Everyone loves to hate insurance companies, especially health insurance companies. After all who wants to pay money and get nothing for it even though logic says we should hope never to collect on any insurance policy.
In recent months the animosity toward health insurance companies was fanned like never before by the President and leaders of Congress. We went from health care reform to health insurance reform. We added federal oversight to requested premium increases and in the process we convinced many Americans that premiums were the cause of unaffordable health care. Several insurers didn’t help their cause by requesting high double digit increases right before the final health reform debate.
I suspect that in some cases insurers have raised rates that were not fully justified but more often premium increases are a reflection of costs, utilization and adverse selection by members of the group.
See Anatomy of a 30% Rate Increase and click here for more on Massachusetts
Now we are beginning to see the clash between the promises of reform, the expectations for lower costs and the reality of increasing health care costs that drive premiums.
In Massachusetts they have simply denied increases in premiums. No doubt some of this may be justified, but the tendency to continue to focus on premiums rather than what drives those premiums does not bode well for the current version of reform on the national level.
As I have said many times, if the problem truly was premiums, the thousands of companies, unions and government plans that are self-insured and do not use insurance would not experience rising costs or be forced to raise the cost to workers by double digit percentages. Generous benefits, rising health care costs and minimal employee involvement in cost sharing all contributed significantly to the bankruptcy of General Motors with no insurance involved.
In reality, simply applying price controls on insurance in the quest for affordable health care is counterproductive for everyone.
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