On Insurance Company Premium Rate Hikes

By Jeralyn, Section Colorado News
Posted on Thu Nov 05, 2009 at 05:11:40 PM EST
Tags: health care reform (all tags)

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Back in May, before any health care reform legislation was introduced, I wrote about Anthem/Blue Cross's employer rate hike in Colorado based on a law passed in 2007 preventing companies from charging unhealthy groups more than healthy groups. My premium (as a member of an employer healthy group)went up $240. a month.

Today, the Denver Post reports the same. What's more, Anthem is planning on raising employer rates an average of 12.5% next year. [More...]

Colorado's insurance commissioner says:

The major reason for rate increases is not HB 1355, but the skyrocketing cost of medical care, said Colorado Insurance Commissioner Marcy Morrison. Critics of the law are using it as "a hammer on the governor" and others responsible for passing it, she said.

From Anthem's letter;

"In June 2007, Governor Bill Ritter signed Colorado House Bill 1355 into law. Simply stated, this bill prevents health care insurers from considering risks such as claims history and health status among employees in determining your premium rates. As a result, at its most basic level, the law shifts a portion of the costs of insuring the relatively unhealthy groups onto the relatively healthy groups."

Does the House bill prevent insurance companies from getting away with this? The Dingell "Manager's Amendment" addresses premium increases.

Such process shall require health insurance issuers to submit a justification for any premium increase prior to implementation of the increase. Such issuers shall prominently post such information on their websites. The Secretary shall ensure the public disclosure of information on such increases and justifications for all health insurance issuers.

The penalty seems to be they could get kicked out of the new insurance exchange. There's also a section on maintaining anti-trust laws on health insurance companies but allowing certain data to be compiled. The remainder of the amendment deals with credits for biofuels. What's that doing in a health care bill amendment? Is Dingell's amendment helpful or sufficient?

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On Insurance Company Premium Rate Hikes | 11 comments (11 topical)

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Several weeks ago, (none / 0) (#1)
by Spamlet on Thu Nov 05, 2009 at 10:35:39 PM EST

when I expressed a certain cynicism about how effective regulation and even the courts can be in controlling this kind of behavior on the part of insurance companies, another TL commenter took me to task for my "ignorance" of "how government works." As I said then, we'll see, won't we?

That confuses me (5.00 / 1) (#4)
by Inspector Gadget on Fri Nov 06, 2009 at 07:44:28 AM EST

What control does the government have over insurance companies right now? Nothing has changed in how insurance companies can operate. The gov't hasn't taken over or put any regulations in place.


That statement should be qualified (none / 0) (#5)
by cawaltz on Fri Nov 06, 2009 at 08:23:01 AM EST

The FEDERAL government doesn't have control over insurance companies. We do have a patchwork quilt system of regulation state by state for the insurance industry. It's working swimmingly(and is yet another reason why I oppose a state by state public option).


Apparently that commenter (none / 0) (#7)
by Spamlet on Fri Nov 06, 2009 at 10:21:57 AM EST

plays a professional role of some kind in enforcing what regulations do exist in his or her state. Our disagreement arose over a situation in another state, Maine, where a regulatory board denied an insurance company's request for a rate increase. The insurance company is appealing the denial in court, and I expressed some reservations about how it would all work out.

Evidently the commenter took my remarks personally and accused me of "insulting" not only him or her but also everyone else who goes to bat for consumers versus insurance companies. The insult is in the eye of the insulted, I guess, but what do I know? Apparently I'm too ignorant to understand how my jaundiced view of insurance companies amounts to ignorance about how government works. Whatever.


Still confused (none / 0) (#10)
by Inspector Gadget on Fri Nov 06, 2009 at 09:33:55 PM EST

I'm missing completely what you are trying to say. Who insulted you?

I share your jaundiced view of insurance companies, but couldn't relate your comment to the specific topic of Jeralyn's post.


: Nobody insulted me (none / 0) (#11)
by Spamlet on Fri Nov 06, 2009 at 09:46:55 PM EST

My take on Jeralyn's post was that the insurance companies might be using a specious justification to raise premiums, and I related my take on her post to a discussion that took place several weeks ago on this blog between another commenter and me.
In that discussion, I expressed low confidence in the possibility that regulation can be universally effective in curbing the profit-oriented behavior of insurance companies. The commenter in question upbraided me for my "ignorance" of "how government works" and claimed that I had insulted him/her and everyone else whose job it is to try to rein in the insurance companies.
That had never been my intention, of course, and so I apologized for the inadvertent insult. The apology was never accepted, but that's the commenter's right.
Capisce?
If not, I'm sorry.

Q.E.D. (none / 0) (#2)
by MileHi Hawkeye on Thu Nov 05, 2009 at 11:08:17 PM EST

: Heh (none / 0) (#3)
by Spamlet on Fri Nov 06, 2009 at 01:59:25 AM EST

Is the suggestion (none / 0) (#6)
by Samuel on Fri Nov 06, 2009 at 08:44:34 AM EST

that the insurance company is profit gauging?

Government tells insurance company it cannot charge more to those more likely to file claims. Insurance company raises costs to the healthy to meet the newly imposed legal requirement.

Of course we all know how this will end (none / 0) (#8)
by mcl on Fri Nov 06, 2009 at 12:50:30 PM EST

Health care "reform" won't stop insurance company rate hikes and the public option will cover such a microscopic number of people that it'll have no effect. So health care presiums will continue to skyrocket.

It'll take only 5 years of that or so to price most of today's working population out of health care, so within another few years we'll see the current trickle of Americans visitng India for medical tourism to get health care they can't afford at home rise to a flood, and then turn into a stampede.

At that point the doctors and hospitals and nurses will fund (translation: bribe) legislation to make it illegal for sick dying people to travel abroad to get cheap medical care, the stupid congresscritters will pass it, and at that point, the American health care system blows up.

When phalanxes of riot-armored cops wade into armies of wheelchair-bound cancer patients who are demonstrating on the street and start shooting and beating and tasing the cancer patients en masse, we'll see an uprising that will make MLK's march on Washington in 1963 look like a warm-up.

Hospitals will burn. Doctors will get dragged out of their mansions. It's going to get ugly.

We will get health care reform, but not through legislation. We'll get it because cities are burning and 80% of the population can't afford health care anymore.

Rate Hike Factors (none / 0) (#9)
by Progressive Promoter on Fri Nov 06, 2009 at 06:36:06 PM EST

There are a lot of factors contributing to premium increases in the small group market--a market which is notoriously well-known for its volatility. Some of them include:
Medical trend
Cost-shift due to our state's high uninsured rate and meager Medicaid program
Reimbursement costs
Changes in benefit plans (PPO, HMO, indemnity, etc.)
Depressed wages compared to premium costs
Age
Geography
Presence of high-risk pools
Economic downturn and underwriting cycles, and so on.

This is especially true for very small businesses (10 or fewer workers) and 63% of Colorado private businesses fall into this category. The small group market feels the impact of other trends more strongly than the large group market.

As Lockton's 2010 Colorado Employer Benefits Survey Report noted, "For the ninth consecutive year, the average company received a double-digit rate increase for its health plan. Colorado's rate increases are and have been greater than the national average regardless of band rates (2003-2007) or modified community rating; however, the 2010 increases on average are less than they have been in previous years."