THE BLOG

Those Rapacious Health Insurers Raise Premiums 9% This Year for Job-Based Health Insurance

10/05/2011 10:01 am ET | Updated Dec 05, 2011

Last Tuesday the Kaiser Family Foundation, a highly respected nonprofit health research organization, released its annual health insurance survey based on its research of some 2,100 small and large firms. Kaiser reported a whopping 9% rise in premiums this year for family plans and an 8% increase for single plans. These increases do not reflect additional out-of-pocket costs workers pay for healthcare, such as co-pays, deductibles and prescriptions. These plans cover some 150 million in the work force.

Closer scrutiny of these numbers is required to clearly see and understand how the model of job-based insurance is becoming a serious and eroding issue to Americans economically. Kaiser documents that in the past decade, workers' wages rose 34%, while inflation increased 27%. However, in 2011 earnings rose 2% while inflation rose 3%. Job-based healthcare plans now cost a whopping $15,000 per year for a family, with workers picking up $4,129 of that amount, meaning that workers' share of healthcare costs has risen a stunning 131% in 10 years. The cost for a single employee plan comes in at $5,429, with the workers' share rising an even more shocking 159% during the decade. Add to this increasingly unbearable burden the fact that 31% of covered workers are now in high-deductible plans, which can range from $1,000 and up. One should note that the bulk of the costs in these plans are paid by employers, for which they receive tax breaks. This story made the front page of the New York Times last Wednesday as the details of Kaiser's report were rolling out, and also hit The News Hour on PBS as well as McClatchy Newspapers. Even Nancy-Ann DeParle, Deputy Chief of Staff for Policy in the White House, weighed in on this issue, particularly as it related to insurers profits.

Barclays Capital reported that 13 of the 14 top health insurers beat their projected earnings in the last quarter, with profits coming in at hefty 46% higher than expectations. Insurance CEO's must be living large with their booming industry, one of the few growing sectors in this stagnant economy. This 9% increase in premiums is the highest since 2005, and comes on top of a 3% rise in healthcare costs in 2010. Speculation is plentiful. Will costs continue to rise, or drop as they had in the preceding few years? Is the recession a factor? And has this increase come in anticipation of more of the Affordable Care Act kicking in next year? After all, these increased rates were set last year, so they would be more proactive than reactive to the current situation. These increases in co-pays, premiums and deductibles makes the current health care model an unattractive and faulty product that encourages lack of use, with more of the costs increasingly shifted to the workers, two factors that would play a significant role in increased insurer profits.

Another discouraging ploy to limit healthcare use is the growing trend toward tax-preferred health savings accounts, with money regularly placed in accounts to be used for medical needs. This appeals to the young, who believe they will never become ill or in need. The money keeps growing, which in itself is an attraction to keep on saving and not use healthcare services, delaying needed healthcare that can only lead to deeper crises down the road, when serious, more complex illness sets in and the system becomes overwhelmed. What then?

The health insurance costs for those in the individual and small business markets are even worse. One insurer last year in California sought a 38% increase in premiums for individual policyholders, outraging the nation. If we factor in the acknowledged 50 million with out health insurance, and add in those 23 million unemployed and underemployed, we have a serious problem. We have an unsustainable, fractured healthcare system that, simply put, does not work for anyone except the insurers and drug industry.

Of course, one would think that corporations would also get that they should not be in the business of providing healthcare, at least if that is not already their primary function. Are we not the only industrialized nation that places such a tremendous responsibility and burden on corporations? They should be unburdening themselves from the responsibility and costs by becoming major advocates and players in the growing movement pushing for an Improved and Expanded Medicare For All. Now that would be lobbying most of us could support. Corporate America would be off the hook and would only pay a reasonable tax -- along with their employees -- to provide a true National Healthcare system. As the current, patchwork, failed system continues down its current path, it is clear there is really only one makes sense solution -- a single payer system with an administrative cost currently of only around 3%. This would save our nation $400 billion annually and could provide quality healthcare to one and all at half the cost of the current system. Where are the deficit hawks on this thinking?

Just look at the single payer model of the VA, which has provided innovative, efficient and quality healthcare to our veterans, not to mention negotiating prescription drug costs directly with pharmaceutical companies. Another model would be Medicare, at least before the specter of privatization crept in. The ACA leaves prescription drug negotiating out, which also occurs in Medicare Part D plan, offering little more than tremendous gifts to the drug companies. As health plans begin to roll out and hit our mailboxes, there will be shocks aplenty. Some information I received over the weekend from my insurer clearly shows further slicing and dicing of benefits, with costs hiked significantly across the board for all services and drugs, especially those nasty, annoying co-pays. Meanwhile, insurance CEO'S are hopping, skipping and jumping all the way to the bank, with their high multi-million dollar annual salaries and perks. Take from the poor and middle class and give to the rich -- Robin Hood must be rolling in his mythical grave.

Next year, to implement any rate increase above 10% for new enrollees in plans, insurers will have to go public and justify those rate increases to state regulators. This is law in the ACA, one of the several good inclusions in the bill, and could affect those 30-odd million that would be insured under the ACA who are currently uninsured. But does that mean premium increases of 9.5% would go unchallenged? Employers will make every effort to opt out of providing health insurance to their workers, sending them off to join an ACA subsidized plan if they qualify. The costs of workers' healthcare now -- on a state and corporate level -- has produced fierce battles in many states to downsize workers benefits in union contracts. Collective bargaining was the big summer issue across the country, and will continue to be for the foreseeable future as states under GOP control continue to decimate workers' rights, especially targeting health benefits.

In the coming months, we can also look to the Supreme Court to rule on the constitutionality of ACA. Last week, the president and 26 states contacted the high court to move forward on this issue. Surely, the question of the government mandating the public to buy a commercial product will be hotly debated. All of this will play out just before the election, giving the GOP a powerful weapon to distract the public and aim at the president, which may ultimately sink his chances of being re-elected, especially if the moribund economy and jobless rate continue unabated in 2012.

-- With Jonathan Stone