Insurance Rate Hikes Spur Health Reform Debate

Capping Rate Hikes?

The health care reform battle will resume this week with Democrats trying to pass reform before the end of the month. Expect to hear more about capping insurance rate hikes as insurers provide fuel for that fire.

Major insurers are seeking premium hikes for individuals not covered by work - that amounts to 56 percent in Michigan, reports CBS News, and 25 percent in California.

Double digit increases are pending in at least eight states. In California, Anthem Blue Cross is raising its premiums by 39 percent. Anthem must put off its rate hikes until May 1 under public pressure while the state inquires about the need for a hike.

Anthem’s parent company, Wellpoint, is $380 in the black in profit in just the fourth quarter of last year.  The Los Angeles Times reports that these hikes are large and unreasonable but not unprecedented.

As part of President Obama’s health reform plan, he has proposed more federal oversight over insurance premium increases.

Goldman Sachs Analysis

Using those hikes a fuel, the Obama administration is looking toward a new analysis by Goldman Sachs, the New York investment bank that recommends investors share the wealth by buying into two big insurance companies, UnitedHealth Group and Cigna. The reason- rates are up and competition is down, reports the New York Times, and insurers can walk away from any risk in the form of pre-existing conditions.

The report says:

• Employers are reducing benefits, adding deductibles for prescription drugs and adding co-pays
  
  
• Price competition is down from one year ago
  
  
• Carriers are increasingly willing to dump existing customers to improve profits

Expect to hear the Goldman Sachs analysis as a centerpiece on the push for major health care reform.

Insurers usually cite the cost of medical care, inflation and medical loss ratios, (that is the amount of every dollar from a premium spent on medical services) as a reason for a hike. eHealthInsurance.com reports that policy holders can expect a rate hike every decade their age raises such as the 30th and 40^th birthdays.

Some insurers also consider the types of medical services used in a community to justify a rate hike.

Consumers should shop around and make sure that they are in the correct age group for what they are being charged. The state insurance commission has a list of rate suggestions. Check if there is a group you can join to share in a group plan, through a professional association, a domestic partner, or spouse or parent’s employer.

A state insurance commission can take your concerns into consideration before allowing rate hikes to go through.

Single Payer Plan

The need for private insurance is eliminated under the single-payer plan, which was taken off the table early in the health care debates even though it was advocated by President Obama at an AFL-CIO meeting in Illinois in 2003 as reported by The Nation.

"I happen to be a proponent of a single payer universal health care program. I see no reason why the United States of America, the wealthiest country in the history of the world, spending 14 percent of its Gross National Product on health care cannot provide basic health insurance to everybody. And that's what (another speaker) is talking about when he says everybody in, nobody out -- single payer health care plan, a universal health care plan."

But in his March 3, “this is it” speech on health care reform, the president dismisses single payer as reported The Progressive,

“On one end of the spectrum, there are some who have suggested scrapping our system of private insurance and replacing it with government-run health care. Though many other countries have such a system, in America it would be neither practical nor realistic.” #