Opinion: Blame price controls for health insurers fleeing Colorado

To understand what's going on, consider the shortages of the 1970s. Then-President Richard Nixon took bold and popular action to make life affordable.

Nixon, a Republican, imposed wage controls he hoped would stabilize employment. He enacted widespread price controls, promising it would curtail inflation. The whole thing backfired on the public.

What sounded like a good idea to average Americans — many of whom forget the principles of Economics 101 the day after finals — became a marquee disaster of the 20th century.

Nobel economist Milton Friedman predicted it, telling Americans that Nixon's controls would end "in utter failure." Though price controls won Nixon a second term, voters soon suffered the consequences.

They paid the price with a surge of inflation. That's because producers produce less when constrained in the pricing of goods, services and commodities based on what the market will bear. When the money supply outstrips production, we have classic inflation — as in too much currency chasing too few products. Mandates can change this outcome like they can order the sun to freeze.

Any baby boomer can tell childhood and young-adult stories of gas lines. Drivers came across multiple gas stations with signs that said, "out of gas." Filling the tank — or buying the maximum gallons allowed — often meant waiting in gas lines for hours, sometimes only to see the station attendant attach a sign to the trunk of a vehicle that said, "last car for gas."

Capitalist, free-market incentives are the only driver of surplus, easy-to-access goods, services and commodities we Americans take for granted. In the '70s, price controls discouraged investment in oil and gas production and the manufacture of food, clothing and all variety of goods. That led to growing unemployment, despite the job security promised by wage controls.

If millennials or Gen Zers time traveled to 1975, scarcity would have them begging for transport back to 2023.

The fundamental flaws of price controls do not change with time or target. We often hear, from liberals and conservatives, that some products are so doggone important our government must control the price. In truth, importance changes nothing. When authorities artificially suppress the prices of home heating fuel, gasoline, food and housing we end up with less of it all. A controlled price helps no one when shelves are bare.

This inescapable economic fact explains why four insurance companies have left Colorado in the past 18 months. That's four fewer offering policies too many Coloradans struggle to find. That's four fewer contributing to the downward pricing forced by fierce competition that determines organic value.

We hear a lot of gobbledygook explanations from so-called experts for Colorado's fleeing insurers. They are greedy, they tell us, and therefore engage in unwise practices. Sure, they're engaged in corporate suicide so they can neglect their families.

In truth, regardless of weird and ignorant micro explanations, we can blame price controls and unfunded mandates for this rapid abandonment.

The Legislature and governor have imposed nearly 30 modern mandates for coverage in insurance policies. Those include full coverage of contraception, even in policies for people who never have intercourse and have no plans for it. The policy for a 90-year-old woman, or a lesbian, must contain contraceptive coverage. It must contain full coverage of abortions, without co-pays and other traditional cost-sharing arrangements designed to lower premiums.

Another mandate requires full coverage of infant care, even for those who cannot or will not have children. All appear as compassion, while making insurance hard to afford.

The mandates comprise a long list of must-cover services for customers who lack the need and income to buy them. It prevents insurance companies from offering products crafted to serve the legitimate risks of customers with simple lives.

The most blatant insurance price control is known to politicians as the Colorado Option — promoted and signed into law by Gov. Jared Polis. In a business-killing effort to subdue the costs of mandates, the "option" forces insurers to offer plans at a specified year-over-year discounts. They oppress the flexibility of situational decisions that keep businesses afloat.

Last spring, the state required insurers to tell the Division of Insurance how they would meet the 2024 Colorado Option price controls. Only one could promise compliance, and that was the relatively small Denver Health Medical Plan.

Let's channel the genius of Friedman and predict these price controls will end in "utter failure." As they said in the '70s, "it's all happening, man." Insurers are running away, leaving Coloradans with less access, less competitive pricing and an increasing dearth in health care providers. All this for the sake of helping us with unrealistic price controls.

The Gazette Editorial Board

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