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Healthcare reform prelude: double-digit increases in premiums?

WellPoint HQ If WellPoint's Anthem BlueCross is trying to make the case for an individual mandate to buy health insurance, it certainly picked a lousy way to go about it.

The insurer plans to raise premiums by up to 39% this year, prompting a flurry of complaints from customers, insurance brokers and regulators. Two top Democrats on the House Energy and Commerce Committee joined the scrum Tuesday, demanding that WellPoint explain all the rate hikes its subsidiaries have imposed since Jan. 1, 2009 -- just before Congress started work on healthcare reform legislation. (Click here to download the committee's letter)

You might think that the recession would hold down healthcare costs -- after all, that's what happened in the first year of the downturn, 2008. No one's going to ignore a broken arm or a child with a high fever, obviously, but people will skip a trip to the doctor for some ailments when times are tough.

But in defense of its proposed premium increases, Anthem pointed to something else ...

... that happens during a downturn:

Unfortunately, in the weak economy many people who do not have health conditions are foregoing buying insurance. This leaves fewer people, often with significantly greater medical needs, in the insured pool.

In other words, when healthy people try to save money by dropping their insurance, the cost of treating everyone else is spread across a smaller customer base. The insurers' trade association, America's Health Insurance Plans, added that small businesses are also dropping coverage or passing on more costs to their employees, prompting more youthful, healthy workers to go uninsured. And when people who have no coverage rack up medical bills they can't afford to pay, those costs get passed on to the people who have insurance.

The solution? According to the statement released by Anthem, it's "sustainable health care reform to manage the steadily rising costs of hospitals, drugs and doctors." That's not an endorsement of the Democrats' comprehensive proposals; no, the company said, Congress needs to "go back to the beginning and get health care reform done right."

WellPoint CEO Angela Braly helpfully laid out several suggestions for how reform could be "done right" in a lengthy interview that the Wall Street Journal published Saturday. Foremost on her list was controlling the rapidly increasing costs imposed by doctors and hospitals, a situation she would address by giving consumers more information about the cost and quality of the care they're seeking. But she also advocated a "meaningful requirement" that everyone carry insurance, and that consumers with expensive ailments or risky profiles be foisted off on public-private insurance pools. Loose translation: send WellPoint more customers who won't cost much to insure, and have the government pick up part of the tab for covering the ones who cost the most.

Somehow, slapping customers with a massive increase in premiums doesn't seem like an effective way to build support for an individual mandate. Nor am I finding it easy to understand how Anthem justified increases of up to 39% when Braly says its customers' healthcare costs went up 8.9% last year. In fact, even 8.9% seems high, given what actuaries at the Department of Health and Human Services reported recently about hospital, physician and prescription drug spending in 2009. Of course, rates are based on projections for the coming year, and AHIP says sharp increases are expected in all sorts of healthcare costs.

Braly's certainly right about the need for lawmakers to add more aggressive cost-control efforts to the healthcare reform bill, as well as the value of giving consumers more information about costs and outcomes. (I would offer just this one quibble: My HMO makes it well-nigh unaffordable for me to use anyone other than my chosen "personal care physician" and the network of specialists and facilities that doctor is associated with. So unless the rules imposed on me change, telling me that there's a better, cheaper hospital in another part of town won't do me or my insurer any good.) I also think an individual mandate has to be part of the comprehensive solution, and that high-risk insurance pools can be a good idea. I'm not sure Braly's formulation, however, is designed to help WellPoint's customers as much as it would help WellPoint.

Photo credit: Darron Cummings / Associated Press

-- Jon Healey

 

Comments () | Archives (13)

The comments to this entry are closed.

whamo

Don't worry, Rush says there's nothing wrong with the American healthcare system.

RM

So I guess my family wasn't the only one hit with the big premium increases, courtesy of Anthem Blue Cross. When the notice arrived in the mail I was so mad I just wanted to choke somebody, prefferably someone responsible for the increase. When I see all those politicians blocking any kind of reform to help families like us with this nightmare of a problem it just makes me so angry! Never will I vote for any one of them!

RM

With respect to one of the reasons as to why the insurance premiums are going up so much: People that can no longer afford it drop the coverage so more of the burden is passed on to those that continue to buy the insurance. Doesn't this mean that once again many more people will choose to drop the insurance this year making next years policy go up even more and if so won't that be continous process that will eventually make it completely unaffordable for even the wealthy. That being the case doesn't it also make sense that one should discontinue the coverage earlier rather than later and instead put that money aside into savings, since eventually it will become impossible to afford the premiums, and the coverage discontinued without being able to get any money back.
Some how the idea of having some $50,000 dollars in my bank account from savings over the next 4 to 5 years, rather than the insurance company's sounds very appealing to me. If some tragic event did happen who knows if the insurance would cover it, or if they would try to find a way to deny the coverage. If not, filing for bankruptcy would most likely be the result anyway, as it has been for so many people.

