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Today, Secretary Sebelius and the Department of Health and Human Services released a report on health insurance company rate increases in the wake of the outrage over Anthem Blue Cross’s 39% increases in California. The report makes clear what those of us who’ve been following the health care debate have known for years: California’s rate increases aren’t unique.
The HHS report highlights similar rate increases in other states:
Anthem Blue Cross isn’t alone in insisting on premium hikes. Anthem of Connecticut requested an increase of 24 percent last year, which was rejected by the state.3 Anthem in Maine had an 18.5-percent premium increase rejected by the state last year as being “excessive and unfairly discriminatory”4 – but is now requesting a 23-percent increase this year.5
In 2009, Blue Cross/Blue Shield of Michigan requested approval for premium increases of 56 percent for plans sold on the individual market.6 Regency Blue Cross Blue Shield of Oregon requested a 20-percent premium increase.7 UnitedHealth, Tufts, and Blue Cross requested 13- to 16-percent rate increases in Rhode Island.8 And rates for some individual health plans in Washington increased by up to 40 percent until Washington State imposed stiffer premium regulations.9
Leading experts have predicted that, without reform, these increases will continue, and the federal government and most states don’t have the legal authority to block or reduce health insurance rate increases.10
Of course, this comes at the same time that the parent companies of these insurers are making record profits.
The insurance companies, of course, will claim that these rate increases are justified by rising costs. They’re dead wrong. More from the report:
WellPoint and others claim that the premium increases are necessary given the rise in health care costs. While rising health care costs is a known problem with our broken health care system, some of the premium increases requested by insurance companies are 5 to 10 times larger than the growth rate in national health expenditures.11 All the while, insurance companies and their CEOs continue to thrive.
Recent economic data show that profits for the ten largest insurance companies increased 250 percent between 2000 and 2009, ten times faster than inflation.12,13 Last year, as working families struggled with rising health care costs and a recession, the five largest health insurance companies – WellPoint, UnitedHealth Group, Cigna, Aetna, and Humana – took in combined profits of $12.2 billion, up 56 percent over 2008.14 These health insurance companies’ profits grew even as nominal GDP decreased by 1 percent over this same time period.15 WellPoint accumulated more than $2.7 billion in profits in the most recent quarter alone.16
On a call today with reporters, Secretary Sebelius explained why insurance companies get away with rate increases like this:
Insurance companies are often responsible to shareholders as well as policy holders. And when you sell insurance, you make more money by insuring people who don’t get sick rather than people who do get sick.
A lot of these people on these plans have no choice other choice. They can either pay the rate increases or drop coverage.
Later in the day on another call with reporters, Congressman Earl Blumenauer joined small business owners from the Main Street Alliance to talk about their rate increases, further driving home the point that these kinds of rate hikes are commonplace.
On the call, business owners like Kelly Conklin from Bloomfield, NJ said health insurance rates had gone up for them as much as 124%. Conklin said:
My employees will have to decide if they want to continue getting coverage and pay their own way or drop coverage and take their chances.
These premium increases stifle business and prevent employees from contributing to economic growth because all of their wages go towards health care. We’re at end of our rope. We can’t afford to let this opportunity for reform slip away. We need to finish the job with the things the Main Street Alliance is fighting for – competition, transparency, and a public option.
Congressman Blumenauer responded:
It’s frustrating for me to hear these stories. Small business is paying disproportionate amount of the health care burden. Hearing of businesses spending 20% of payroll on health care isn’t uncommon.
It doesn’t have to be this way. We spend more on health care than any nation in the world. A few in America get the best health care, for the average American, we get worse results. We are sick more often, stay sick longer, die sooner, and our families and businesses suffer.
A few months ago, I introduced a bill to terminate health insurance for Congress until health reform is enacted. If they had to personally experience the tender mercies of the health care market – the gaps in coverage, the increasing premiums premiums, denials of care – I think we would enact reform in a matter of weeks!
Hopefully the House will use reconciliation, otherwise known as the majority vote process, to clean up the Senate bill and send it back to them for a vote. Then we would approve the remainder of the Senate bill.
