Wednesday, January 12, 2011

Ho Hum

Lots of more dramatic news out there right now, but there's also some unexciting news which will also have a direct impact on people in California. Health insurance rates will be going up for Blue Shield of California customers.

The three increases announced by the insurer, the last of which would go into effect March 1, would collectively raise rates 30% on average for people who buy coverage individually. That's a much higher jump than in the premiums for group insurance policies and a significantly larger increase than the overall rate of healthcare inflation.

Why the huge jump? The editorial points out that even Blue Shield admits that the new health care law's expanded coverage accounts for only a tiny fraction of the increase. Other forces are at work:

...the company said, the main factors are increased fees for doctors and other care providers and the growing demand for treatment by the company's customers. What that reflects, though, is that Blue Shield is attracting fewer healthy customers for its individual plans, leaving fewer people to shoulder the rising burdens.

The individual mandate was supposed to stop the cycle, but that really hasn't kicked in yet, and may not for a longer period expected, given the current court challenges. What is interesting is that the insurer seems to be offended by its customers actually expecting to use their policy for health care.

The huge increase has prompted the California Insurance Commissioner to take a hard look at the premium hike, but here's the rub: all he can do is look. He can't block the hike if the math justifying the rate increase has been done properly. California insurers finally figured that out with the Anthem Blue Cross fiasco of last year.

Here is where the editorial actually gets it right:

...A recently enacted state law instructs the insurance commissioner to determine whether premiums for individual health coverage are reasonable, but doesn't give him the power to block or modify rates that don't meet that standard. The only limit is the federal requirement that insurers spend at least 80% of the premium dollars they collect on medical costs. That's no substitute for the commissioner being able to block unreasonable rates, and the Legislature should give him that authority. [Emphasis added]

Of course, all of this could have been avoided by real health care delivery legislation, say Medicare For All, or even a shot at a Medicare buy-in plan for the non-billionaires among us. That kind of thinking was eschewed right from the start, however, so we're stuck with the half-vast plan we got. The most we can hope for is the slow pace of incrementalism.

I'm too old for that.

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Anonymous Anonymous said...

I do hope that forensic auditors will verify that the actual profits(including any kickbacks not yet in evidence) don't exceed the limits...

11:57 AM  

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