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What To Make Of Anthem’s Rate Hikes HCAN has responded to Anthem Blue Cross’s rate hikes (the company is a subsidiary of WellPoint) in the California individual market by releasing a report demonstrating how premium increases have been feeding insurer profits, not paying for health care costs. “The report finds that the top five largest for-profit insurance companies increased their profits by $12.2 billion last year while dropping coverage for 2.7 million Americans“:
As a group, WellPoint, Aetna, UnitedHealth Group, Humana and Cigna saw their profits jump 56 percent in 2009 up $4.4 billion over the previous year, according to the report. Four out of five companies saw profits increase while insuring fewer people. Cigna increased earnings by 346 percent while UnitedHealth shed 1.7 million beneficiaries. Aetna, which increased its membership and percentage of premiums spent on medical care, was the only company to see less income in 2009 than 2008.
Health insurance is one of the only businesses where you can make more money by shedding customers and selling less product. And the insurers certainly have. The patchwork of state regulations governing the individual market allow insurers to cherry pick the healthiest applicants and drop those with the most expensive claims. It’s a smart business strategy but it doesn’t work very well for the patient, which is presumably a concern for lawmakers.
Democrats have responded by proposing a plan that establishes new standards for insurers and sets a federal floor of protections that prohibit some of the most egregious industry practices. You’ve heard most of this before: the legislation would prevent pre-existing condition exclusions, lifetime and annual limits, and other abuses. The bills “would greatly reduce the number of people enrolling in individual market plans. Instead of signing up for these high cost, low benefit plans, individuals can join together in a broader pool within the health insurance exchange to lower costs.” It’s a fairly good deal and according to the Congressional Budget Office, it should lower premiums for a good number of Americans and change the trajectory of health care spending (slow the growth of national health care expenditures).
And Republicans are also feigning concern. “If the argument is that the WellPoint hike means we need reform, well, ‘duh,’” said Michael Steel, spokesman for House Minority Leader John Boehner. “But our proposal holds down costs, without the trillion-dollar government takeover.”
No, their proposal reinforces the problems of the individual market. The House Republicans’ plan, which extends coverage to just 3 million Americans would leave 52 million Americans uninsured by 2019. And that’s because it deregulates the individual health insurance market by permitting insurers to override state-based consumer protections and sell sub prime policies across state lines. They want insurers to sell policies from the Northern Mariana Islands! In fact, it’s unlikely that the GOP would be able to qualify for coverage under their own plan — which, incidentally, does nothing to control general health care spending. (More on that here.)
So it’s a tale of two parties. Democrats are using the rate hikes to argue in favor of reform that would ameliorate the problem, Republicans are using it to hawk a proposal that would result in higher costs for the overwhelming majority of Americans. Republicans are trying to sell you the kind of deregulation that contributed to the rate hikes in the first place.
-------------------- Wise men learn more from fools than fools from the wise. Posts: 3827 | From: beautiful California | Registered: Sep 2008
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Health Insurers Inadvertently Make The Case For Health Care Reform Our guest blogger is Emma Sandoe, a Health Care Researcher at the Center for American Progress Action Fund.
America's Health Insurance Plans President Karen Ignani Today, Department of Health and Human Services Secretary Kathleen Sebelius released a report that shows premiums in the individual market are expected to skyrocket in Connecticut, Maine, Michigan, Oregon, Rhode Island and Washington. This report comes on the heels of the widely-reported Anthem Blue Cross premiums increase of 39 percent in California.
Responding to this report, Karen Ignagni of the America’s Health Insurance Plans (AHIP) released a statement joining the growing argument that “health insurance premiums are increasing in the individual market because of soaring medical costs and because younger and healthier people are dropping their coverage due to the economy.” This is known as adverse selection and leads to higher cost for the remaining covered individuals.
Ignagni’s insistence that the premium increases are a result of the recession is a compelling argument for health insurance reform, especially in the individual insurance market. Health reform is needed in any economic climate, and the recession only shines some light on the already existing instability of the market.
Health reform will help prevent premium increases during a recession by creating a stable, well-regulated insurance market within the health insurance exchange. First, the market will not be overwhelmed by sicker individuals because exchange will have a broader, healthier risk pool. The individual insurance requirement ensures that healthier individuals have the responsibility of paying for reform, which will lower costs for all individuals.
Under reform, premiums will likely be more affordable and stable. During times of economic decline, many individuals will qualify for federal subsidies to help pay for coverage. This will prevent healthier individuals from dropping their health coverage when facing financial hardship, which in turn, keeps everyone’s premiums stable.
According to the Congressional Budget Office, health care reform should also lower premiums for a good number of Americans. The design of the exchange does this by creating competition within the marketplace, whereas currently “more than 94 percent of insurance markets in the United States are highly concentrated. ”
Finally, as Kathleen Sebelius noted today, under reform insurers will have to report spending and the premiums they receive from individuals. If the administrative costs and profits exceed the Medical Loss Ratio limit, premium dollars will have to be reimbursed to the consumer. So the insurer’s claim of higher health costs would be verified, before they were passed on to consumers.
The administration responded to Ignagni’s claim by insisting that the insurers “want to defeat reform.” Instead, the insurers have laid out the clearest case to date: the recession demands that reform occur.
-------------------- Wise men learn more from fools than fools from the wise. Posts: 3827 | From: beautiful California | Registered: Sep 2008
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