Government Spending

Health Care Is Expensive, So Stop Raising Health Insurance Rates!

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do not make me smite you, Anthem, with my orbs of justice

While the cost of health care and the cost of health insurance won't always rise and fall perfectly in tandem, it stands to reason that they wouldn't be entirely unrelated. But Health and Human Services Secretary Kathleen Sebelius is peeved that the premiums on some individual insurance policies are going up in California:

"With so many families already affected by rising costs, I was very disturbed to learn through media accounts that Anthem Blue Cross plans to raise premiums for its California customers by as much as 39%," Sebelius wrote to company President Leslie Margolin.

"These extraordinary increases are up to 15 times faster than inflation and threaten to make healthcare unaffordable for hundreds of thousands of Californians, many of whom are already struggling to make ends meet in a difficult economy."

Sebelius goes on to note that the company is financially stable at the moment. But the underlying logic of her demands is peculiar: Health care costs are going up rapidly—something everyone acknowledges, including Sebelius in the letter—but the people who provide health insurance should continue to behave as if they are staying the same, or perhaps only rising at the rate of inflation?

Sebelius also suggests that the people "deserve to know" if the rate increases will be spent disproportionately on administrative costs. But that level of disclosure—while appropriate for government-supplied health insurance, like Medicare or Medicaid—isn't mandatory for private firms, and shouldn't be. The secretary of health and human services doesn't demand public disclosure measures when the cost of Tylenol goes up. This should be no different. But Sebelius' letter is just as sign of the times on the health care issue, with the boundaries between public and private eroding increasingly rapidly.

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  1. Katherine Mangu-Ward,

    Fairness is the most important thing. I can’t believe you hate the poor!
    /snarkasm

    1. Awesome.
      Just wait until the Democrats ARE controlling health care. We’ll have the $700 dollar hammer situation the DOD already has. If it’s the government, they know they’ll get paid, so why not jack up the prices?

      1. Slow down. You might give me another snarkasim.

        1. no doubt all health insurance plans are going to skyrocket in price in the next 4 years- because they know they have until 2014 before the government attempts cost caps.

          Right now– as a single individual, I pay $45. a week for my healthcare–which is a bare bones health policy my company offers. Because Obama’s healthcare plan is going to pass tonight- I expect to pay at least $100.00 a week by 2014. The reason for that is because all of the health insurance companies know they have a 4 year time-frame to take advantage of and they WILL take advantage of that.

          I make less than $44,000 a year so while I will qualify for health insurance subsidies- I will only get reimbursed the amount my employer already pays towards my present health insurance. They will give me a voucher with that amount that I will be able to use towards a subsidized health plan– which will be no less expensive than what I am paying now.
          Judging by how expensive Cobra insurance is for the unemployed, my voucher will not go very far in cutting health care costs.

          I will actually save MORE money by paying the $695. fine and not having health insurance– and just wire the extra $$ into an automatic deposit savings account.
          Otherwise,. right now I pay $2086 a year for my present healthcare.
          By 2014, I will probably be paying $4,800 a year.
          That doesnt include increased property taxes and school taxes my State and County is inflicting on everyone this year and in the next few years.

          Individuals making over $200,000 a year will be taking heavy taxes to support this new health care plan “change” and guess what– Most company owners and small business owners make $200,000 a year. They will pass these costs onto their employees – with more lay-offs, etc. Also more small business will start closing up. No more Mom and Pop stores any longer — only Walmarts will survive.

          I am not looking forward to America’s future– it looks very dark to me now.

          Give me all the snarkasms you want- I could care less.

  2. I guess I should be thankful that my Anthem only went up about 20%.

    I think I got the letter just as the Senate was preparing to vote on the health care bill. Surely, that was just a coincidence.

  3. Well, we should not lose sight of the fact that it is, for the most part, a third party who is paying for the premiums charged by the health insurance companies.

    As long as we think employers should be footing the bill, health insurance companies are free to be the imperfect rent seeking creatures they are.

    1. This came about because of President Roosevelt’s wage controls .

      I wonder if pricer controls on health care itself , instead of health insurance premiums, would be a better solution.

      1. Or, you know, removing incentives for employers to provide health insurance as a benefit.

    2. Individual insurance policies are not related to employment.

      Incidentally, all rate increases must be approved by the state DOI (and the insurer must provide evidence to their regulator that rate increases are warranted), thus Sebelius’ comments should be directed to the state of California and not the private insurer actually providing a service, and gasp!, earning a profit for doing so.

      1. Alan, I know this policy applies for homes but are you sure that rate increase approval applies to health insurance?

        1. I used to work for a variety of individual health insurers and am positive. In some instances we had to pull out of states because they wouldn’t allow us to increase rates and it was no longer profitable/possible to continue operating in that state.

