Economically-illiterate and authoritarian commentary on health care reform has become the norm for the Raleigh News & Observer. Consider today’s latest installment, which indicates how confused and ignorant the authors of the article are on the topic. The article’s focus is on a report claiming the “cash reserves” held by Blue Cross and Blue Shield of North Carolina are excessive.
Like virtually every aspect of the health care industry in this country, however, the government mandates health insurance companies hold substantial reserves to cover an unexpected spike in insurance claims.
The company responds to the report by noting that the law requires a three- to six-month reserve based on claims and administrative costs, and that BCBS is at about 3.6 months.
The issue here, however, isn’t whether the company is up to something. It’s whether the law is out of kilter in what it requires.
All of these things reflect the nature of a health care system that, unlike those in other nations of the industrialized world, is driven by profit margins and a free-market structure.
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