The next health reform debate: What's an 'unreasonable' insurance premium hike?

[Phoebe Loosinhouse]

http://www.ctmirror.org/story/7085/ratehikes

August 3, 2010
The next health reform debate: What's an 'unreasonable' insurance premium hike?

By Deirdre Shesgreen

WASHINGTON-When Anthem Blue Cross tried to raise health insurance premiums in California by 39 percent this year, the move became a rallying point for proponents of health care reform legislation, and the landmark bill won final passage soon after.

So what will the health care reform bill actually do about double-digit premium hikes?

The answer to that question is still being sorted out, as insurance companies, health care providers, and consumer groups engage in a new tug-of-war over how federal regulators implement the law's provisions on premium increases.

The health care overhaul does not give the federal department of Health and Human Services (HHS) the power to approve or reject insurance increases. That task is still left to state regulators, who now have varying degrees of authority over insurance costs.

Abridged analysis:

Premiums are too high now. They will remain high and go higher. The fact that the cost of the premium may be shared in the future by both the taxpayer individually and the taxpayer again collectively as a government subsidy, does not reduce the cost of the premium itself.

Health care reform did nothing to address the underlying issue of AFFORDABILITY. We'll be right back to the drawing board in a few short years. Maybe then we'll have leaders strong enough to address actual reform and not preserving private delivery systems.

[zipplewrath]

1. Health CARE costs

Although we'll go through a few years of adjustment to the new market environment, in the end the rate of increase of health CARE costs will "justify" the insurance companies increasing their health INSURANCE premiums. My company has been "self insured" for decades. Their health care costs are borne directly. They have been rising faster than both wages and inflation for the better part of 20 years. They can easily "justify" the rate hikes in our benefits because they have the cost data to back it up. So does the insurance companies.

This Health Insurance Industry Stimulus Package did virtually nothing to control health care costs, and it dumped the one and only real hope we had to do it, the Public Option. Ultimately, as participation grew, they would have gotten the economic clout to effectively "control" health care costs because they would have been in essence had the negotiating clout of a "single payer".

Obama's interest, in the end, in his HCR was to reduce the costs to the federal government of providing health insurance, mostly medicare and medicaid. To a great degree, he abandoned any real effort to reduce health care costs to individuals. He was successful in that he got a series of fines put in place on both individuals and employers that will generate revenues, and also was able to push through payment reductions (and/or lack of future increases) for medicaid. That will affect very few individual payers, or those covered by employers, and to some extent will have providers eschewing medicaid even more, and finding ways to "cost shift" to private insurers.

Within 10 years we'll be "in crisis" again and talking about HCR the way we speak of NAFTA and DADT today. Only then the GOP will probably be in charge and we'll get whatever mandates they want to promulgate.

[alc]

3. exactly

Reasonable premium is "cost + X% profit margin". We can argue about reasonable profit margin (2%,5%, 10%,?) but cost is the overriding factor and the health insurance bill hardly addressed that all.

Number & composition of insurance pools is also a factor (changes the cost of your pool). The bill does address that, but mainly by reducing the # of pools and adding healthy people to pools which increases healthy people's premiums. So a reasonable premium increase will include that and if you are healthy your insurance will go up.

It's still to be determined what a policy must cover and any limits on co-pays and deductibles. Depending on your policy, there could be a huge increase if some things are changed. My policy more than doubled when I went from high co-pay, high deductible to lower of each a few years ago.

[zipplewrath]

4. The first few years will be bumpy too

You'll have alot of people inserted into the system that will have existing problems that have gone untreated/poorly treated for years. The companies will virtually "panic" at the sudden surge in claims, even for minor issues such as blood pressure etc. Considering they've been avoiding much of this for years, some of them will be poorly equipped to deal with it and will extrapolate the data into the future to ensure they cover their risks. The state regulatory agencies will have to be vigilant in reviewing the data and not letting these people over estimate the risks in the out years. I don't hold out alot of hope. We could see large increases in premiums "justified" by the changes in the insured population that will take a few years to settle out and demonstrate that the situation wasn't as bad as they feared.

[ThomWV]

2. There are three reasons for an insurance rate hike - pick one

There are three reasons that come immediately to mind for an insurance rate hike. They are:

1. The insurance company increases rates above costs to increase profit

2. The insurance company found and corrected an error in their actuarial tables

3. Changes in the society or environment have increased the occurrence of insured events

Pick one or add to the list.

[BlueIdaho]

5. The medical loss ratio

HCR included a medical loss ratio of 80 to 85% as I remember it. That means insurance companies have to be able to prove that 80 to 85% of your premiums to directly to your health care. If they fall outside that ratio they will not be listed on any of the exchanges. That may be a compelling reason to hold the line. Obviously they will try to game the system, but anything is better than their last year's track record where the top five insurers showed 56% profits while 2.7 million Americans lost coverage.

[inna]

6. The main problem is that the parasitic for-profit industry got entrenched.

That's your "uniquely American way" - profits/corporations over people.

Profits must be maximized, peasants must be squeezed out of any remaining disposable income.

[NorthCarolina]

7. There will be no actual reform as long as the DLC New Dems are calling the shots. eom