by Linda Honold and Robert Kraig
Friday, April 3, 2009
The rising cost of health care in Wisconsin is well documented. According to a report by Citizen Action of Wisconsin late last year, Wisconsin health insurance premiums have increased by 149 percent since 2000, increasing almost five times faster than wages. A recent report by the New America Foundation concluded that without fundamental reform, a family health insurance policy in Wisconsin will cost almost $25,000 a year by 2016.
Now compare that to your cost of purchasing automobile insurance. The costs for a year of coverage for a single individual with excellent coverage would probably be in the same range now as it was 10 years ago. Automobile insurance is a great deal compared to the cost of health insurance.
But are you getting what you pay for? While Wisconsin automobile insurance premiums are the second lowest in the nation, Wisconsin has had the same minimum rates of liability coverage since 1982 -- $25,000 per individual, $50,000 per incident, and $1,000 for medical expenses.
It is not realistic to believe that amount is still sufficient to cover your own liability if you cause an accident. A higher liability limit proposed by Gov. Jim Doyle in his budget -- $100,000 per individual, $300,000 per incident, and $10,000 for medial expenses -- is a necessary improvement to ensure that everyone who pays for auto insurance has adequate coverage.
Increasing auto insurance minimums also reduces cost shifting onto health insurance. Given that health care costs are spiraling upward, why would consumers want to continue to place the added burden of paying for the care of automobile accident victims on private health insurers or taxpayers? When people are injured in an automobile accident and they do not have adequate automobile insurance to cover the cost of the damages suffered, then health insurers, Medicaid, BadgerCare or charity care pays for the uncovered health care costs. Why are we shifting that cost from the person causing the accident to the health care side of the equation? This kind of cost shifting is one of the reasons that health care costs have risen so significantly.
Those representing automobile insurers admit that having higher liability limits would make it easier for health insurers and government assistance programs to recover more money, but they oppose Doyle's long overdue reform because they are more interested in protecting their bottom line.
From 2004 to 2006, property/casualty insurers' profits were estimated to be $149.2 billion by the Consumer Federation of America. The increase in 2006 alone was over $30 billion -- a jump of more than $100 for every man, woman and child in America. The major reason for these windfall profits is that insurers are methodically overcharging consumers, cutting back on coverage, underpaying claims, and getting taxpayers to pick up the tab for higher risks.
Insurers in Wisconsin are showing healthy surpluses (assets minus liabilities) -- American Family, $4.1 billion; State Farm, $63.5 billion; West Bend, $510.9 million; and General Casualty, $744.6 million.
Wisconsin consumers would be well served to have adequate automobile insurance to cover the costs of accidents, rather than shifting costs to health care insurers and taxpayers. Given the financial health of the property/casualty insurers, it is a fair burden for them to carry.
Linda Honold is executive director and Robert Kraig is the program director at Citizen Action of Wisconsin. www.citizenactionwi.org