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Did you know that the so-called fiscal cliff deal eliminated any additional government money to finance co-ops as competition for big-profit insurers? Why is this problematic? Well, they were at least a small potential way to discipline the big-profit insurers. And, as the New York Times lays out today, they sure need to be disciplined:

Health insurance companies across the country are seeking and winning double-digit increases in premiums for some customers, even though one of the biggest objectives of the Obama administration’s health care law was to stem the rapid rise in insurance costs for consumers.

Particularly vulnerable to the high rates are small businesses and people who do not have employer-provided insurance and must buy it on their own.

In California, Aetna is proposing rate increases of as much as 22 percent, Anthem Blue Cross 26 percent and Blue Shield of California 20 percent for some of those policy holders, according to the insurers’ filings with the state for 2013. These rate requests are all the more striking after a 39 percent rise sought by Anthem Blue Cross in 2010 helped give impetus to the law, known as the Affordable Care Act, which was passed the same year and will not be fully in effect until 2014.

In other states, like Florida and Ohio, insurers have been able to raise rates by at least 20 percent for some policy holders. The rate increases can amount to several hundred dollars a month.

'The rate increases can amount to several hundred dollars a month is really the money line -- no pun intended -- in that last paragraph. These greedy big-profit insurers -- who add no value to the health care system through their existence as pseudo-investment banks gambling with Americans' premium dollars to generate shareholder wealth -- are sucking money out of an American economy -- and American pockets -- that could be spent instead at the local hardware store, diner or clothing store. Heck, the money could even be spent at Walmart. This is the essence of economic rent.

There are a couple lessons here. First, states that have the power to reject rate increases from insurers get smaller rate increases. And, second, insurers are lying when they claim that these increases are necessary due to rising health care costs.

Under the health care law, regulators are now required to review any request for a rate increase of 10 percent or more; the requests are posted on a federal Web site,, along with regulators’ evaluations.

The review process not only reveals the sharp disparity in the rates themselves, it also demonstrates the striking difference between places like New York, one of the 37 states where legislatures have given regulators some authority to deny or roll back rates deemed excessive, and California, which is among the states that do not have that ability.

New York, for example, recently used its sweeping powers to hold rate increases for 2013 in the individual and small group markets to under 10 percent. California can review rate requests for technical errors but cannot deny rate increases.

The double-digit requests in some states are being made despite evidence that overall health care costs appear to have slowed in recent years, increasing in the single digits annually as many people put off treatment because of the weak economy. PricewaterhouseCoopers estimates that costs may increase just 7.5 percent next year, well below the rate increases being sought by some insurers. But the companies counter that medical costs for some policy holders are rising much faster than the average, suggesting they are in a sicker population. Federal regulators contend that premiums would be higher still without the law, which also sets limits on profits and administrative costs and provides for rebates if insurers exceed those limits.

The reality is that like a used car salesman who insists the plastic seats are fine Italian leather, big-profit health insurers can't be trusted to tell the truth. Why? Because their business adds zero value to the health care system -- and thus serves no real purpose -- so lies are the only way to push back against those who aim to raise awareness about their sickening role in American medical care. As Wendell Potter recently argued, although the Medical Loss Ratio requirements under the Affordable Care Act force insurers to spend 80/85 percent of premium dollars on medical care, there is no regulatory tool to force ensurers to keep premiums in check. Why is this important? Without that kind of tool, which California's hero Insurance Commissioner Dave Jones advocates, insurers can just boost premiums in order to boost both profits and medical spending.
Critics, like Dave Jones, the California insurance commissioner and one of two health plan regulators in that state, said that without a federal provision giving all regulators the ability to deny excessive rate increases, some insurance companies can raise rates as much as they did before the law was enacted.

“This is business as usual,” Mr. Jones said. “It’s a huge loophole in the Affordable Care Act,” he said.

While Mr. Jones has not yet weighed in on the insurers’ most recent requests, he is pushing for a state law that will give him that authority. Without legislative action, the state can only question the basis for the high rates, sometimes resulting in the insurer withdrawing or modifying the proposed rate increase.

If we can't have Medicare-for-all (yet), this kind of aggressive regulation is absolutely necessary. New York is an excellent case study:
In New York, for example, state regulators recently approved increases that were much lower than insurers initially requested for 2013, taking into account the insurers’ medical costs, how much money went to administrative expenses and profit and how exactly the companies were allocating costs among offerings. “This is critical to holding down health care costs and holding insurance companies accountable,” Gov. Andrew M. Cuomo said.