Double digit rate hikes are the norm in America’s health care system today. They will only get worse if reform isn’t finished and finished right. Of course, the insurance industry thinks Secretary Sebelius is "vilifying" them, with AHIP – the main insurance industry lobby – releasing a statement today saying how much they think we need health reform. This is while they’re actively funneling money to the Chamber of Commerce to run ads trying to kill reform.
Sorry insurance companies, but we’ve known all along that you want to preserve the status quo so you can keep raking in your outrageous profits while the rest of the country struggles to get out of a deep recession. It’s up to Congress to fix this broken system and put the insurance companies in their place. Which means finishing reform right and getting it done now.
(also posted at the NOW! blog)
I’m proud to work for Health Care for America Now
33 Comments
This is a great detailed bit of writing on insurance profits, Jason – and its really lends weight to the argument that provision of health care is just plain not a private market function. The public ends up going to eternity and back struggling to get the government to take on the insurance industry, but that never happens because the insurance industry is deep-pocketed and generally succeeds in buying the laws it wants for itself and otherwise keeping politicians on a leash.
Reform of the health care system is a “yes or no” proposition. Either the system is transitioned to the single public payer model (which is very successful in many well-known examples) or the system, as such, is left as a private market function with those able and willing to pay doing much better than those who aren’t. There doesn’t seem to be a viable, achievable “halfway” solution. You either have a single public payer system or you don’t have a true system for health care provision, just the option of the insurance racketeers’ products for those inclined, and you don’t pretend that you do have a real system.
I don’t disagree that health care can be an entirely non corporate thing, but to say that there’s only one way to reform the system, given the examples around the world, doesn’t ring true for me.
As far as I know we have various implementations of public single payer, then there is Switzerland and the Netherlands who have highly regulated private system that we’ll never have here because, as I wrote earlier, the government officials are unable and/or unwilling to regulate deep-pocketed incorporated business interests.
Can you give me an example besides the two above that exist in democratic nations of functional systems?
I think you proved my point. Thanks.
Again: in the US, health care reform is a yes-or-no question. Are we to have a government single payer system, or do we stay with largely unregulated private service offerings available to those able and willing to pay? Are health care costs determined by large-scale government engagement with service and product manufacturers, or does the pharmaceutical industry write its own legislation?
Again: there doesn’t seem to be a viable, achievable “halfway” solution for the US. The attempt to create a hybrid public/private system just failed spectacularly in front of us in 2009 because the government officials in great number are completely corrupt and will only intervene in the current dismal status quo to enhance the wealth and prerogatives of the sectors of the plutocracy riding atop the health insurance and pharmaceutical cartels. There is no achievable system in the US that relies on regulated private industry in health care to pay for health services and products. Our government officials are just too bought off and corrupt. Otherwise, that system would have been signed into law last year.
So: do you want a public single payer system, or not? In the US, there will never be cooperation from the health industry cartels with any form of serious regulation, nor will they allow co-existence with a public single payer option with which they must compete. So we have, again, the yes-or-no question. Health care reform in the US is about achieving a public single-payer system. The rich sitting atop the health industry will fight tooth and nail any reform that benefits working people so either you live with the dismal status quo or you fight the rich sitting atop the industry into defeat, somehow.
That doesn’t make any sense. Can you give examples of what the halfway solutions are?
In essence and in effect, all industrialized nations have a single-payer system, with rare exception. Even nations with public utility private institutions have the lion’s share of cost paid with public money.
The United States should have a single-payer model for the simple reason that Americans simply don’t like each other, so the idea that a non-profit or public utility private corporation could maintain fair and equal treatment and action for all Americans is ridiculous. The ONLY solution for America is a single-payer model. Everyone gets the benefit and everyone feels the pain.
have you looked at what they have in common?
For-Profit Insurers Must Be Banned from Basic Healthcare Market
So true Jason! Thanks for reminding the folks here that there is more than one way to reform the system.
Best Care Everywhere
Here’s an idea: a civilian VA for the uninsured, and maybe the rest of us.
http://www.washingtonmonthly.com/features/2007/0710.longman.html
Single Provider works for veterans, but try telling that those free market fSingle Payer types who are hung up on the right to go to the private hospital or doctor of their choice. Geez, what a bunch of supply sidesr, if you don’t like socialized medicine, you should move to Canada!
