As I've mentioned before, our businesses received notification in October that our health insurance premiums were going up another 25.8%, the latest of a long series of substantial rate increases. Finally it seems that some people are taking notice: California Death Spiral
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Here’s the story: About 800,000 people in California who buy insurance on the individual market — as opposed to getting it through their employers — are covered by Anthem Blue Cross, a WellPoint subsidiary. These are the people who were recently told to expect dramatic rate increases, in some cases as high as 39 percent.
Why the huge increase? It’s not profiteering, says WellPoint, which claims instead (without using the term) that it’s facing a classic insurance death spiral.
Bear in mind that private health insurance only works if insurers can sell policies to both sick and healthy customers. If too many healthy people decide that they’d rather take their chances and remain uninsured, the risk pool deteriorates, forcing insurers to raise premiums. This, in turn, leads more healthy people to drop coverage, worsening the risk pool even further, and so on.
Why the huge increase? It’s not profiteering, says WellPoint, which claims instead (without using the term) that it’s facing a classic insurance death spiral.
Bear in mind that private health insurance only works if insurers can sell policies to both sick and healthy customers. If too many healthy people decide that they’d rather take their chances and remain uninsured, the risk pool deteriorates, forcing insurers to raise premiums. This, in turn, leads more healthy people to drop coverage, worsening the risk pool even further, and so on.
President Obama clearly understands the importance to business of fixing the problem: Premiums, Profits, and the Need for Health Reform
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The other week, men and women across California opened up their mailboxes to find a letter from Anthem Blue Cross. The news inside was jaw-dropping. Anthem was alerting almost a million of its customers that it would be raising premiums by an average of 25 percent, with about a quarter of folks likely to see their rates go up by anywhere from 35 to 39 percent.
Now, after their announcement stirred public outcry, Anthem agreed to delay their rate hike until May 1st while the situation is reviewed by the state of California. But it’s not just Californians who are being hit by rate hikes. In Kansas, one insurance company raised premiums by 10 to 20 percent only after asking to raise them by 20 to 30 percent. Last year, Michigan Blue Cross Blue Shield raised rates by 22 percent after asking to raise them by up to 56 percent. And in Maine, Anthem is asking to raise rates for some folks by about 23 percent.
The bottom line is that the status quo is good for the insurance industry and bad for America. Over the past year, as families and small business owners have struggled to pay soaring health care costs, and as millions of Americans lost their coverage, the five largest insurers made record profits of over $12 billion.
And as bad as things are today, they’ll only get worse if we fail to act. We’ll see more and more Americans go without the coverage they need. We’ll see exploding premiums and out-of-pocket costs burn through more and more family budgets. We’ll see more and more small businesses scale back benefits, drop coverage, or close down because they can’t keep up with rising rates. And in time, we’ll see these skyrocketing health care costs become the single largest driver of our federal deficits.
That’s what the future is on track to look like. But it’s not what the future has to look like. The question, then, is whether we will do what it takes, all of us – Democrats and Republicans – to build a better future for ourselves, our children, and our country.
That’s why, next week, I am inviting members of both parties to take part in a bipartisan health care meeting, and I hope they come in a spirit of good faith. I don’t want to see this meeting turn into political theater, with each side simply reciting talking points and trying to score political points. Instead, I ask members of both parties to seek common ground in an effort to solve a problem that’s been with us for generations.
Now, after their announcement stirred public outcry, Anthem agreed to delay their rate hike until May 1st while the situation is reviewed by the state of California. But it’s not just Californians who are being hit by rate hikes. In Kansas, one insurance company raised premiums by 10 to 20 percent only after asking to raise them by 20 to 30 percent. Last year, Michigan Blue Cross Blue Shield raised rates by 22 percent after asking to raise them by up to 56 percent. And in Maine, Anthem is asking to raise rates for some folks by about 23 percent.
The bottom line is that the status quo is good for the insurance industry and bad for America. Over the past year, as families and small business owners have struggled to pay soaring health care costs, and as millions of Americans lost their coverage, the five largest insurers made record profits of over $12 billion.
And as bad as things are today, they’ll only get worse if we fail to act. We’ll see more and more Americans go without the coverage they need. We’ll see exploding premiums and out-of-pocket costs burn through more and more family budgets. We’ll see more and more small businesses scale back benefits, drop coverage, or close down because they can’t keep up with rising rates. And in time, we’ll see these skyrocketing health care costs become the single largest driver of our federal deficits.
That’s what the future is on track to look like. But it’s not what the future has to look like. The question, then, is whether we will do what it takes, all of us – Democrats and Republicans – to build a better future for ourselves, our children, and our country.
That’s why, next week, I am inviting members of both parties to take part in a bipartisan health care meeting, and I hope they come in a spirit of good faith. I don’t want to see this meeting turn into political theater, with each side simply reciting talking points and trying to score political points. Instead, I ask members of both parties to seek common ground in an effort to solve a problem that’s been with us for generations.
I would hate to think that the the coalition of idiots and crooks in the US is big enough to keep the current nonsensical system alive.