Over the last few weeks, Californians have read accounts about how Anthem Blue Cross, the state’s largest medical insurer, is raising health insurance premiums for Californians in the individual market. This was quickly followed by politicians trying to blame insurer profits for the woes of our health care system. <\/p>\n
While criticizing insurers for raising rates makes a convenient story line for pundits and lawmakers eager to boil down the complexities of health care into media sound bites, it does very little to illuminate the real culprits in rising health care costs. In fact, we have the opportunity to take what is happening in California and use it as a lesson for what happens when the core issue is ignored: the need to halt the unsustainable increases in medical costs. <\/p>\n
First, let me say that Anthem Blue Cross understands that raising premiums creates many challenges and is hard on individuals and families, especially in these tough economic times. We also exist in a highly competitive insurance marketplace with more than 100 plan options in California alone – so if our rates are higher than our competitors, we won’t keep our customers. <\/p>\n
This leads to an important point: consumers can often switch plans if they believe another plan offers a better value – but the reality is all insurers are in the same boat. This is easily confirmed by visiting any of the online health insurance portals and looking at quotes. Anthem Blue Cross alone offers consumers more than 60 different individual plan options from which they can choose. <\/p>\n
Insurance premiums and increasing rates are a function of medical expenses. By law, premiums have to reflect the anticipated costs that they will cover. The higher the medical costs, the higher the rates. In California, as in much of the country, rates are on the rise because medical costs continue their skyward ascent. <\/p>\n
While the balance sheets of insurance companies make for convenient targets, medical expense – and not company profits – is the major cost driver underpinning the rates that consumers pay. PricewaterhouseCoopers data show that 87 cents of every premium dollar is spent on health care services, while approximately 3 cents goes to insurance company profits – a number that is relatively constant – while the cost of services continues to explode. <\/p>\n
Unfortunately, in this recession, individuals are far more likely to opt out of coverage or to disenroll, if they think they are healthy enough to take that risk. The result is a pool of people that uses more services per individual, increasing premium rates for all that remain. <\/p>\n
An example underscores the problem. If an insurance pool consists of 100 people and incurs medical costs of $10,000 per month, the cost per individual is $100 per month. But if 10 people who incur little or no costs leave the pool, the $10,000 must be spread among 90 people. The per-individual cost is now $111 per month, an increase of 11 percent. This means a health insurer must increase rates 11 percent in order to cover the increase in costs per individual, and that’s before accounting for medical inflation. Now extrapolate this problem across the state. <\/p>\n
How to address this? Encourage everyone to participate in the system. When everyone is covered, the risk pool becomes not only more diverse, but also more predictable. Insurers are then able to spread the risk among the total population and bring greater stability to rates. <\/p>\n
Let’s assume for a moment that physicians, hospitals, drug companies and device makers are not likely to slash prices. Anthem Blue Cross isn’t waiting. At the local level, we are acting to bring greater stability to insurance rates and ensure quality of medical care for all Californians. <\/p>\n
Partnering with three regional hospital associations representing most of the state’s hospitals, Anthem Blue Cross has invested in a collaboration designed to address patient safety. The goal of this partnership is to improve patient outcomes and cut medical costs by sharing data, resources and successful safety practices. We are aggressively taking these actions because focusing on quality and the cost of care is the only path to creating a sustainable health care system.<\/p>\n
As California’s largest health benefits company with nearly 8 million members, including more than 1 million low-income Californians, we are committed to ensuring access to quality health care. What we ask of our political leaders is that true health care reform targets what actually needs reforming: high medical costs and encouraging coverage for all.<\/p>\n","protected":false},"excerpt":{"rendered":"
Over the last few weeks, Californians have read accounts about how Anthem Blue Cross, the state’s largest medical insurer, is raising health insurance premiums for Californians in the individual market. This was quickly followed by politicians trying to blame insurer profits for the woes of our health care system. While criticizing insurers for raising rates […]<\/p>\n","protected":false},"author":4325,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[7],"tags":[],"class_list":["post-425879","post","type-post","status-publish","format-standard","hentry","category-news"],"_links":{"self":[{"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/posts\/425879","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/users\/4325"}],"replies":[{"embeddable":true,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/comments?post=425879"}],"version-history":[{"count":0,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/posts\/425879\/revisions"}],"wp:attachment":[{"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/media?parent=425879"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/categories?post=425879"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/tags?post=425879"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}