          1. Does the insured have any specific rights when an insurer does pull out?

            1. The insurer still has to pay outstanding claims, for one.

              1. I wanted to know about breaking a contract rules.

            2. Any existing policies stay in force, it’s just that the company cannot sign any new business.

              1. The policy stays in effect even if they leave the state?

    3. Employers footing the bill? Health insurance companies “imperfect?” Ha! Employers pass along those costs to employees and insurance companies are EVIL!!!

  4. “These extraordinary increases are up to 15 times faster than inflation and threaten to make healthcare unaffordable for hundreds of thousands of Californians, many of whom are already struggling to make ends meet in a difficult economy.”

    I can vouch for that – we get raped by the Fed Gov, the State Gov, and now Anthem? It is like being caught in a Federal Prison, except without the niceties (free food and board)!

    1. You should buy your health insurance from some other state then … oh wait, nevermind.

      1. Why doesn’t the commerce clause prevent this practice?

        1. Because that would mean using that Constitutional provision as it was originally intended, as opposed to using it to regulate a farmer’s ability to grow wheat on his own farm for his own families consumption.

          1. “families” –> “family’s”. Shouldn’t type after I’ve had my nightcap.

  5. I thought the photo was of Diana . . .

    1. Now THAT’S funny. I was trying to figure it out, too…”oh, it’s the Queen Bitch her own damn self”. Huh…

      I like yours better…

  6. It flabbergasts me that they never bring up the ridiculous mandates (i.e. acupuncture) nor the lack of interstate competition.

    1. My premiums (premia?) actually went down 87%. HSA Bitches!

      But now i get to find out what my psychiatrist REALLY charges. 🙁

      1. You will pay less if you pay with cash

          1. Sex actually costs me more cause my same-sex Dr. isn’t homosexual. Shit – we’re back to cash.

    2. e.g.

  7. I really can’t believe it. We live in the greatest nation in the world and we can’t even get free health care? Come on!

    1. If we are that rich shouldn’t we be getting paid healthcare?

  8. Anthem only raised rates a few percent in KY, IIRC, although I would need to check to be sure.

  9. ridiculous mandates (i.e. acupuncture)

    Oddly enough, acupuncture used to be much more affordable, before it was covered by insurance. I’m sure that’s just a weird coincidence.

    1. Zero correlation. Zero! In fact, negative correlation to the one millionthiest degree!

      1. How do you figure pro lib? When insurers come in, thats a lot more ‘dumb money’.

      2. Pro Libertate – close, but it’s negative correlation to the “God’s Mother’s Universe” degree. FIFY 🙂

        1. Remember, health care reform is brought to you by the same people who think that the way to deal with the increasing cost of higher education is to increase Pell Grants and federal funding!

          1. Not exactly Libertarian, but government funding can actually be a very effective way of reducing higher education costs. Granted, it looks nothing like the system we have in the USA.

            In Poland, public universities are the most prestigious. Enrollment is highly limited, so only the absolute best students get in. Students who get in do not pay for their education, unless they drop-out. Students who do not get in either go to trade school or private universities.

        2. Oh, yes. I’m so embarrassed by my miscalculation.

  10. You can’t bother them to read a book on the Economics of Health and HealthCare. The opening chapter of the class I took on the topic was “Is Universal Health Insurance Desirable?” The argument then delineated how agency and high levels of insured/uninsured cause systemic inflation.

    1. To spell it out:

      Insured consumers do not face the full cost of their healthcare and tend to overconsume relative to out-of-pocket consumers. This drives up prices on an overall basis (more healthcare demanded with limited Dr time). Higher rates of insured/uninsured drives up prices on a per-service basis because insurers/consumers have different price elasticities.

  11. Health care costs are going up rapidly?something everyone acknowledges, including Sebelius in the letter?but the people who provide health insurance should continue to behave as if they are staying the same, or perhaps only rising at the rate of inflation?

    Well it’s logically consistent with her voting record. You have to give her credit for that at least.

  12. CANCERJACK: http://www.news.com.au/couriermail/st…..%2C00.html

    “She said it was “immoral, illegal, and unscientific” to seek to be administered the drug before approval, likely to take up to seven years, by the Therapeutic Goods Administration.”

    Umm, no.

    1. If it’s as effective as they say it is, they may as well give to people looking at death sentence style cancer, and put them in a separate category scientifically speaking.

      More importantly, how hard would it be to try growing some of that in the US?

  13. Anthem managed to do what no one thought possible: Turn me into an Obama fan. I spend so many years putting Obama down. I gave money to McCain, voted for him, volunteered for him and in one letter I got what Obama was talking about.