AntonioSosa

It seems that when Obama said he was going to "focus on jobs" he meant he was going to focus on DESTROYING jobs.

That's why he continues to threaten businesses with the higher taxes and costs that would be generated by his Obamacare and cap and trade SCAMS.

Threatened by the scams and uncertainty, most business are letting workers go, closing down, or considering moving to freer countries.

As we can see, Obama is working hard at destroying jobs. His Obamacare and cap and trade scams work like fuel to keep unemployment growing.

andrew nelson

Costs rise because of uncertainty. This year, the risk to all business has increased exponentially. There is no predictable way for a CEO, like Wellpoint's, to plan for health cost, insurance costs, or even predict whether WellPoint will remain solvent for the coming year. These Democrats have no leadership nor skill at governing. With super majorities in both houses, and a Democrat President, they have seriously damaged the nation's health care industry by their viscious attack on it, in the name of reform. Nov 2, 2010.

Carl_W_Goss

This is just the tip of the iceberg. More rate increases are coming from insurers across the country. You can bet on it.

And of course, the GOP response to all these rate increases will be to do nothing.
Nothing!

Lornaj

My doctor gave me an RX for a brace and took it to get filled. The people wanted $ 80.00, so I checked the internet. The same brace cost $40.00 same price they paid. Making a 100% profit is not bad at all, and that is what they all do. Hosptials and clinics are worst of all. We are being over charged on everything to make a Profit. All businesses, and campus bookstores raise their cost over 50% to make a profit.

djay

I had to CHARGE my last Anthem premium because I just didn't have the money to pay for it. Previous medical bills (high deductables) Comcast, PG&E, Chase and Verizon, to name a few, got to my checking account first. The day after I charged my premium I got an increase of $200 month. Really? I've got two children, one had a serious (treatable) disease two years ago....and I'm scared to let go of this insurance, but.....it's coming down to insurance vs mortgage....hummmmmm. Everything is wrong with the healthcare insurance system in this country. What amazes me is how we all put up with it.

republicanblack

The biggest problem in this health debate is education. We the people of the united states have failed when it comes to civics and history. I myself, a republican, was all worried about mandates and unconstitutionality of the health care bill, and I was TOTALLY wrong. here is the proof,

http://bit.ly/constitnmandate

JourneyHome

“Use Senate reconciliation and expand Medicare via the Senate’s buy-in provisions. The CBO has already signed off on this as a means of saving money.

More importantly, if more Americans can do a buy-in with Medicare, it creates more cost control (because there’s a genuine “public option” competitor).

It also helps to solve the problems of pre-existing conditions, because Medicare does not deny coverage on this basis.

Allowing a Medicare buy-in to Americans under 65 would give people a genuine alternative to private insurance and thereby render the pre-existing question moot.

It would also lower Medicare costs by expanding the risk pool of patients (the great bulk of medical expenses are accounted for by a small number of people, mostly the elderly, requiring very expensive treatment).

And it would substantially enhance the global competitiveness of American corporations. After all, in what other country in the world is health care a marginal cost of production for business?” - Roosevelt Institute Marshall Auerback

andrew nelson

Give it a rest. All of this stuff is regurgitated Democrat Healthcare Legislation. It didn't work last year, it won't work this year. It's not 'new and improved', and it's certainly not for lack of education that the majority rejected it. No matter how much lipstick you put on this pig, no one is buying the pig. Nov 2, 2010. Let's get someone in who knows what they are doing.

Patty Zevallos

Healthcare reform can start now with no high price tag

Obama and Congress are taking the entirely wrong approach to healthcare reform. We can be doing so much right now to improve healthcare without suspicious price tags. There is nothing wrong with carrying out reform in two phases: the immediate and low price-tag phase, and the longer-term, let's-find-the-money-first phase.

What can be done now, with little public opposition:

One group plan
Everyone would have access to insurance if all insurance companies were required to offer a plan to individuals as though they were all in one large company group plan, with the same rate and no exclusions. There is no cost to taxpayers; premiums are paid by the insured.

Guaranteed coverage and insurance market reforms
Few would argue with such provisions. The health insurance industry has been such a Wild West that companies could promise anything and provide nothing. They suffered no bad consequences when they blatantly breached contracts with subscribers. Other than enforcement, there would be no cost to taxpayers.

