More Profits for Health Insurers

February 23, 2012

Here we go again. Although California health insurers cannot justify raising premiums, rates continue to grow faster than underlying costs. Premiums for hundreds of thousands of individual policyholders are to increase at 8% to 14%. This is a significant chunk of change. My policy is $1,000 monthly. So a 14% increase is $140.

The cost of goods and services associated with medical care grew just 3.6% over the last 12 months nationally, government figures show. This accords with the national average rate of increases. Yet California insurers’ justification is based on these same projected increases in medical costs which have no basis in past experience. The burden on consumers is enormous – premiums have been increasing five times faster than inflation.

Note that California is one of only 17 states that do not have some kind of oversight over the setting of individual health plan rates. Senator Dianne Feinstein is spearheading the effort to impose accountability and transparency of premium increases. Feinstein noted that the initiative “would require health insurance companies to publicly justify their rates before rate hikes take effect…. Their profits are unprecedented. They are huge…. In the first quarter of 2011, the five largest made net profits of $5.95 billion, a 16% increase.”

As healthcare becomes increasingly expensive, patient advocates encourage California voters to implement legislation that would authorize the state insurance department to approve or reject insurance premiums. 505,000 signatures are needed on a petition to place the measure on November’s ballot.

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4 Responses to More Profits for Health Insurers

  1. Andrea Geiger on February 24, 2012 at 4:46 pm

    What happens when you put Actuarial’s in charge of health? This is what we’re seeing now. The Insurance industry works with macro-ecomonics, worst case scenarions and maintaining a fiduciary balance to hedge their risk. It’s not personal. So, again, why have we allowed our health and wellness to be determined by Insurance companies? There are alternatives to financing healthcare costs, but government mandates and beaurocratic ‘best practices’ are not the route to personalized health and wellness for all. I have had the pleasure of running medical clinics for low income and uninsured folks for years… I have found that medical professionals ARE the most compassionate and motivated individuals in all of healthcare. Always going beyond the minimums, sacrificing time, money and countless personal gain for patients. These dedicated, invested individuals should be the architectsn of health and wellness care.

    • Claudia on February 27, 2012 at 8:13 pm

      Andrea, I agree. If, for example, Medicare was expanded to include all of the population and private health insurance companies were taken out of the equation (no wonder healthcare reform is receiving pushback!), we would all benefit (and the insurance companies could take their money and invest in something new). Demand for health care is inelastic – that is, it is based upon need, not choice, similar to the need diabetics have for insulin. Is it appropriate – ethical – wise – to place the supply for such a market in the hands of profit-seeking institutions? Methinks not!

      Thanks for your feedback. Much appreciated.

  2. Paul Siman on February 27, 2012 at 9:14 pm

    The rising cost of premiums is only a part of the quest for profit that the insurance industry feels is necessary. If insurance was a not-for-profit business it would be an entirely different scenario. If the Federal Government regulated insurance, and there was a consistent strategy and enforceability across all 50 states, the cost of managing would be reduced. With individual states each pushing agendas that allow insurers to work market to market, the insurance companies have the advantage, and if the odds are not in their favor – they pull out of the market or inflate premiums. The assumptions used are out of date, the one shoe fits all mode reduces the caliber and quality of care, and the public allows this by remaining silent. We all need to speak up, speak out and push both Federal and State officials to challenge, reject and modify plans that are more in line with the economic times and the population.

    • Claudia K. Nichols on September 14, 2012 at 6:17 pm

      Paul, I agree with all of your points. I do have to question the ethics of categorizing medical practice as a profit-making venture. Dr. Paul Farmer, the founder of Partners In Health, at the beginning of his career maintained that it was unethical to profit from others’ illnesses. He has held to that belief over several decades. And yes, the public has a responsibility — one which has in large part been abdicated. There is a cultural disconnect in the U.S. which makes health care reform extremely difficult to implement.

      Thanks for your astute response.

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