Controlling Rising Health Care Premiums
By Paul Gagliardi
Rising health insurance premiums are all too common, but the recent announcement by Wellpoint, Anthem Blue Cross in California, that it was raising premiums up to 39 percent for individual policies was stunning. 
California isn’t alone in regards to soaring rate hikes as Wellpoint and its Anthem Blue Cross subsidiaries are planning extremely high premium increases in at least 11 states in 2010 including Wisconsin, which could see 17.2 percent increases effective April 1.
Over the past decade, health insurance costs have risen dramatically, but so have insurance company profits. A recent report by the U.S. Department of Health and Human Services found that profits for the 10 largest U.S. health insurance companies rose 250 percent between 2000 and 2009. In 2009 alone, the five largest insurers – Wellpoint, Cigna, UnitedHealth Group, Aetna and Humana – saw their profits increase 56 percent. At the same time 2.7 million Americans lost their health insurance. 
In addition, U.S. spending on health care continues to grow, increasing 4.4 percent in 2008 to $2.3 trillion. Health care spending makes up 16.2 percent of the gross domestic product – the highest of western economies while over 45 million Americans are uninsured.
With health insurance costs skyrocketing it’s obvious something needs to be done to help the American public, as well as keep the insurance industry in-check. That is why action on health care is desperately needed. It is true there is much to dislike about the Congressional process to approve the health care legislation, but that should not deter the push to make health care more affordable and accessible to millions of Americans. Our country cannot continue down this treacherous path of skyrocketing costs and more uninsured individuals.
Wellpoint said one of the reasons for its huge increase: “A higher proportion of healthy individuals are choosing not to enroll, leaving an insured pool that utilizes significantly more services.” This is why Wellpoint is advocating for a mandatory requirement that everyone carry insurance – one of the items in the federal health care legislation.
Sen. Dianne Feinstein (D-Calif.) has also put forth a proposal in response to the extremely high premium increases. She would require the insurance companies justify the rate increases, and would give the federal government authority to modify or reject “unreasonable” rate increases.
President Obama has picked up that idea and has proposed that the federal government be given new authority to regulate insurance premiums. Under his proposal a health insurance company would be required to lower its premiums, provide rebates or take other actions to make premiums more affordable if they are deemed “unreasonable.”
The proposal allows the secretary of health and human services to block premium increases that were deemed too high under standards to be developed by a panel of experts.
States currently regulate the insurance industry but the system is not the same nationwide. In many states regulators are unable to evaluate or reject rate increases before they take effect.
In California some forms of insurance are regulated, but not health insurance. The state’s auto insurers are required to submit rate increases to a regulatory body for approval before they can start charging customers higher premiums. Consumers can also ask for public hearings to examine increases that are higher than 7 percent. Since the law passed in 1988, it has forced automobile insurance companies to refund over $1.2 billion dollars to Californians and has blocked more than $23 billion in automobile insurance rate increases.

Imagine getting a refund or being able to stop an unnecessary health insurance premium rate increase. That would be a powerful tool to help tame our skyrocketing health care costs.

Paul Gagliardi is the President of the Wisconsin Association for Justice, the state’s largest statewide voluntary bar organization. WAJ is committed to a fair and effective justice system that ensures justice for all, not just the privileged few. 

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