Essential benefits
An independent committee would define an "essential benefit package" as a minimum quality standard. It would include preventive services with no co-pays or deductibles, mental health services, and oral health and vision for children. It would cap the amount that consumers have to spend per year, and cost taxpayers nothing. Insurance companies could add features to this basic package. Now they can get away with not paying for basic services because most people do not have a choice of plans, and insurance plans are far too complicated to easily compare.

Individual responsibility
It is time for the government to be honest about the lifestyle factors that cause many of our healthcare problems. According to an article at preventdisease.com that is based on research reported in The New England Journal of Medicine, "preventable illness makes up approximately 80% of the burden of illness and 90% of all healthcare costs," and "preventable illnesses account for eight of the nine leading categories of death." This is the single most important factor in lowering healthcare costs and making people healthier. But in most ways it is not a role for government. It is up to individuals to change their habits. However, the federal government certainly shouldn't be making the situation worse. That means telling the truth about the fast food and prepared food industries. And it means requiring that government agencies and contractors use part-time and telecommuting work arrangements so people have time to exercise and prepare food at home. A national campaign aimed at employers, encouraging them to use flexible schedules for workers, such as part-time and telecommuting, could do a lot of good, with the government itself taking the lead. Cost to taxpayers: nothing. In fact, there are potentially huge savings in lowered healthcare costs.

Pushing for results
It is time for ratings. Netflix movies are rated. EBay sellers are rated. This is established technology. It is time for a central web site that shows us ratings for healthcare providers. Some sites do this now, but there are too many with too few ratings and it is chaotic. An insurance company doing ratings of its providers is not an unbiased source. How good is that doctor / hospital / radiology lab anyhow? How effective? How organized? How long a wait? How polite? How accurate a bill? This costs little and offers so much in savings and making healthcare very effective quickly. No more money is wasted on ineffective providers. People get well much sooner. Providers change their methods to get better ratings. Cost to taxpayers: very little. Such a site would also reveal the really bad eggs . . . moving on to . . .

Making sure healthcare providers really do their job
States are supposed to enforce this now, but often don't. According to a press release from Public Citizen's Sidney Wolfe, MD, "Most state medical boards are doing a dangerously lax job in enforcing their state medical practice acts and adequately disciplining physicians." In another article, Dr. Wolfe said that from 1990 to 2002, just five percent of U.S. physicians caused 54 percent of the nation's malpractice lawsuit payments, basing his numbers on information from the National Practitioner Data Bank. A constant stream of reports show that hospitals are covering up mistakes. If states were doing their job, there would be little or no malpractice lawsuits. This is far more important than tort reform. With ratings, state regulators, properly funded and monitored, could spot and check on providers who are doing a poor job before they do something really really wrong. Such a practice would eliminate payments to incompetent providers and lower malpractice cost. Cost to taxpayers: very little.


Emphasizing primary care
Healthcare reform needs to enhance the partnership between patient and primary care doctor. The primary care doctor is the one who needs to be on top of what is happening with a patient, with whatever record-keeping system works best for him or her (usually a hybrid of paper and database. All-electronic record-keeping is not reliable yet). Primary care doctors need to be paid as much or more than specialists and be paid for phone call and record-keeping time instead of just doctor visit time. Many doctors are forced to use a more expensive visit when a phone call will do because they don't get paid for phone time. Cost to taxpayers: nothing

Looking close at hospitals
Hospitals need to be very closely audited. Not only are there often bogus charges on bills, but the charges are far far beyond costs. No one really checks this, so they keep doing it. Employees wander around hospitals that don't seem to be doing anything. Hospitals charge for unnecessary tests, with no one making sure that tests are based on research. Anyone who complains is ignored. Medical institutions are roach motels for our hard-earned dollars. Dollars check in but they don't check out. Cost to taxpayers: very little.

A simple little thing
Refrigerator magnets can save millions. Yes, you read that right. A magnet can list the phone numbers, hours, and locations of urgent care centers that can be used during weekends and evenings instead of much more expensive emergency rooms. We now waste millions on non-emergency problems being treated in emergency rooms simply because people don't know where else to go. Cost to taxpayers: very little.

Another simple little thing
Money is wasted on mailed Explanation of Benefits forms from insurance companies when this information could be provided for free via a secured web site. Cost to taxpayers: nothing.

These no- or low-cost changes would greatly improve care and save millions. They are the first step. There is no reason to delay them in order to get a “comprehensive” healthcare reform. No reform can possibly work without them in place first.

Patty Zevallos
media producer – web, video, print
www.pbzproductions.com

Stephen

Doctors and healthcare workers are pricing themselves right out of existence. The only real answer to lower cost is tort reform. Any other increases in fees and services is purely greed.


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