While insurers in New York, on average, requested a 9.5 percent increase for individual policies, they were granted an increase of just 4.5 percent, according to the latest state averages, which have not yet been made public. In the small group market, insurers asked for an increase of 15.8 percent but received approvals averaging only 9.6 percent.

I will allow one sarcastic comment from the big-profit insurance industry to be represented here:
“There’s a four-letter word called math,” Ms. Voss said, referring to the underlying medical costs that help determine what an insurer should charge in premiums. Health costs are rising, especially in Iowa, she said, where hospital mergers allow the larger systems to use their size to negotiate higher prices. “It’s justified.”
Sorry, Ms. Voss, but the whole point of health insurers existing is to negotiate lower prices for patients. In other words, to combat the pricing power of big-profit hospitals. If private, big-profit insurers are unable to negotiate low prices for their policyholders -- which they claim is exactly why the need to ask for higher rates -- then big-profit insurers are failing at the one thing that they exist to do, and should be replaced by a single government insurer (i.e. Medicare) that is truly able to negotiate with providers and 'bend the cost curve' as we heard politicians say so frequently. This is exactly why no other developed country allows private, for-profit insurers to finance basic health care -- because they are incapable of doing so in a reasonable, affordable way; they literally fail at that task.

So, this article should make us angry -- as angry as the silly threats of Aetna CEO Mark Bertolini to raise rates (Wendell Potter again calls bullshit on Bertolini's threats) -- but it should also make us happy, because the insurers -- without apparently realizing it -- are admitting -- through their intention for raising rates -- that they are absolute failures at doing their job.

And, you know, isn't that why Mitt said we should be able to fire health insurers in the first place? Maybe the guy was right about something.

Big-profit health insurance companies are not only cruel and greedy -- they are also, well, failures.

10:34 AM PT: Friends, please understand that I am not -- at all -- referring to ObamaCare as a failure. I am, instead, referring to the business model of the private, for-profit health insurance industry as a failure. I accept that ObamaCare was a necessary compromise -- with a TON of good stuff -- that finally begins to address this country's greatest social injustice. Again, this diary is not criticizing ObamaCare, but is criticizing the insurance industry.

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Comment Preferences

  •  hasn't the rate of increase in premiums (1+ / 0-)
    Recommended by:

    been unusually low over the past couple years?  Thought I read that somewhere.

  •  I had no idea that the fiscal cliff deal (4+ / 0-)
    Recommended by:
    james321, Mr Robert, Lucy2009, a2nite

    that so many here defend also eliminated funding for health co-ops that these same people said would provide competition in the marketplace.

  •  in fall of2008 (5+ / 0-)

    as we were getting ready to vote in Obama for his first term, my hospital employer told us our insurance rates would be going up by 50% from 400/mo to 600/mo starting Jan 2010.

    they were giving us a full year warning so we could make other arrangements.

    I had no options so I had to swallow the increase. Mind you, the arrangement is that employees are free, and a spouse is what you pay for. this was the employee plus one rate.

    Family rates were well over 1000 per month.

    So we have been percolating along with that rate since January 2010.

    November 2012, nearly 3 years into this higher insurance rate, the hospital came back to us and said the rates were going up again, starting in January 2013.

    By another 17%, from 600/mo to 700/mo.

    So, I just got a pay reduction of 100 per month since I certainly am not getting a raise on my wages.

    F-ing insurance companies are big fat blood sucking b@$tards.

    I live in a country where the health and safety of it's people takes second place to profits and political gain. Enough.Is.Enough.

    by karma13612 on Sun Jan 06, 2013 at 08:57:03 AM PST

  •  Care is lost in the battle of systems (3+ / 0-)
    Recommended by:
    james321, slinkerwink, RJDixon74135

    It seems to me that our health CARE has become lost in increasingly enormous, unresponsive, systems -   insurance, hospital and government and I do not for the life of me know how you make these competing titans focus for one second on treating individual human beings with care and dignity.  

    All the discussions revolve around the costs - primarily around the shifting of costs, passing the buck, robbing one system to pay off another, or colluding to rob the third.  The actual provision of care seems low on any list.

  •  I worked briefly for one of the most prominent of (11+ / 0-)

    the group health insurers and returned to a previous job when I saw close up how they made every effort to pay a fair rate for needed services.  This was a two decades back and the insurance companies seemed to be roundly preoccupied with building multi-million dollar monuments to themselves along the interstates in the wealthy suburbs.  No expenses were spared on furniture and amenities.  There was extended quibbling over payouts for knee replacements and PT.
    The only way to bring health care costs down is single payer, something other nations figured out long ago because they did not bow to laissez-faire capitalism in the critical areas of human life.  (We don't either or there would be no such thing as no-bid government contracts.)
    Also, competition has been replaced with collusion to prop up profits.  This will come out in the states that will provide exchanges.
    In the meantime, may Vermont succeed in aces with their single payer system.  This has to be one of the reasons the happiness quotient is highest in their state.

