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Premiums may rise without reform
The headquarters of Blue Cross Blue Shield health insurer Anthem Inc. in Indianapolis, Ind.
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Kai Ryssdal: California's biggest for-profit health insurance company has announced a big rate increase. Big, actually, might not even do it justice. Anthem Blue Cross has started telling individual policy holders -- that is, folks who buy directly from them, not through their employer -- that their premiums will jump by as much as 39 percent beginning March first. The company blames higher costs for hospitals, drugs and doctors. Also, the recession. Anthem says the bad economy is forcing younger, healthier premium payers to leave the insurance pool.
And Marketplace's John Dimsdale reports Anthem's heart-stopping rate increase has become part of the health care debate in Washington.
JOHN DIMSDALE: Health and Human Services Secretary Kathleen Sebelius shot off a letter asking Anthem to justify its increase. She noted Anthem's parent company, Wellpoint, earned $2.7 billion in the fourth quarter of last year.
Today, President Barack Obama used Anthem's hike to try to jumpstart health reform negotiations.
PRESIDENT OBAMA: If we don't act, this is just a preview of coming attractions. Premiums will continue to rise for folks with insurance, millions more will lose their coverage altogether, our deficits will continue to grow larger, and we have an obligation, both parties, to tackle this issue in a serious way.
In a written statement, Anthem said the recession and unemployment are pushing more healthy people to drop insurance leaving sicker people in the insured pool.
Robert Zirkelbach is with America's Health Insurance Plans, an industry trade association.
ROBERT ZIRKELBACH: Over the last year there has been an increase in uncompensated care as more and more people go without health insurance and aren't able to cover their bills if they go to the emergency room.
Health reform would prohibit insurance companies from rejecting customers with pre-existing conditions. But in exchange, the industry wants a mandate to make healthy people buy insurance, says Professor Marjorie Baldwin at Arizona State University.
MARJORIE BALDWIN: Otherwise premiums are going to go up too fast.
As hospitals and doctors seek reimbursement for uncovered health care from their patients who do have insurance.
In Washington, I'm John Dimsdale for Marketplace.
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Voters see mandatory health insurance for what it is (a deal with the devil). Lawmakers, you're gonna get burned.
Medicare cannot survive if only costly seniors are eligible. Young and healthy citizens are willing to pay into it, SO LET THEM!
A mandate like the one obama was proposing would force the young and/or healthy to pay a wildly disproportionate share of the costs relative to what they use. That is because the bill would artificially restrict the ratios between what an old/sick person pays vs what a young/healthy person pays to 3:1 or 2:1. Actuarial tables go out the window. Additionally, there would have been bloated minimum coverage requirements that the healthy/young people neither want nor need. It is like forcing someone who drives a Ford Escort to purchase coverage for a BMW. The whole goal of the mandate is to force the young/healthy into the pool to subsidize the old/sick. This penalizes those who make healthy lifestyle decisions and is fundamentally unfair and oppressive.
If I were forced to pay an artificially inflated premium, I would make it my goal to utilize as many healthcare resources as possible, even if not medically necessary. At least then I would be getting something for the money I would be throwing away.
This story should have been paired with the later one regarding the insurance anti-trust exemption. Obviously, without competition, Anthem Blue Cross will seek to penalize its customers when their customers really have nowhere else to go. The arguments regarding "young healthy" people's dropping out of the pool, especially the proposal to force those people to buy insurance, ignores the reality of the twenty-something college graduate of today. First, worst economy since the 1940s, so not likely to get a good paying job. Second, the average debt accumulated by a college grad just for going to college is over $150k. On top of little to no pay, you want these kids to buy insurance from a company that gets to charge them on the basis of what exorbitant salaries they want to pay their executives? Remember, $1 out of every $700 spent in healthcare now goes to the CEO of United Healthcare.
And, "tort reform" is a red herring. In Texas, we've had 10 years of tort reform, and the results have been rather abysmal. It did not drive down costs, and in fact, the opposite happened. Not only does Texas now have some of the highest healthcare costs in the country, but we have managed to attract sub-par doctors who get away with sub-par, negligent care that even kills people. The only parties that benefited were insurance companies and hospitals, who pocketed the difference on not paying out for malpractice.
I am working and have health insurance through employer. My premiums TRIPLED this year from approximately $50 to $150 per month. Then there's copays of $20, $35 and $100 depending on who you see and what they do, and meds... etc Of course I am working and really have no right to complain but the health care INDUSTRY is truly out of control...
I take exception to Obama's fear mongering statement trying to infer that the rise in California's health insurance premiums is a predecessor of worse things to come, if we don't accept his new health care plan; when his plan doesn't even address lowering the cost of health care to make it more affordable for lower income people. This makes me just want to up-chuck. Typical politician, using fear tactics to scare un-educated voters to adopt his plan, in order to maintain his meager and unproductive political career. When will polticians do what is right for the country instead of promoting their own self-interests?
I have an idea for the congress, the senate, and our Socialist President to digest. How about work on tort reform and pass legislation eliminating frivolous medical liability lawsuits (again for individual self-centered personal gain; people wanting something for nothing without consideration for others or the impact to their country, the medical malpractice lottery players), except those cases proving severe negligence and/or criminal intent. This would significantly lower the cost medical malpractice insurance for doctors and hospitals. If the malpractice premiums go down, so will the doctor and hospital bills. If those costs drop, so will health insurance premiums, ultimately making health care more affordable. Also Mr. Lawmaker, put an end to all prescription drug advertisements and put this decision back in the hands of the professionals, the doctors. The dramatic increase in prescription drug prices is directly related to the day advertising was legalized. Try this first, instead of a massive reform bill and see if it works. What do you have to lose Mr. Politician, you're campaign contributions? Lastly, I'm about sick and tired of getting bombarded by Erectile Dysfunction and Vaginal itch and KY Jelly advertisements while watching TV with my children. Who decided that was OK or educational?
Since insurance companies have a mix of group coverage and individual coverage, I suspect that the corporations offering health insurance to their employees are becoming ever more aggressive in their negotiations with their insurance carriers. The insurance companies make better and better offers to the corporations covering hundreds of subscribers while gouging the individual subscriber to make up the difference. The individual of course has no negotiating power at all. the NPR program Fresh Air has had interesting interviews with T.R. Reid about his experiences in the health care system of six or seven nations all over the world. He notes that some of the western European countries use private health insurance carriers to provide their citizens health care, but with much stricter controls on cost and on the way they treat both patients and providers. These companies have the incentive to provide a good experience for those in their health insurance plans so that they might consider using the same company for their other insurance needs.
Actually this kind of thing argues for liberalizing the insurance market and allowing people to buy insurance across State lines. The insurance mkt is not competitive. Creating pools of people that could buy insurance would help as well. But at the end of the day, without some sort of mandate, I don't know how you get around the adverse selection process that goes on in individual insurance. Perhaps a more competitive market and buying coops would bring down premiums enough to convince the 20-something immortals to buy insurance, but I don't know.
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