    I almost had a stroke when I saw my bill. I will basically be working for Anthem since most of my check will go to paying the bill and the rest to food and shelter. Maybe shelter, i don’t think I can eat anymore. I was diagnosed with cancer last year at the young age of 30 and I am screwed if I try to change companies.

    Anthem’s increase is the largest in the industry by miles. Health insurance increase only effect individual policy holders. It seems health insurance increases don’t effect them this time around. I am desperate for help. If Obama can help, I say screw Mcain. That bill was a wake up call. I will pray that Obama gets the caniving attitude he needs to get health care reform passed and in his second term get a public option. At this rate my kids will be paying 5K minimum for health insurance by the time they are 18.

    1. “I almost had a stroke when I saw my bill. I will basically be working for Anthem since most of my check will go to paying the bill and the rest to food and shelter. Maybe shelter, i don’t think I can eat anymore.”

      well there is your problem – you are stupid. you can live outside, you can’t live without food.

      but then again you have time to read a random blog and comment on it. interesting how as a poor man you choose to prioritize your time.

      1. Me being stupid is causing my bill to go up? that is the most novel explanation for Anthem’s crazy increase I have heard so far. Actually, other than Anthem, no one else has tried to justify their rate increase. Surely not on my stupidity.

        But seriously I could live on little food, but shelter is a must. I can’t be outside and catch a cold and get an infection. The human body can survive on little food. I don’t mind eating 1 meal a day or 1 meal every 2 days so my kids can have food, but I can’t have a brand new baby with no roof over his head and 2 toddlers. Therefore I choose shelter over lots of meals. It may be stupid but that is how I prioritize.

  14. It is truly pants-wetting comedy watching glibertarians pretend that free-market fundamentalism as applied to health care has any shred of credibility left. This while western standards of care are being maintained at the same time costs are being controlled to single-digits of GDP in the UK, Canada, Japan, India, Brazil, Switzerland, The Netherlands, and the rest of the list of industrialized nations who sanely frown on making a buck off of cancer.

    For having such otherworldly ideas it really is ironic how untraveled you seem.

    1. It’s easy to control health-care costs at single-digits when the true cost is balanced by currency inflation, increased taxes, and declining quality (there are more MRI machines in Baltimore than Montreal). Moreover, Europe (at least) does not fund a monster of a military like the U.S. and are implicitly dependent on such forces should the need arise (This is not to say the U.S. should not reduce the size of its military considering the boondoggle that it is). This frees up much of their stolen income to pay for universal health care and the necessary propaganda to inform the public they have the best care possible (check out U.S. cancer survival rates for differing facts). On top of this, prescription drugs are bought in bulk through special contracts with pharma companies by these countries, but the cost to develop such drugs is reflected in the price that American consumers pay. Essentially, Americans are subsidizing other industrialized nations by shifting military and medical development costs to the U.S. If the U.S. went single-payer, Europe would see a direct rise in costs as Americans forced pharma companies to charge less coupled with stagnation of new drugs/technologies. But whatever, you just point your gun at my head and take my money which I would have donated to the red cross. After you take it, please shoot me because I can’t live in a world where such faceless murder is possible.

    2. When (since the development of modern medicine) has there been anything approaching a free market healthcare system? How has the credibility of such an idea been lost?

  15. I can’t get to all the wrong in your comment due to time constraints. But to counter three particularly silly ideas:

    Money “stolen” at gunpoint: the funniest glibertarian fantasy of all. First off, you wouldn’t have any money if not for your hated government. You’d have barter. You’d have as many different scrips as you had locales. You’d have no standardization. You’d have a society one thousandth the size and robustness of the one whose boot is allegedly on your neck as you type freely on its power grid, comm infrastructure and internet.

    Second, nothing is “easy” when it comes to mass governance, and only the duller teenagers imagine this is so. Those democracies where the political will has been mustered to recognize a public interest in health care tantamount to a public interest in building roads are those nations specifically not hobbled by the pervasive business propaganda culture we are cursed with. Those nations do not promote fantasies of radical self-reliance and government demonization in their advertising, their national narratives, business schools, etc. That’s because they understand representative democracy AND business and don’t pretend the two can’t co-exist.

    Speaking of which, this completely out to lunch notion that drug companies will “stagnate” due to the all-powerful gubmint coming down hard on them by capping their prices is the most magnificent glibertarian fantasy yet. Look into “orphan drugs” – formulations researched, known and patented by big pharma, but that will never be made because a product that saves 100,000 people’s lives is not a profitable enough product for them to produce. Good thing for them they don’t have to talk about that, nor ever worry about being forced to give up those patents “at gunpoint” and what’s more, they have good little glibertarians running around giving them cover, peeing their pants about the Evils Of Gubmint.