Hmm, here’s a thought…we could compromise on expanding and improving Medicare to cover everyone while also expanding VA eligibility so it can provide care to every veteran (and family member) who chooses to go there. Veteran’s families could “vote with their feet” between the sure hand of the VA healthcare or the invisible hand of Medicare. That way we can see which system works best. Call it the “Medicare with a public option” plan. :o)
From Sibelius quote above:
Now, why was it Obama took single payer off the table?? Oh, yeah…private for-profit insureres were there, had been making big profits, and that couldn’t be changed.
Yeah, that’s the ticket.
That’s why the public just luvs them these Obama plans (plural used becz I really don’t know what his plan will be or has been, there have been seemingly so many).
Could these huge rate hikes be pressure to force the current HCR bill to pass?
They are choosing the absolute best time to do it. We couldn’t ask for better timing.
Yeah, they’re showing what everyone would get once they have a Captive Market if we pass this so-called healthcare reform. If you think insurance is being raised a lot now without a mandate, just wait to see what happens to the rates when there’s an IRS-enforced mandate to make you buy their products.
Great read Jason, lots of info and details.
I’d offer that the rate hikes are for extended profits in light of reform coming their way that’s not friendly, and also the hikes are to force costly patients off the rolls completely, reducing expenditures for the company.
At any rate it’s clear to all we need REAL reform, anti trust, competition for private ins and all the things FDL has discussed in the past year or so or more.
Again, nice read, thanks for pulling all that together for us.
Other than the generally disapproved of approach of the excise tax as a way to bend the curve, what part of the currently proposed legislation would address the increased insurance rates for those that are currently insured?
A simple profit cap, say 10 or 20 percent, for the insurance company probably just means that niftier accounting tricks and profit loosing transactions to shell vendors, such as are often used in businesses like nursing homes, become the norm. Without serious oversight and profit diminishing oversight, such as has not been even hinted at in any of the congress defined variants, profits will continue their upward climb. It might even be argued that the fact that since nothing serious was suggested by health insurance reform it has lead the insurance companies to let loose the dogs of rate hikes. They already know they can mow down those that might hint that healthcare supported by insurance is not amenable to comparative shopping.
So, the mandated medical loss ratio is basically a profit cap, it just works the other way around. Instead of saying they can only take in 20% profit, it says they have to spend 80 – 85% of money they take in on actual care instead of admin expenses, profit, etc…
So it works out the same.
Of course, you’ll need vigorous enforcement to make sure the insurers play by these rules.
Are you aware that insurers are opening banks? In fact, WellPoint got the feds to reclassify them from an insurance company to a financial services company. Both WellPoint and UnitedHealth Group are becoming bankers.
I believe the long term strategy behind these huge rate increases is to price us out of the popular insurance products where the insurer assumes the risk to high deductible plans where the consumer assumes the risk. And those high deductible plans are coupled with Health Spending Accounts. And where will those Health Spending Accounts be deposited? In those nice new banks of course. And we will be charged fees for managing the account, transaction fees, fees for investing the funds.
They aren’t opening these banks to get a few dollars. They are in the process of changing the insurance industry. Just like fee for service plans are ancient history today’s PPO’s will be ancient history and high deductible plans and health savings accounts will become the norm. Instead of being insurers, today’s insurance companies will be financial services companies.
I believe the insurers turning themselves into bankers is a missing piece of the story about these controversial rate increases. It needs to be more widely known.
Read this enlightening article from the LA Times:
Insurers see banking future
Many have found that managing customers’ money is more profitable than underwriting medical coverage.
http://articles.latimes.com/2008/oct/22/business/fi-insure22
Wow.
No SHIT, ya think?!?!?!?
This is huge.
I’m gonna hammer Deep Capture and do a diary . .
It’s all intertwined . . . and Deep Capture tells how it’s intertwinded, start to finish.
It’s long after Jason’s post earlier today, oh, yesterday.
And it’s long after your comment.
