Thursday, February 11, 2010

The "best health care" in the world...

Is getting even more expensive. You can bet this announcement by major insurer Wellpoint just gave cover to similar rate hikes by other health insurance companies.
Sebelius had called the increases "extraordinary" and told the insurer in a letter she was disturbed to learn about them. She also has demanded that the insurer answer questions about how much of a profit it will make from the hike.
Sassi said in the letter to Sebelius that the Anthem Blue Cross unit at the heart of the inquiry lost millions in 2009. He declined to offer specifics in an interview.
The executive said Anthem Blue Cross set some of its prices, or premiums, too low last year for the claims it received. It set 2010 prices based on what it thinks future prices will be.
"We need to make sure that our premiums cover the cost of claims," he said.
Sassi a minority of Anthem Blue Cross's 800,000 individual policy holders in California will see rate increases as high as 39 percent. Most premiums will rise around 24 percent when the rates take effect March 1.
WellPoint as a whole made a profit of $4.75 billion in 2009, though $2 billion of that came from the sale of a business.
The letter to Sebelius said insurance costs also continue to rise because medical prices are increasing faster than inflation, and people are using more health care. That use increase is driven by an aging population, new treatments and "more intensive diagnostic testing," the letter said.
Sassi also said that as much as one-third of their individual insurance customers leave every year. That volatility can lead to big changes in the mix of people covered and rate swings. [More]
Please note I do not necessarily blame the insurance companies.  They are making rational business decisions. But they are a big part of the reason why consumers look at health insurance a ticket to an all-you-can-eat medical buffet. Third party payers sever the link between consumption and cost.

Somewhere along the line - and I think it will be sooner than later - we will have to decide how we weigh the amount of health care we can deliver against how much we have to spend.  Yes, we will need a rationing system - either market (ish) or some other mechanism. The interesting part of the Ryan deficit plan is he simply proposes capping Medicare costs, but leaves the details of how to be filled in later.

While some observers say a growing portion of GDP going to health care is a sign of our prosperity and how comparatively little we have to spend on stuff like food, housing, etc., this trend will soon crush that naive outlook, I think.

At the same time, the political sanctity of Medicare will make announcements like this more common. The costs of caring for an aging population which enjoys socialized medicine as a reward for being 65 and older won't stop at the federal budget. To its credit, the Roadmap for America does exactly this, although like other plans it also contains some ideological silliness in the form of costly privatization schemes that drag down its usefulness.
The proposal would shift risk from the federal government to seniors themselves. The money seniors would get to buy their own policies would grow more slowly than their health-care costs, and more slowly than their expected Medicare benefits, which means that they'd need to either cut back on how comprehensive their insurance is or how much health-care they purchase. Exacerbating the situation -- and this is important -- Medicare currently pays providers less and works more efficiently than private insurers, so seniors trying to purchase a plan equivalent to Medicare would pay more for it on the private market. It's hard, given the constraints of our current debate, to call something "rationing" without being accused of slurring it. But this is rationing, and that's not a slur. This is the government capping its payments and moderating their growth in such a way that many seniors will not get the care they need. This is, in its simplest form, a way to limit the use of a finite resource: Money. [More]
Here's the weird thing.  I find both the current HCR plan(s) in Congress and the Roadmap viable alternatives. They certainly offer different basic visions of the future, but they both address rising health care costs. Either one works for me - warty as they are.

Maybe we are not at the point of realizing how our choices are limited to such a range of "don't-wannas".  But a few more years of 39% premium hikes and we will be.

Right now, folks with jobs that mask their insurance costs are too frightened to contemplate any change. Those jobs will be harder to find, and employers will be shifting more costs to employees. At the same time the ability to get insurance on the individual market will not become easier or cheaper.

I would guess few people who don't have health insurance support maintaining the status quo. At least some of those who do also want some change in how we allocate health care. Those populations are growing and unlikely to change their minds. We will have a different health care system in the future.

If nothing else, we need to start deciding what burdens we can bear and shift the debate that direction.

1 comment:

Anonymous said...

You know how you have to stand up and say your name when you comment at a meeting? Regarding health insurance, I think everyone should be required when they speak or write about health insurance to state how much of their premium they actually pay and who (their employer, medicare, medicade) pays the rest. Bet this would be interesting! btw, I pay all of mine and all of my employees.