IT’S NOT JUST ANTHEM…. California’s Anthem Blue Cross — the largest insurer in the nation’s largest state — recently told nearly a million customers that, next month, they’ll face premium increases up to 39%. Even those who have come to expect private health insurance companies to tighten the screws on their customers were taken aback. An LA Times editorial noted, “Anthem’s actions offer the best argument yet for Congress to complete work on a comprehensive bill without delay.”
Today, however, the Obama administration’s Department of Health and Human Services is publishing a report called, “Insurance Companies Prosper, Families Suffer: Our Broken Health Insurance System.” The point is to emphasize that Anthem’s back-breaking rate increases are becoming increasingly common nationwide — the report specifically points to premium increases proposed in Connecticut, Maine, Michigan, Oregon, Rhode Island, and Washington for those buying coverage as individuals because they’re not covered by their employers.
Jonathan Cohn explains the structural problems that lead to these rate hikes.
The problem here, as the Blue Cross plans themselves have admitted, is the dysfunctional nature of the individual insurance market. Insurers divide the market up into blocks, then adjust rates to account for the past and projected medical expenses of each block. As the rates go up, healthier beneficiaries leave the block for other policy options, forcing rates even higher for those people who are left.
The problem gets worse when the economy is bad, because people are more eager to find cheaper coverage and more willing to risk going without. It can also get worse if an insurer is trying, deliberately, to isolate and then force out unhealthy subscribers.
How do you stop this cycle? Get everybody covered, either in one pool or a set of smaller pools that are “risk-adjusted” so that this cycle doesn’t take place. But to do that, you have to require that insurers stop discriminating against people with pre-existing conditions, mandate all policies provide average coverage, make everybody carry some insurance, provide subsidies for people who can’t afford premiums on their own, and implement systemic reforms that will make medical care itself less expensive over time.
This isn’t complicated — to address the problem, policymakers are going to have to pass health care reform. And given that Maine residents are poised to be especially screwed over by the premium increases, the fact that Olympia Snowe and Susan Collins don’t even want reform to get an up-or-down vote in the Senate should be pretty scandalous in the Pine Tree State.