Excerpt:
Last month Anthem Blue Cross, a subsidiary of WellPoint, got national media attention and the attention of congress by announcing a 39% rate increase in health care premiums in California. According to Steve Lewis, employed at the world’s third largest health care insurance brokerage, employers and individuals across the nation can expect similar rate increases in the near future, regardless of whether or not health care reform is passed in congress.
In a conference call organized by Goldman Sachs Global Investment Research, Steve Lewis, a highly regarded broker at Willis, painted a picture of the health insurance market in which many employers and individuals seem likely to be priced out of coverage. Noting that “price competition” between insurers was “down from a year ago,” Lewis relayed that “incumbent carriers seem more willing than ever to walk away from existing business.” Insurers are able to do this in part because the markets in which they operate have no adequate competition, suggests Lewis.
According to Sam Stein, writing for the Huffington Post, “The phenomenon of insurers pricing their policies beyond where consumers can afford it seems to be already taking place.” That is reflected in a transcript of a conference call within Aetna last October explicitly revealing plans by their executives to “price-out” over 600,000 Americans from health care coverage.
Meanwhile, President Obama spent the afternoon in back-to-back private sessions with two separate groups of legislators that are uncomfortable with the bill because it lacks a public option that could compete in the free market with private insurance companies and drives insurance down. A non-profit government plan would operate solely off its members’ premiums. His response to them was that a public option would never pass the Senate, but said he would be “personally committed” to pursuing it once the current bill became law, said Representative Raúl Grijalva to the New York Times, Democrat of Arizona and co-chairman of the Congressional Progressive Caucus.
No matter where one stands politically on the health care reform issue, the economic implications should be a no-brainer. Anyone who understands the concept of a free market should also understand that costs are kept down by competition. Anyone who understands how insurance works should also understand that the more clients a provider has, the less that each individual enrollee in the plan will have to pay in.
A health care reform bill without a public option will do little to curb rate increases. No reform bill will do nothing at all.