When it comes to health care reform, many Americans are still asking: What’s in it for me? They should put that question to Californians who have individual insurance coverage from Anthem Blue Cross--and just learned their premiums will be going up by almost 40 percent this year.
Beneficiaries started learning about the rate hikes last week, according to the Los Angeles Times, which first reported the story. The premiums will, I’m sure, cause real hardship for many people.
This is not, to be clear, just another story of medical care getting more expensive because of technology, over-treatment, monopoly pricing, or any of the other familiar drivers of system-wide costs. Yes, health care costs in this country are rising, faster than any of us would like. But inflation--that is, the increase from year to year--rarely exceeds 12 percent. And Wellpoint, Anthem’s parent company, reports that its medical expenses rose by only around 9 percent this year. Obviously, something else is going on.
In a statement, Anthem explained that a big part of the problem was the down economy--and the effect it was having on people’s decision to buy insurance. As budgets get tighter and people look to cut back on expenses, some people will decide to drop insurance. And, overall, they will tend to be people in better health, since they are most willing to risk going without coverage. The whole point of insurance is to pool risk, so that premiums from healthy people (who make up most of the population) cover the expenses of unhealthy people (who constitute a small fraction of the population). When healthy people start dropping coverage, rates for the unhealthy go up, to the point where they become unaffordable.
As Karen Tumulty notes, that's a pretty good argument for some sort of universal health care system, in which everybody has to maintain coverage. The idea that insurance premiums would rise more quickly at precisely the moment when more people are struggling financially is positively perverse.
But, most likely, a slow economy isn't the only culprit here. It appears, based on press accounts, that not all Anthem beneficiaries are seeing such huge rate increases. Only some are. If so, there's more to this story.
(Warning: The rest of this item is pretty wonky.)
There must be 100 smart analyses of last week's State of the Union speech. Many of my blogosphere friends were happy with it. I was pretty dismayed. I thought the President needed to push much harder and with greater specificity for a comprehensive bill. A week later, I feel even worse.
