Did you know that the so-called fiscal cliff deal eliminated any additional government money to finance co-ops as competition for big-profit insurers? Why is this problematic? Well, they were at least a small potential way to discipline the big-profit insurers. And, as the New York Times lays out today, they sure need to be disciplined:
Health insurance companies across the country are seeking and winning double-digit increases in premiums for some customers, even though one of the biggest objectives of the Obama administration’s health care law was to stem the rapid rise in insurance costs for consumers.'The rate increases can amount to several hundred dollars a month is really the money line -- no pun intended -- in that last paragraph. These greedy big-profit insurers -- who add no value to the health care system through their existence as pseudo-investment banks gambling with Americans' premium dollars to generate shareholder wealth -- are sucking money out of an American economy -- and American pockets -- that could be spent instead at the local hardware store, diner or clothing store. Heck, the money could even be spent at Walmart. This is the essence of economic rent.
Particularly vulnerable to the high rates are small businesses and people who do not have employer-provided insurance and must buy it on their own.
In California, Aetna is proposing rate increases of as much as 22 percent, Anthem Blue Cross 26 percent and Blue Shield of California 20 percent for some of those policy holders, according to the insurers’ filings with the state for 2013. These rate requests are all the more striking after a 39 percent rise sought by Anthem Blue Cross in 2010 helped give impetus to the law, known as the Affordable Care Act, which was passed the same year and will not be fully in effect until 2014.
In other states, like Florida and Ohio, insurers have been able to raise rates by at least 20 percent for some policy holders. The rate increases can amount to several hundred dollars a month.
There are a couple lessons here. First, states that have the power to reject rate increases from insurers get smaller rate increases. And, second, insurers are lying when they claim that these increases are necessary due to rising health care costs.
Under the health care law, regulators are now required to review any request for a rate increase of 10 percent or more; the requests are posted on a federal Web site, healthcare.gov, along with regulators’ evaluations.The reality is that like a used car salesman who insists the plastic seats are fine Italian leather, big-profit health insurers can't be trusted to tell the truth. Why? Because their business adds zero value to the health care system -- and thus serves no real purpose -- so lies are the only way to push back against those who aim to raise awareness about their sickening role in American medical care. As Wendell Potter recently argued, although the Medical Loss Ratio requirements under the Affordable Care Act force insurers to spend 80/85 percent of premium dollars on medical care, there is no regulatory tool to force ensurers to keep premiums in check. Why is this important? Without that kind of tool, which California's hero Insurance Commissioner Dave Jones advocates, insurers can just boost premiums in order to boost both profits and medical spending.
The review process not only reveals the sharp disparity in the rates themselves, it also demonstrates the striking difference between places like New York, one of the 37 states where legislatures have given regulators some authority to deny or roll back rates deemed excessive, and California, which is among the states that do not have that ability.
New York, for example, recently used its sweeping powers to hold rate increases for 2013 in the individual and small group markets to under 10 percent. California can review rate requests for technical errors but cannot deny rate increases.
The double-digit requests in some states are being made despite evidence that overall health care costs appear to have slowed in recent years, increasing in the single digits annually as many people put off treatment because of the weak economy. PricewaterhouseCoopers estimates that costs may increase just 7.5 percent next year, well below the rate increases being sought by some insurers. But the companies counter that medical costs for some policy holders are rising much faster than the average, suggesting they are in a sicker population. Federal regulators contend that premiums would be higher still without the law, which also sets limits on profits and administrative costs and provides for rebates if insurers exceed those limits.
Critics, like Dave Jones, the California insurance commissioner and one of two health plan regulators in that state, said that without a federal provision giving all regulators the ability to deny excessive rate increases, some insurance companies can raise rates as much as they did before the law was enacted.If we can't have Medicare-for-all (yet), this kind of aggressive regulation is absolutely necessary. New York is an excellent case study:
“This is business as usual,” Mr. Jones said. “It’s a huge loophole in the Affordable Care Act,” he said.
While Mr. Jones has not yet weighed in on the insurers’ most recent requests, he is pushing for a state law that will give him that authority. Without legislative action, the state can only question the basis for the high rates, sometimes resulting in the insurer withdrawing or modifying the proposed rate increase.
In New York, for example, state regulators recently approved increases that were much lower than insurers initially requested for 2013, taking into account the insurers’ medical costs, how much money went to administrative expenses and profit and how exactly the companies were allocating costs among offerings. “This is critical to holding down health care costs and holding insurance companies accountable,” Gov. Andrew M. Cuomo said.I will allow one sarcastic comment from the big-profit insurance industry to be represented here:
While insurers in New York, on average, requested a 9.5 percent increase for individual policies, they were granted an increase of just 4.5 percent, according to the latest state averages, which have not yet been made public. In the small group market, insurers asked for an increase of 15.8 percent but received approvals averaging only 9.6 percent.
“There’s a four-letter word called math,” Ms. Voss said, referring to the underlying medical costs that help determine what an insurer should charge in premiums. Health costs are rising, especially in Iowa, she said, where hospital mergers allow the larger systems to use their size to negotiate higher prices. “It’s justified.”Sorry, Ms. Voss, but the whole point of health insurers existing is to negotiate lower prices for patients. In other words, to combat the pricing power of big-profit hospitals. If private, big-profit insurers are unable to negotiate low prices for their policyholders -- which they claim is exactly why the need to ask for higher rates -- then big-profit insurers are failing at the one thing that they exist to do, and should be replaced by a single government insurer (i.e. Medicare) that is truly able to negotiate with providers and 'bend the cost curve' as we heard politicians say so frequently. This is exactly why no other developed country allows private, for-profit insurers to finance basic health care -- because they are incapable of doing so in a reasonable, affordable way; they literally fail at that task.
So, this article should make us angry -- as angry as the silly threats of Aetna CEO Mark Bertolini to raise rates (Wendell Potter again calls bullshit on Bertolini's threats) -- but it should also make us happy, because the insurers -- without apparently realizing it -- are admitting -- through their intention for raising rates -- that they are absolute failures at doing their job.
And, you know, isn't that why Mitt said we should be able to fire health insurers in the first place? Maybe the guy was right about something.
Big-profit health insurance companies are not only cruel and greedy -- they are also, well, failures.
10:34 AM PT: Friends, please understand that I am not -- at all -- referring to ObamaCare as a failure. I am, instead, referring to the business model of the private, for-profit health insurance industry as a failure. I accept that ObamaCare was a necessary compromise -- with a TON of good stuff -- that finally begins to address this country's greatest social injustice. Again, this diary is not criticizing ObamaCare, but is criticizing the insurance industry.