Health Care Costs Are The Driving Factor Behind Premium Hikes

I’ve long supported the premise that our health care system was in need of reform that would make care more affordable and accessible to everyone, regardless of their health or financial situation.  But I’m starting to feel a bit frustrated by what feels like an over-emphasis on regulation of health insurance carriers and not enough focus on ways to actually control the cost of health care (including over-utilization).  If people are thinking of this process as health insurance reform rather than health care reform, it’s doomed to failure.

A Denver Post article from last week details the negative consequences for the people of Colorado if the PPACA were to be repealed.  HHS broke down the numbers for each state in order to emphasize how much the new law is already helping citizens across the country.  And HHS Secretary Kathleen Sebelius explained in an op-ed why we shouldn’t turn back the clock on health care reform.  She makes many valid points, but she also notes that the reform law prohibits the “worst abuses of health insurers.”  Although the PPACA did include numerous provisions to address the rapidly rising cost of health care, the issues that have become popular talking points almost all center around new regulations in the health insurance industry.

I’ve addressed this point many times, but the fact remains that most Americans are very insulated from the actual cost of health care (and the problem of over-utilization and it’s impact on costs).  People tend to be much more aware of the cost of health insurance.  This is especially true if they purchase individual health insurance, but those with employer-sponsored group coverage also tend to be cognizant of increases in payroll deductions and rising copays and deductibles.  And although the cost of health care is the primary driving factor behind the cost of health insurance, it’s the latter that people tend to focus on.

It’s true that some of the PPACA regulations specifically addressing the health insurance industry are, or will be, beneficial to a lot of Americans.  They will help to make health insurance more accessible and fair, and hopefully will lead to fewer people finding themselves in positions where they are unable to get coverage.  But I don’t think that the often-vilified health insurance industry is the root of the problem.  I think that more focus should be directed at ways to combat the rising cost of health care (including over-utilization) rather than taking a cart-before-the-horse approach of trying to reign in health insurance premiums first.

Despite federal regulations on medical loss ratios, individual policies in Colorado are an average of 12.9% more expensive than they were last year, and the Colorado Division of Insurance has said that very little of this rate increase can be attributed to new PPACA changes pertaining to health insurance carriers.  The driving factor is the cost of health care, including things like an overall decline in health, increased utilization of care, and newer, more expensive treatment options.  In CA, Blue Shield has announced rate hikes of up to 59% for individual policies as of March 1.  The increased rates are in compliance with the new MLR guidelines, and according to the insurer, have “almost nothing to do with the federal health reform law.”  Even with the higher rates, Blue Shield still “expects to lose tens of millions of dollars on its individual healthcare business in both 2010 and 2011.”  Basically, health care continues to get more expensive, and people are utilizing health care more than ever.  Prescription drug usage continues to climb, and high-tech medical technology is increasingly the go-to solution for both patients and doctors.  Until we figure out a way to slow the increase in health care cost, there is no realistic way to slow the corresponding rise in health insurance premiums.

About Louise Norris

Louise Norris has been writing about health insurance and healthcare reform since 2006. In addition to the Colorado Health Insurance Insider, she also writes for healthinsurance.org, medicareresources.org, Verywell, Spark by ADP, and Boost by ADP, and Gusto. Follow on twitter and facebook.

Comments

  1. Louise:
    You are absolutely right.
    In our desperate quest to assess blame, we look at everyone except ourselves.
    The obscure will take a while to understand.
    The obvious will take a bit longer.
    Don Levit

  2. The problem is the companies know that they are going to have to insure more people, people that abuse anything they get. The cost of care is so high because people do not pay for what they are getting, the tax payers and the people that actually help this country move on are getting the saft now more than ever.

    I just went to pick-up my wifes prescriptions and my co-pay went from 45.00 to 57.00 on one prescription, that is nuts. My wife and I have a good income, one that we could live very well if not for all the taxes and extra we are having to pay out for some low life people that had the same chances in life as we did but they decieded to quit school, pop out babies, and milk the system. Why do these people think they deserve any type of help when they have not chosen to help them self and get an education? I say let them die and starve. I know that sounds harsh but really we cannot afford to help everybody that chooses to sit on their butts and pop out kids and play around their entire life while a few that applied themself in school, made something out of their life to have to sit back and have our hard earned money sucked out of us to give to some low life. Obama Care sucks and our costs are going to keep going up. That worthless president stated that if this health care added one dime to the national debt he would not sign it, well you lier, it is adding 1 trillion and making my costs go up to the point even working I cannot afford my medications where a year ago I could.

  3. J Duncan – That’s great! You couldn’t have unwittingly proved the point of the article better!

    Third paragraph: “…the fact remains that most Americans are very insulated from the actual cost of health care (and the problem of over-utilization and it’s impact on costs). People tend to be much more aware of the cost of health insurance. This is especially true if they purchase individual health insurance, but those with employer-sponsored group coverage also tend to be cognizant of increases in payroll deductions and rising copays and deductibles. And although the cost of health care is the primary driving factor behind the cost of health insurance, it’s the latter that people tend to focus on.

    Your response: I just went to pick-up my wifes prescriptions and my co-pay went from 45.00 to 57.00 on one prescription, that is nuts.

    Do you have any idea how much the Rx actually costs? Do you even know how much your insurance costs? Do you even know if you would qualify for a plan where you could be declined because of pre-existing conditions if it weren’t for government mandated guarantee issue coverage through your employer?

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