Today, Secretary Sebelius and the Department of Health and Human Services released a report on health insurance company rate increases in the wake of the outrage over Anthem Blue Cross's 39% increases in California. The report makes clear what those of us who've been following the health care debate have known for years: California's rate increases aren't unique.
The HHS report highlights similar rate increases in other states:
Anthem Blue Cross isn’t alone in insisting on premium hikes. Anthem of Connecticut requested an increase of 24 percent last year, which was rejected by the state.3 Anthem in Maine had an 18.5-percent premium increase rejected by the state last year as being “excessive and unfairly discriminatory”4 – but is now requesting a 23-percent increase this year.5
In 2009, Blue Cross/Blue Shield of Michigan requested approval for premium increases of 56 percent for plans sold on the individual market.6 Regency Blue Cross Blue Shield of Oregon requested a 20-percent premium increase.7 UnitedHealth, Tufts, and Blue Cross requested 13- to 16-percent rate increases in Rhode Island.8 And rates for some individual health plans in Washington increased by up to 40 percent until Washington State imposed stiffer premium regulations.9
Leading experts have predicted that, without reform, these increases will continue, and the federal government and most states don’t have the legal authority to block or reduce health insurance rate increases.10
Of course, this comes at the same time that the parent companies of these insurers are making record profits.
The insurance companies, of course, will claim that these rate increases are justified by rising costs. They're dead wrong. More from the report:
WellPoint and others claim that the premium increases are necessary given the rise in health care costs. While rising health care costs is a known problem with our broken health care system, some of the premium increases requested by insurance companies are 5 to 10 times larger than the growth rate in national health expenditures.11 All the while, insurance companies and their CEOs continue to thrive.
Recent economic data show that profits for the ten largest insurance companies increased 250 percent between 2000 and 2009, ten times faster than inflation.12,13 Last year, as working families struggled with rising health care costs and a recession, the five largest health insurance companies – WellPoint, UnitedHealth Group, Cigna, Aetna, and Humana – took in combined profits of $12.2 billion, up 56 percent over 2008.14 These health insurance companies’ profits grew even as nominal GDP decreased by 1 percent over this same time period.15 WellPoint accumulated more than $2.7 billion in profits in the most recent quarter alone.16
On a call today with reporters, Secretary Sebelius explained why insurance companies get away with rate increases like this:
Insurance companies are often responsible to shareholders as well as policy holders. And when you sell insurance, you make more money by insuring people who don't get sick rather than people who do get sick.
A lot of these people on these plans have no choice other choice. They can either pay the rate increases or drop coverage.
Later in the day on another call with reporters, Congressman Earl Blumenauer joined small business owners from the Main Street Alliance to talk about their rate increases, further driving home the point that these kinds of rate hikes are commonplace.
On the call, business owners like Kelly Conklin from Bloomfield, NJ said health insurance rates had gone up for them as much as 124%. Conklin said:
My employees will have to decide if they want to continue getting coverage and pay their own way or drop coverage and take their chances.
These premium increases stifle business and prevent employees from contributing to economic growth because all of their wages go towards health care. We're at end of our rope. We can't afford to let this opportunity for reform slip away. We need to finish the job with the things the Main Street Alliance is fighting for - competition, transparency, and a public option.
Congressman Blumenauer responded:
It's frustrating for me to hear these stories. Small business is paying disproportionate amount of the health care burden. Hearing of businesses spending 20% of payroll on health care isn't uncommon.
It doesn't have to be this way. We spend more on health care than any nation in the world. A few in America get the best health care, for the average American, we get worse results. We are sick more often, stay sick longer, die sooner, and our families and businesses suffer.
A few months ago, I introduced a bill to terminate health insurance for Congress until health reform is enacted. If they had to personally experience the tender mercies of the health care market - the gaps in coverage, the increasing premiums premiums, denials of care - I think we would enact reform in a matter of weeks!
Hopefully the House will use reconciliation, otherwise known as the majority vote process, to clean up the Senate bill and send it back to them for a vote. Then we would approve the remainder of the Senate bill.
Double digit rate hikes are the norm in America's health care system today. They will only get worse if reform isn't finished and finished right. Of course, the insurance industry thinks Secretary Sebelius is "vilifying" them, with AHIP - the main insurance industry lobby - releasing a statement today saying how much they think we need health reform. This is while they're actively funneling money to the Chamber of Commerce to run ads trying to kill reform.
Sorry insurance companies, but we've known all along that you want to preserve the status quo so you can keep raking in your outrageous profits while the rest of the country struggles to get out of a deep recession. It's up to Congress to fix this broken system and put the insurance companies in their place. Which means finishing reform right and getting it done now.