As the healthcare reform world turns we see another rendition to the ever evolving proposals from Washington. This time it comes from the White House in the form of the regulation of premium levels. Although premium levels are certainly a concern, addressing high premiums by regulating them is akin to telling a patient to stop bleeding instead of addressing the gash in his leg.
The timing of this proposal hopes to capitalize on the recent proposed rate hike of 39 percent on an insurance company’s individual plans. Shouldn’t we address the root causes of the 39 percent premium hikes such as the medical costs that are driving those premiums?
Profit margins of insurance companies rank 88th in comparison with other industries and have a 3.4 percent profit margin, according to a recent study. Eliminating insurance profits would bring the increase down to 35.6 percent. Is this number any more acceptable than 39 percent?
In California, the increase in unemployment caused by the struggling economy has resulted in healthier individuals leaving their risk pool. Therefore, prompting insurance companies to increase their rates to cover the less healthy population.
The Texas Association of Health Underwriters (TAHU) believes that we need to reform the delivery of care to align the right incentives with all parties involved. Doctors should be paid not on a fee for service basis which encourages more services than needed; instead, TAHU believes that physicians should be reimbursed for the results of their outcomes. In addition, TAHU continues to believe that the patient’s incentives should be aligned correctly through transparency and consumer driven health plans (HSAs).
While 39 percent does seem like quite an egregious increase, but is it the federal government’s business to determine what a private sector company should or should not charge for their services? If these rate hikes are not acceptable to current customers, then policy holders have a choice and can choose from six other carriers.
Addressing the premium without addressing the root cause will only exacerbate the situation. It is TAHU’s position that we should let the private market forces set the prices and address the claims costs and wastes that the premiums end up funding.
Rusty Rice is president of the Texas Association of Health Underwriters, a state chapter of the National Association of Health More information can be accessed at www.TAHU.org.
