White House Warns Insurers Against Rate Hikes,” Sept. 9).
Sounds reasonable. But it isn’t. “Unreasonable” is too vague and subjective a standard for guiding a government agency that possesses the power to block price increases. While by definition any “unreasonable” action is questionable and likely harmful, there is in fact no objective way for government to distinguish reasonable price hikes from unreasonable ones.
Consider, for example, if the First amendment prohibited Congress from making laws “abridging reasonable speech.” Who would trust government officials with the power to differentiate “reasonable” speech from “unreasonable” speech? Who would not doubt that such power would be abused?
What’s true for speech (and other First-amendment rights) is true for prices: it is unreasonable to give government power over such matters. Only competition among insurers will reveal which rates are reasonable and which ones aren’t.
Donald J. Boudreaux