With a form letter issued last week, a major health insurance provider in New York may have made the most compelling case of all for creating a "public option" for health care coverage. That letter, received by a family that I know, informed them that their premium would rise by 29 percent in October.
Not only was the increase staggering, but it raised the prospect of having the cost of that family's health insurance coverage more than double in the next four years. How many Americans can keep up with increases of that magnitude?
My first reaction on learning of the letter was to wonder what could possibly cause a health insurance provider to increase its fees by 29 percent at one time. My second reaction was to wonder why the company would raise its rates so significantly just when the federal government is grappling with health care reform and the possibility of a public option to compete with private insurers.
But an even more fascinating question is: What kind of company can afford to raise its rates by 29 percent in one of the worst recessions in U.S. history? Most businesses across the country are reducing their prices -- many slashing them dramatically -- but health insurance is apparently not only immune to those pressures but able to counter-balance them.
That circumstance arises either because the company has insufficient competition or its customers have difficulty shifting to a competitor. In the case of health insurance providers, the latter is especially the case.
Their customers are virtually locked in, forced to go along with any rate increase, because of the difficulty of taking their business elsewhere. Fortunately, the family in question has not been sick, but for anyone with a pre-existing condition, moving to a new insurance company can be almost impossible.
And the insurance company doesn't even have to provide a justification for the rate increase. In this case, the letter offered no explanation at all.
One is left to wonder just what costs could be justifying the increase: salaries aren't rising by 29 percent in a recession. Most people are happy just to have a job, and even contractually mandated labor costs don't rise 29 percent in a year.
The health insurance in question is an HMO, so the extent of service provided is constantly monitored by the insurance company. Every medical visit, test, or procedure of any kind must be pre-approved.
Clearly the cost of health care is rising, but is it rising by 29 percent per year? U.S. Secretary of Commerce Gary Locke recently stated, in an op-ed in The Wall Street Journal, that "Absent reform, the price of an average family's insurance will nearly double over the next decade." Why then is this insurance provider raising its premium by 29 percent?
During the current Congressional recess, prospects for a "public option" have diminished significantly, as special interests have bombarded town hall meetings with organized opposition. But if health insurance premiums rise 29 percent each year, one can only wonder how long Members of Congress can remain opposed.
It's a very small number of voters who can bear that kind of health insurance increase over a period of years. And ultimately it's voters, rather than special interests, who determine the outcome of elections.
At present, in an off-year for elections, the health care reform debate is focused on Washington, DC, where special interests hold inordinate sway, but in 14 months, that focus will shift dramatically. Every Member of the U.S. House of Representatives and a third of the U.S. Senate will be up for election, and it will be fascinating to see what message on health care reform the voters send.
A lot will depend on what legislation is adopted in the meantime, but if health care costs continue to rise at this rate, the ranks of the uninsured will only grow, the public clamor for universal coverage will only increase, and opposition to the "public option" will fall away.
Health insurers, like this one in New York, are doing their supporters in Congress no favors. They're making the public case for greater competition.
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Even with right and reason on their side; even with a filibuster-proof majority on their side, the Democrats have again found a way to lay down and cower.
What is amazing about this is that I have never made a single claim. Ever.
The company provided no reason when I called to ask them why, but they eagerly told me I could apply to enter a "newer" plan.
Checking on the web, I found that this is common practice. It is how companies force people to re-apply for their insurance, thereby providing a rationale to drop anyone who has developed a health problem while under their care. This way they can claim they don't drop anyone who has claims, instead they can deny based on a "pre-existing condition" when they are forced to re-apply.
I'm a Republican who favors a free-market approach to health care. Unfortunately we do not have it in the US. We have an oligopoly that can only be changed by government intervention.
Thank you for shedding some light on some of the many shady business practices of these companies. I also give you credit for seeing the obvious (no free market in health care!) regardless of party affiliation! Wish more members of BOTH parties would do that.
You're right, the health care industry as it presently exists in no way resembles a free market.
