Wednesday, February 10, 2010

The Need for Health Insurance Reform


Via SFGate

Anthem Blue Cross customers got a shock this week when the health insurer informed thousands of individual policyholders that their premium rates will jump as much as 39 percent on March 1.

Unlike home and automobile insurers, California insurers can legally raise rates for policyholders as much as and whenever they want. Regulators technically oversee the increases, but they have no power to control rates.

That means the regulators can't regulate!

What are Anthem's reasons for the increase?

In a statement, Anthem Blue Cross attributed the increased premiums to a bad economy and rising health care costs, forcing members to drop coverage, which “leaves fewer people, often with significantly greater medical needs, in the insured pool.”
But several years ago California passed tort reform to cap damages at $250,000 as away to control health care costs. Now the insurance industry is blaming the economy and their pool of insured. When will they run out of excuses?

Californian Mark Unger has an interesting slant.

Is it me or is that the greatest circular argument ever? Because of the bad economy, members have had to drop their coverage leaving them uninsured. Because the healthy people can no longer afford the coverage, that leaves more sick people in the pool, raising the costs to the insurance company and forcing them to raise premium costs for those who can continue to pay for their coverage.

I don’t suppose this ever occurred to Anthem, but based on their logic, were they to lower their prices, they would attract more members, rather than force members to drop out, greatly improving the ratio of healthy to sick in their insurance pool. This would leave them with the opportunity to earn more profit.

This is a great example of why we need health care reform which is a not-for-profit system such as the public option. Or even better a universal single-payer health care system.

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