I used to take public transportation to work, but I started to drive and guess what, my auto insurance increased to cover the additional risk. My home is in a hurricane prone area, guess what, my deductible was increased and my premium was raised. I started to smoke (not really) and when my life insurance company found out, they raised my rates. Such is life.
My health benefits plan was told to cover children to age 26, report the value of my benefits on my W-2, cover many preventive services at 100%, cover people with existing medical conditions the same as everyone else and to implement new appeal procedures. My premiums are going up an extra 5%…those bastards!
Congress added all the goodies in health care reform early on in the process so it could sell the idea to the American people, what they forgot (eh, eh) to sell was the fact that all this stuff costs money and one way or the other Americans are going to pay. Now, insurers are seeking premium increases to cover the additional costs and risk as a direct result of PPACA changes. There is a good article in the September 8 Wall Street Journal summarizing the state of the individual market.
Here is my favorite quote from that article:
“In Kansas, I don’t have a lot of authority to deny a rate increase, if it is justified,” said Kansas Insurance Commissioner Sandy Praeger.
Should any regulator have the authority to deny a rate increase that is justified?
Apparently, the White House thinks so:
“I would have real deep concerns that the kinds of rate increases that you’re quoting… are justified,” said Nancy-Ann DeParle, the White House’s top health official. She said that for insurers, raising rates was “already their modus operandi before the bill” passed. “We believe consumers will see through this,” she said. About half of all states have the power to deny rate increases. Ms. DeParle pointed out that the law awards states $250 million to bolster their scrutiny of insurance-rate proposals, saying that will eventually curb premiums for people.
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You’re sure this is going to work, right?
I think she is right, consumers will see through this, except the “this” may not be what she envisions. Additional scrutiny may curb premiums in some cases, but how are we curbing health care costs. The premiums we are talking about are for new individual and small group coverage that is subject to all the new requirements of PPACA. If you think we are having fun now, wait until all the provisions of PPACA hit for retired employees with employer based coverage and for the 70 million Americans with self-insured coverage through large employers and the States? Those plans are now grandfathered from many of the costly new provisions, but to keep that status is more costly than making changes to manage health care benefits and thus many if not most of the grandfathered plans will lose that status in the next few years. Retired employees will see their benefits cut as well as the changes to employer based prescription drug programs kick in.
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“There will be zero tolerance for this type of misinformation and unjustified rate increases.”
Is all this a surprise? Not exactly, in November 2009 a report from the Congressional Budget Office told lawmakers:
Nongroup Policies CBO and JCT estimate that the average premium per person covered (including dependents) for new nongroup policies would be about 10 percent to 13 percent higher in 2016 than the average premium for nongroup coverage in that same year under current law. About half of those enrollees would receive government subsidies that would reduce their costs well below the premiums that would be charged for such policies under current law.
Amazingly, politicians saying something will work does not make it so. Now to cover its tracks the Administration is once again taking the insurance industry to task warning them that “unnecessary” premiums hikes will not be tolerated. Hey, I don’t think we should tolerate unnecessary increases in anything, but duh, that’s not the point. The fact is that we passed legislation that will cause health care costs to rise either by design or by the shifting of costs from some federal programs. No amount of political scapegoating is going to change that.
In the news: New law won’t curb health care costs in this decade. Spike in health care costs.
You can demonize health insurers all you want, you can classify underwriting procedures as abuses, but the fact remains that health care trend for the next year is still 9% plus the additional costs added by PPACA. Some costs are directly related to benefit provisions of PPACA other changes raise administrative costs for employers, third-party administrators and insurance companies and some is caused by the fight over loss ratios. You can’t squeeze this health care balloon and keep it the same shape it was before and you can’t make health care affordable by “curbing premiums.”
QUINNSCOMMENTARY 
