The bold red letters on the
PacAdvantage web site are sobering.
I should know. Earlier this year my own insurance was cancelled--out-of-the-blue.
Finding new insurance became my full time job.
PacAdvantage has announced it will no longer provide access to health insurance offerings
http://www.pacadvantage.org/
This is the new normal for 6200 small businesses covering over 116,000 California residents who have had the plug pulled.
Whatever happened to working hard and playing by the rules?
Even worse, these small businesses are the backbone of Mr. Bush's robust economy. They are probably the base of the Republican Party.
So after receiving the bad news, the beleaguered enrollee is invited to keep clicking to learn why their insurance is gone.
The withdrawal of participating health plans leaves PacAdvantage unable to continue offering competitive healthcare coverage choices for California's small business employees.
Blue Shield of California, a long-term PacAdvantage plan, has notified us it can no longer participate after December 31, 2006, due to its financial losses in the program. Despite concerted good-faith efforts among all parties, we could not reach a financially viable arrangement that would allow for continued participation of Blue Shield of California, Health Net of California and Kaiser Permanente. A core premise behind PacAdvantage is health plan "choice" for participating small employers. Without that choice, PacAdvantage no longer can offer a suitable, competitive option for our employer groups.
Several weeks ago I wrote a diary and an outraged Kossack commented--legitimately, I should add, that complaining about cancelled insurance was a luxury that 48 million Americans don't have. This is totally correct and I hope I implicity acknowledge in every diary I write that the only solution to our cascading disasters is universal, affordable single-payer health care.
That said, take a look at why PacAdvantage closed down.
Officials blamed PacAdvantage's demise on a pullout by the three remaining health plans that participated in the voluntary program -- Oakland-based Kaiser Permanente, San Francisco-based Blue Shield of California, and Health Net of California. In 1994, in contrast, when the experimental purchasing pool was the new thing in town, 10 health plans offered coverage through this mechanism, including many of the state's top HMOs.
. . .PacAdvantage officials said many small employers could no longer afford the cost of the program, and many sought coverage outside of the purchasing pool in recent years. Others have stopped offering insurance to employees.
http://www.bizjournals.com/...
When claims rise faster than premiums, more carriers pull out of the plan. Then premiums rise, and a phenomenon known as adverse selection sets in. Adverse selection occurs when a plan's health insurance population, usually due to age or health status, has a significantly higher utilization of health care services than an average population.
The sad end result: costs exceed premiums or fees collected. When this happens there is even more pressure on loss ratio's. When there are not enough bodies and premiums to support the risk the plan implodes.
Loss-ratios are key for insurance companies. Insurance companies are in business to make money not to guarantee you access to health care. When these ratios increase, which means more people are utilizing health care services, the insurance company must either reverse the trend (deny claims) or cancel the coverage.
Pacific Business Group on Health, headed by CEO Peter Lee, collectively purchases more than $5 billion in health-care coverage for more than 3 million enrollees and their dependents. It represents many of the Bay Area's and the West Coast's largest employers, including Bank of America, Bechtel Corp., the California State Automobile Association, Chevron Corp., McKesson Corp., Pacific Gas & Electric Co., Safeway Inc., Target Corp. and Wells Fargo & Co.
Despite its clout, it found it can no longer afford to offer this service to small employers.
. . .The healthcare purchasing pool was designed to give small employers, with from 2 to 50 employees, have access to affordable coverage. The California state government created the plan, then known as the Health Insurance Plan of California, or HIPC, in 1992. Both under PBGH's management and previously, the health plan offered a variety of HMOs and other health-plan options, including medical, dental, vision and a complementary plan for choices such as acupuncture.
Market forces? You bet.
Private market forces are unable to achieve their social objective which is to deliver health care as a basic right to all Americans. At least 15 percent of our population is uninsured, and the U.S. ranks poorly among industrialized countries in systemwide measures such as life expectancy and infant mortality. Market forces are not working.
PBGH "is proud of the accomplishments of PacAdvantage over the past eight years and we're disappointed that this closure has come to pass," Lee said. "PacAdvantage exhausted every possible approach to keep the partnership together with the health plans. Unfortunately, market forces kept that from happening."
And never forget that millions of desperately sick American citizens cannot afford or access life saving medication due to their pornographic prices and insurance company denials.