Rising Premiums + Rising Profits = 2.7 million Americans lost coverage in 2009
Just ahead of this week’s Bipartisan Health Care Summit, the health insurance industry provided us with a critical reminder on the importance of passing comprehensive health care reform. Earlier in the month HHS Secretary Kathleen Sebelius sought justification from the insurance provider WellPoint Incorporated, which operates Anthem Blue Cross in California. Sebelius called on the carrier to justify a jaw-dropping hike in health care premiums of 39 percent, despite taking in $2.7 billion in profits in the final quarter of 2009. To add insult to injury WellPoint also dropped nearly 1.4 million members, and reportedly spent $4.7 million on lobbying efforts to derail health care reform.
It remains difficult to understand how a company that made $2.7 billion in the last quarter of 2009 alone can justify massive increases that will leave consumers with nothing but bad options: pay more for coverage, cut back on benefits or join the ranks of the uninsured. High health care costs alone cannot account for a premium increase that is 10 times higher than national health spending growth. Katherine Sebelius’ response to WellPoint regarding rate hikes of 39%
Unfortunately, this story is not unique to California or a financial faux pas carried out by WellPoint alone. A recent report by Health Care for American Now! revealed that the five largest insurance firms — WellPoint, UnitedHealth Group Inc, Cigna Corp, Aetna Inc, and Humana Inc – raked in $12.2 billion in profits in 2009, a 56 percent increase from the previous year. They also proposed rate increases between 13 and 40 percent (mostly in the individual and small group markets) in several states. By the end of last year roughly 2.7 million Americans lost their coverage, while CEOs of the top five firms each received as much as $24 million in compensation. It is a bitter pill to swallow.
Growing health care premiums have forced many people to make tough decisions on how to pay for health care. Increasingly, employers are expecting workers to pay a greater share of health care costs—or cutting benefits all together. Younger and healthier people may choose to drop out to save money, and the risk pool deteriorates, causing prices to increase further. A report by the Commonwealth Fund found that nearly 75 percent of people seeking coverage on the individual market did not buy coverage, 61 percent of those individuals cited costs as the primary factor in their decision. This is the dreaded death spiral that health reform legislation was meant to prevent.
Texans have watched their premiums nearly double since 2000, and without meaningful reform experts project that they will double again by 2020. Folks gulped at the proposed rate increases in California, but data from the Texas Department of Insurance (TDI) show that insurers have already been charging small businesses in Texas premiums as high as $29,000 per person per year. It’s clear the health insurance status quo is too expensive and unsustainable. We need our leaders in Washington to get the job done, and make high quality affordable health care available to every American.