Here's some more evidence on that front. Go to your doctor for a routine treatment (strep throat for example). Ask exactly how much your visit, including the diagnostic test, will cost. You'll either receive a blank stare or the doctor will go off to look through some paperwork in the office trying to find a price... he/she will not know how much the services actually cost. Nor do you, the typical patient. Nor does your insurance company... or more likely, they are unwilling to tell you.
Now ask your doctor which antibiotic represents your best value for treating your strep throat. Again receive the blank stare.
Another interesting tidbit: physician contracts with insurers typically forbid offering discounted services to patients... ANY patients. In other words, insurer dictates the doctor may NOT decide for himself how much he wishes to charge his own customer, even if customer has no connection with the insurer. Microsoft got in trouble for this sort of manipulation with Windows... has any insurer been punished for this behavior, at all? Why not?
Not a free market, not gonna change without government involvement.
public option please.
It's difficult to understand how any company could raise prices in this economy--we had to take a 20% pay cut this year! Like another poster pointed out -- because they can.
We're in our mid-50's, neither of us with any major health issues; we'll now be paying nearly $18,000 per year for health insurance. Yes, we buy quality insurance because from personal experience, it's not worth the stress to fight for benefits from an inferior company--they play the game of denial of claims for stupid reasons; if you have the time, energy and intelligence to fight it out, they MIGHT eventually pay. But why should you have to fight at all for something for which you've paid that is clearly defined in the benefits statement?
Although we still have a good income, $18,000/year is a huge burden, and I can't believe many people CAN afford this--no wonder so many are uninsured! However, we can't afford NOT to have insurance as we could lose everything we've worked for our entire lives if hit with a catastrophic illness. Medicare age will be a relief to our worries.
The Democrats are incredibly foolish for believing the Republicans might accept any health care proposal. It's time for the Dems to steam-roll this issue and get it done!
Look, it is the job of any business to make a profit, preferably a large profit. In a normal market system, profiteering is prevented by consumers going elsewhere or dropping out of the market entirely. But healthcare is not a normal market system. Because we all need healthcare all the time (or, at least, the option of it), the consumer forms a captive market. You can't drop out without great risk to your life and health and that allows the insurance companies to both cherry-pick their clients and to make out like war profiteers. Thanks to the practice of recission (that is, cutting off the insurance of sick people), health insurance is a lottery anyway.
The insurance company is not your friend. They are pouring over a million A DAY into defeating reform because it threatens their extortionate profits, they cut you off if you get sick and charge you ever increasing premiums. This isn't healthcare, it's a protection racket.
Remember, this is what the repubs are fighting hard to continue!
And you make statements of questionable validity. For example, I doubt every medical visit, test, or procedure of any kind must be pre-approved. Some, yes...but every one? I'm also not sure how your point about the "the difficulty of taking their business elsewhere" applies to New York, which has guaranteed issue (albeit, a valid point in other markets).
Sure, health costs are rising. Yes, we need a public plan. Better yet, single-payer like Canada or a highly regulated insurance market such as The Netherlands or Switzerland. What we don't need are more opinion pieces that add little to the debate and raise more questions than they answer.
it is one article, and yes insurance co's raise their rtes like this all the time
it is one reason why wages are stagnant, you employed is beng robbed to cover you for insurance.
how much longer will employers continue to pay
and what happens when employers stop wanting to pay
Your final paragraph sounds like you are trying to make up for such a position originally in your post.
It's helped many in our congregation to realize that they have had no idea that health insurance rates were rising, because their employers don't show them the company's costs. They do understand that they have had to contribute more for their own health insurance, but when they look up at the PowerPoint in church to see that an increasingly greater percentage of what they give every Sunday is going toward insurance premiums, it gives them pause. Nobody wants their offerings to line a corporation's pockets. And as the costs have risen, the amount of coverage has decreased.
This is a congregation that spans the political spectrum.
Much like America subsidizes the rest of the world's healthcare. We pay more than any ther civilized country in the world because of our prosperity. Much like the top 1% in the country pay 40% of the taxes. Just a little perspective.
Nothing is ever as simple as we percieve it to be. The Democrats aren't rampant socialists and the Republicans are not depraved hate mongers. Let's remove the rhetoric.
This is all subsidized by private insurers? Why should a dialysis center make a profit at all?