July 12, 2017 2:48PM 

# Are ObamaCare’s Community-Rating Regulations a System of Price Controls? 

By [Michael F. Cannon](https://www.cato.org/people/michael-f-cannon) 

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ObamaCare’s community-rating regulations generally bar insurance companies from using any factor other than age to determine premiums, and prevent insurers from charging 64-year-olds more than three times what they charge 18-year-olds. I have [long maintained](https://www.cato.org/publications/commentary/health-reformers-worst-idea) community rating is nothing more than a system of government price controls, and should meet with [the usual scorn](https://www.treasury.gov/press-center/press-releases/Pages/rr1247.aspx) economists universally heap on such [boneheaded](https://www.amazon.com/Forty-Centuries-Wage-Price-Controls/dp/1610161408) [policies](https://www.wsj.com/articles/how-obamacare-punishes-the-sick-1488327340).

An esteemed colleague challenges my claim that ObamaCare’s community-rating is a system of price controls, because “the government doesn’t set a price.” Here is how I responded:

> Price controls don’t always take the form of a fixed integer. Sometimes government sets prices using ratios.
> 
> 
> Premium caps control prices by limiting this year’s premium to a ratio of last year’s premium. Medicaid’s prescription-drug price controls set prices as a ratio of the average wholesale price. Medicare’s price controls involve all sorts of complex ratios.
> 
> 
> ObamaCare’s community-rating regulations control prices by (a) setting the ratio of premiums for healthy vs. sick people within each age category to 1:1, and (b) setting the ratio of premiums for young vs. old to 1:3. Insurers would not voluntarily follow those ratios, [with good reason](http://www.americanbar.org/content/dam/aba/publications/supreme_court_preview/briefs/11-393_petitioneramcuahip-andbsbsa.pdf). But community rating forces insurers to set prices according to those ratios. Thus it is a price-control scheme.

##### Related Tags 

[Health Care](https://www.cato.org/health-care), [Regulation](https://www.cato.org/regulatory-studies) 

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