While the health care bills remain stalled, the problem of soaring health care costs continues. For those who are insured in the individual market, but barely hanging on, the news is grim.
Health and Human Services Secretary Kathleen Sebelius dispatched a letter to Anthem Blue Cross of California earlier this week asking for justification for the individual insurance premium increase of as much as 39 percent. The rate increase will affect as many as 800,000 Californians who currently pay for individual policies, but does not affect those with employer-based plans. These increases are up to 15 times that of inflation.
Sebelius wants Anthem to disclose to policyholders what share of their premiums is going toward profits and what share actually covers medical claims. The state of California requires a minimum of 70 percent to be spent on care, pointing out that Anthem’s corporate parent, WellPoint, saw profits rise to $2.9 billion in the fourth quarter of 2009. You can read the entire text of her letter HERE.
Although California state regulators oversee increases to make sure they are handled according to law, they have no power to control rates.
Anthem, according the The Washington Post, defended itself by saying “Costs have increased in the individual market because the recession has led many policyholders to drop their coverage, spreading expenses among a smaller pool of customers. Additionally, those remaining with the company tend to have, on average, greater health needs than those who have dropped coverage. We regret the impact this has had on our members.”
Did you get that? Cost increases cause policyholders to drop coverage, which causes prices to increase. Vicious cycle.
As someone who is hanging on by a thread in the individual market, the Washington gridlock on health care reform has me steamed. My own premium rose by 30 percent in January, after a similar increase a year ago.
Every time rates increase, more of us fall off the rolls of the insured, necessitating increases for the remaining few. It is unsustainable. How long before the option for individual policies goes the way of the dinosaur? Employer-based coverage is also shrinking, as fewer small businesses can afford to cover their employees.
While people are losing coverage and, along with it, access to care, Washington is keeping reform in the deep freeze, more concerned about the next election than with making progress.
I was thrilled to see Kathleen Sebelius take an insurer to task in such a public manner, but firing off angry letters to insurers is not going to cut it. As long as the “system” remains unchanged, we can only expect more of the same.