Well, well…the health insurance industry’s death spiral continues. Insurer Blue Shield of California just announced yesterday that it is seeking an eye-popping 59% rate increase on individual policies. That’s after the company imposed an 18%-29% increase on Oct. 1, citing higher healthcare costs. What’s the explanation for this ridiculous increase? Blue Shield spokesman, Tom Epstein, told the Los Angeles Times:
Epstein said Blue Shield raised rates again Jan. 1 to pay for changes under the national healthcare overhaul and a new state law that bars insurers from charging women more than men.
But another Blue Shield spokesman, Johnny Wong, told Bloomberg News that the federal health reform law wasn’t much of a factor. The increases are necessary, he said, not only because of rising provider fees and patients using too much care, but also because healthy people are dropping coverage.
The increases “have almost nothing to do with the federal health reform law,” and “reflect trends that were building long before health reform,” Wong said in the e-mail.
All of Blue Shield’s business is located in California, which is why the insurer hasn’t experienced the slowdown in use of services that other insurers led by UnitedHealth Group Inc. and WellPoint have reported, Wong said.
“Although some parts of the country have experienced a drop in utilization, we have not seen that reduction in California,” Wong said in an e-mail. “In fact, because healthy lives are dropping out of the risk pool due to affordability issues, we have seen upward pressure on our core trends.”
He said the company’s business for individual policyholders continues to experience growth of 3 percent to 5 percent and unit cost increases of 7 percent to 9 percent.
“Together those factors are driving core trends into double digits,” Wong said.
Why the bit of inconsistency in reasons for these increases? Basically, Blue Shield was going to raise rates come hell or high water, reform or no reform. Already, California’s new insurance commissioner, Dave Jones, is pushing back against Blue Shield, arguing that health insurance company rates should be regulated like auto insurance rates.
But, we all know there’s an 800-pound gorilla in the room. Health care shouldn’t be like owning a car. I don’t really need a car to get around, but I do need my health. Simply put, insurance companies should stay out of health care. The existence of profit-seeking health insurance industry is the main reason why America is spending more than 16 percent of its GDP on health care and still have 50 million uninsured, while other nations with national health systems spend far less and cover everyone.
Although Blue Shield of California is technically a non-profit company, it, like other supposed non-profit health insurance companies, operate like Big Businesses within a deregulated marketplace. And it’s telling that Blue Shield acknowledges that its product is unaffordable, and that’s what’s making people drop coverage, which results in higher premiums for the customers that are left, which results in more people dropping coverage. This is the insurance industry death spiral in action.
Yes, the other factors cited for increasing premiums are also partly to blame. A lot of doctors are charging too much money and overtreating patients. A lot of patients are using far more care than they need. And drug companies are ripping off patients and taxpayers. But these are symptoms of the much larger structural problem of having a healthcare delivery system that relies on unaccountable, inefficient and destructive profit-seeking enterprises like the health insurance companies.