    I’ll give you this: at least you believe this nonsense. Over at Pfizer, they know a lot better.

    1. you are an idiot. but carry on.

      1. I just took time to reply to a comment that you wrote above and than read this one and realized “oh no, he’s the guy who goes around calling everybody stupid on blogs.” and than laughed.

        Thanks for the laugh ap. May God bless you with no illness, not even a cold. And may you never become an Anthem blue cross customers. They promise to raise their rates at least twice a year.

    2. “At gunpoint” refers to being forced to pay for things that you will not use much or at all, and as a result not being able to pay for goods and services you value more. There is an argument that roads and defense are best left to central planners considering the lack of space available for endless construction projects and the need to protect lives and property. However, trying to justify taking money “at gunpoint” from someone who will never benefit from the war on terror (Most Americans), the war on drugs (Most Americans), failed public school (Everybody), poorly planned universal health insurance (Most Americans), and unfunded social security (Americans under 40) is nothing short of intentional ignorance. What would you call a “service” you are forced to pay for that has little (if any) positive benefit at best and significant detriment to you at worst? And technically, you can argue that no one is literally pointing a gun at you. Well, not yet. Eventually, you wind up in one of our overpopulated prisons (bolstered by laws that violate civil liberties drafted by your masters) getting raped and shanked (not necessarily in that order) for not dutifully paying for these vaunted “services”.

      Regarding stagnation, see this report by Stossel http://blog.heritage.org/2009/…..nnovation/ who I am sure you already demonize as a “glibertarian”. But “keep an open-mind”, that’s what you stooges keep telling us.

      Funny thing about orphan drugs… FDA regulations slow the process of introducing new life-saving drugs to the consumer while burdening pharma and eventually the consumer with added “administrative” costs not to mention unneeded death. I wonder if this undercuts the bottom line and makes funding risky and unproven “orphan” drugs even more risky. Oh I know how you can save their lives! You can go into business for yourself (non-profit of course) and develop the…oh wait you still have to appeal to the FDA. Maybe you can get it on the market in 15 years. I hope you can stomach another 1.5 million deaths laid at the feet of bureaucracy.

      If you want to take their patents and produce these drugs I’m sure you can get the government to levy sanctions and force against them. Who is stopping you? Libertarians are a minority. Our opinions are our own and no on listens to us. So why are you here? Why does any of this matter? Maybe its because you know these ideas are at the heart of your opposition and strangling them out of public discourse just makes it that much worse (much like the closed health-care debate). You think you are attacking closed-minded neoconservatives but you are attacking people so open-minded they rejected they status quo fed to them by a dangerously incompetant education system and sought something else–something full of less bullshit.

  16. The rate filing is being reviewed by an outside actuary and will pass muster. You won’t hear about it when it happens.

  17. You know, California has had health care tort reform since 1975. It has apparently resulted in much lower malpractice insurance for doctors. See http://www.thedoctors.com/Know…..index.htm. Does that trickle down to reduce health insurance prices? Apparently not.

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  24. I used to work for a variety of individual health insurers and am positive.Health Videos In some instances we had to pull out of states because they wouldn’t allow us to increase rates and it was no longer profitable/possible to continue operating in that state.

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  26. All experience must be directly derived from a project like this one; anything else doesn’ t count. Process is irrelevant. Skills that are critical on other projects are totally unimportant on this one. If you haven’ t been in health care since shortly after the invention of the stethoscope, don’ t bother applying.

  27. Just give the assistance necessary, counting what they can reasonably pay based on their income, to that 12 million to buy private health insurance. That is the key to avoiding a multitrillion-dollar new entitlement involving government rationing, which would trash the best health care in the world the American people now enjoy. With broader welfare reforms involving positive incentives, we could end up with less total government spending than today.

  28. Just give the assistance necessary, counting what they can reasonably pay based on their income, to that 12 million to buy private health insurance. That is the key to avoiding a multitrillion-dollar new entitlement involving government rationing, which would trash the best health care in the world the American people now enjoy. With broader welfare reforms involving positive incentives, we could end up with less total government spending than today.

  29. This would not cost much because only about 12 million Americans arguably cannot afford health insurance without some public assistance. Out of the 47 million uninsured we keep hearing about, 9.7 million are already eligible for current government programs like Medicaid or SCHIP but haven’t signed up. Another 6 million are eligible for employer sponsored insurance but have not signed up for that either. Another 9 million are in families earning more than $75,000 per year. Another 10.2 million are immigrants, legal or illegal, and not U.S. citizens.

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