But I gotta say, and acknowledge, that if what you are saying is true (I have NO reason to believe it’s not, my wife is in the biz with a player albeit she’s in a division FAR removed from the care and coverage issues) that it makes big sense to me.
It’s just a furthering of the present scams allowable due to deregulation of ALL industries and the open doors deregulation in and of itself has provided to profiteering.
And now EVERYONE wants to be on Wall Street, and trade, and have the government and us taxpayers bail their asses out when they fail.
The shit yer talkin about is well documented here . .
Deep Capture
Proof, and putting, of how Wall Street is crooked, rigged, ugly and evil.
It’s no wonder to me that the healthcare industry, be it insurers or providers, decided to use the same tactics, join Wall Street, and bust out any competition using any of the tactics that Deep Capture unveils.
How to bust a company, in moments. And consolidate, and profit whether you win or lose. Hedge, sell naked, sell short and naked.
Hope you’ll consider reading Deep Capture if you haven’t, hope FirePups will too . . .
It’s really all about the root of our facist system and tells how it’s all rigged with the corporatist game.
And who the players are, and how it’s done.
Again, I’m in awe of your comment, and I thank you for it, hope others pick up on it and begin to see the real light of the depth of the corporate facism we are drowning in.
I got my notice from Anthem the end of January informing they were raising my rates from $627 a month to $773 a month. They offered some HMO type plan for $683 a month along with a small print, thirteen page explanation of benefits to go along with it. I hope Obama and congress can pass something soon before I either go broke or get seriously ill. I just can’t afford this anymore.
I now have 356 days to Medicare eligibility.
Just stay health and uninjured…
Stay well !
Thanks. I will certainly try.
Of course, we all know that the Repu’ublicists would love to privatize Medicare or turn it into a means-tested welfare program.
Hey mister, your money AND your life.
(pause)
Hey mister, I SAID, “Your money AND your life”
(short pause)
What’s to think over?
Thanks, Democrats, for blowing the reforms that could have fixed these problems and made you HEROES to the American public.
Now just imagine you were locked down in one of these government mandated plans right now. Your rates are rising thru the roof and your forced to either pay it or get penalized by the IRS. Obama and the dems are lucky the senate bill didnt pass.
The way I read the mandated plan was that you would only be required to pay a certain percentage of your income for mandated insurance and the rest would be subsidized by the government, so the gov would end up paying the additional subsidy, thus raising the cost of the whole program and lining pockets of big insurers because there are no cost controls.
If your income sucks or you are unemployed, then all the subsidies promised don’t mean shit for brains.
Conservative/Teabaggers/Republicans like Sarah must keep it simple; tax cuts, energy,
wearupliftbracountryNot as up on this as I should be, but North Dakota may be among the seeming few states that actually have functioning Insurance Dept/Commissioners that regulate rates which must be approved before going into force.
Along with our socialist state bank. And socialist state mill and elevator.
And ginormous budget surplus.
All of which Coattails Hoeven, the current Republican Governor is endeavoring to ride into the U.S. Senate.
Damn socialists ruining our great country! You should be ashamed of yourselves!
Well, It seems that what everyone would get once they have a Captive Market. We can reform health care better. Indeed, Insurance companies must be often responsible to shareholders as well as policy holders.Also when you sell insurance, you make more money by insuring people who don’t get sick rather than people who do get sick.I think we should reform this program as soon as possible.
The article you post is helpful for lots of people.
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you want capitalism you got it
aint it nice
wars for profits
pre existing conditions
bankrupt over medical costs
corp fascism owns supreme court, congress, white house, war machine, election process, and best of all the media
keep blaming the corps they are only doing what they do best make mega profits.
dont look at the system you love called capitalism.
systems are responsible for 90 per cent of a societies problems.
best kept secret in america.
no better kept secret than americans are imperialists to the core liberals and conservs alike.
but behind that imperialism is an economic system called capitalism based on greed and survival of the fittest.
americans love affair with capitalism will cost them their middle class.
americans are living on borrowed time and money now to maintain a declining middle class. fast declining middle class.
and the middle class is whining like babies while they line up to vote for capitalists agendas. go figure. the very thing making them lower class they line up to vote for.