    Building a better America with activism, cooperation, ingenuity and snacks.

    by judyms9 on Sun Jan 06, 2013 at 09:14:03 AM PST

  •  LOL - "failure" (2+ / 0-)
    Recommended by:
    james321, slinkerwink

    depends where you are on the divide. This is a resounding (possibly short-term - remains to be seen) victory for some.

    Your problem (and mine, and many others too) is that we're on the wrong side of this.

    Some people make out like the bandits they are.

    But not to worry - our representatives, POTUS and CEOs are fine. They didn't lose a    t-h-i-n-g    (and never will)

  •  Diary ignores ACA's impact and math (0+ / 0-)

    Insurance companies are now required to spend 85% of premiums on healthcare for groups and 80% for individuals.

    So unless insurance company's were previously spending over 95% of premiums on healthcare before ACA, the increase in premiums now is overwhelmingly due to higher spending on healthcare per insured person.

    The most important way to protect the environment is not to have more than one child.

    by nextstep on Sun Jan 06, 2013 at 09:37:19 AM PST

    •  Fair enough, but read Wendell's column and (1+ / 0-)
      Recommended by:

      tell me what you think:

      •  Wendell writes with very limited understanding (0+ / 0-)

        of how markets work.

        For example, he writes that an unintended consequence of requiring 80/85% of premiums going to healthcare is that administrative savings are being kept by insurance companies rather than passed to customers.  This was not unintended, but an expected outcome.  Similarly, he is surprised that when large companies cover the medical cost risk that the administrative cost savings from the insurance companies hired for administrative services are passed to the company customer.

        Better for people to read other sources on the healthcare economy from far more knowledgeable sources such as the Kaiser Foundation and Stanford University's SIEPR.

        The most important way to protect the environment is not to have more than one child.

        by nextstep on Sun Jan 06, 2013 at 11:27:55 AM PST

        [ Parent ]

  •  Why should the fact that a piece of legislation (1+ / 0-)
    Recommended by:

    is less than perfect make it a failure?

    Tell the families who kids get to be covered on their  insurance until they are 26 that Obamacare is a failure.

    Tell those with pre-existing conditions who will no longer be denied coverage that Obamacare = failure.

    Tell those who received rebates from their insurance companies that Obamacare = failure.

    Yes, we need to make Obamacare better.  But Hillarycare was completely DOA during Clinton's presidency.  Yet less than one generation later, and with a lot fewer sane R's in Congress, a Democratic president was able to get the first step in health care reform passed.

    Are we going to try to build and expand on that, or are we just going to piss and moan?

    I could say "I live in deep red Alabama and I can't do anything to change that."  Or I can say "I can't do much about deep red Alabama, but I know of a Congressional district in MI that, despite gerrymandering, has a chance of flipping Red to Blue in the midterm, and that will make a difference at the national level which will help change things."  So guess where my money and effort goes next election?  To trying to get a D elected in MI-01.  

    Republicans: if they only had a heart.

    by leu2500 on Sun Jan 06, 2013 at 10:15:55 AM PST

  •  Wait a minute... (1+ / 0-)
    Recommended by:
    While insurers in New York, on average, requested a 9.5 percent increase for individual policies, they were granted an increase of just 4.5 percent, according to the latest state averages, which have not yet been made public. In the small group market, insurers asked for an increase of 15.8 percent but received approvals averaging only 9.6 percent.
    Guess the key phrase is "on average" because the low income Healthy NY plan from Empire BC/BS HMO (Wellpoint) asked for and received a double-digit increase:

    Small Group/Individual - Healthy NY
    Approved: Effective April 12, 2012

    Approved Annual Percentage Rate Change
    (Base Medical Plan)

    Lowest +16.1%
    Highest +22.0%
    Weighted Average +17.8%

    To qualify for Healthy NY, income has to be within 250% of the Federal Poverty Level, so these increases are going to hurt.

  •  Our BCBS health insurance for my wife and I has... (0+ / 0-)

    increased 20% each year for the past 2 years.

    We both had to raise our individual deductibles to make both policies affordable as we each pay 100% out of pocket for our health insurance.

    When will this insanity end?  

    “The object in life is not to be on the side of the majority, but to escape finding oneself in the ranks of the insane.” — Marcus Aurelius

    by LamontCranston on Sun Jan 06, 2013 at 04:14:22 PM PST

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