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Rising Premiums Causing Headaches for…Insurance Companies?
by Eli Staub | Monday, April 28, 2008
If you’re like most people, you’ve probably seen
your health insurance premiums skyrocket over the past few years. On average,
people who get insurance through their job saw their premiums go up 10 percent
from 2006 to 2007. And that’s just the tip of the iceberg – the
average employee now contributes $1,400 more to their healthcare plan
than they did in 2000! All in all, the shrinking number of companies that offer
health insurance pay over $12,000 on average for family health insurance
coverage for their employees.
With all of this, could you believe that health insurance companies could be facing money troubles?
A recent article in the New York Times starts with what we all already know:
“In recent years, despite soaring medical costs, insurers have made big profits by keeping premiums well ahead of health care inflation.”
But apparently, the giant health insurance company UnitedHealth has posted weaker-than-expected earnings for the first quarter of 2008. The reason? Well, according to one industry analyst:
“UnitedHealth, like many insurers, has priced its product beyond the reach of too many people[…] Insurers are finding it harder to raise prices without losing consumers.”
Normally we don’t think of Wall Street caring much about the little people and our health insurance woes. But when analysts start making the connection that the rising costs of premiums are forcing more and more people to give up health insurance altogether, you know the companies are in trouble.
So if rising premiums cause UnitedHealth to lose business, this will mean lower prices for consumers, right? Sadly, the Wall Street Journal reports that:
“UnitedHealth […] said earlier this year that it would lose 550,000 of its 28.5 million commercial health-plan members in the first quarter. [This] signals that UnitedHealth would rather give up business than restrain premium increases too much to attract more customers.”
Sigh… great to see that insurance companies have their priorities in order!
And UnitedHealth wasn’t the only company to give its investors headaches – apparently Wellpoint’s profits took a tumble as well, falling by nearly 25% in the first quarter. But no fundamental worries here, say analysts.
WellPoint's biggest problem is that its [prescription] drug benefit is so rich that people who need lots of drugs will always buy the benefit. The easy solution: decrease the benefit so the company gets fewer of the very sick. Or increase the price to cover the cost of the benefits.
I’m sure it makes investors breathe a little easier to know that Wellpoint can just slash benefits when it’s faced with the cost of paying for prescription drugs for the “very sick.” But the real question for the rest of us remains – what will it take to get insurance companies to compete for our business by offering high quality care at low costs?
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2 Comments
20 years ago I experienced Costa Rica along with the results of their healthcare system. The peace and stability experienced walking down the streets as a single lady was stabilizing and “I felt safe”. That proded me to look further into the dynamics of their system. Human nature dictates that our ‘survial instincts’ such as feeling ‘safe’ and ‘taken care of’ are a priority to stabilizing the emotions...which effect the physical body. Come to find out that Costa Rica has both systems: socialize medicine and pay for service...which means that their young ones and elderlies are taken care of and don’t get sick from worrying about ‘what if’s’.
Originally from Canada with the socialized medicine, i have had many of my love ones (mother, father, sister, and recently brother) very well taken care of and with my direct supervision as I am an ICU Registered Nurse . The system is much more efficient than most hear about. In order to keep medicine (drugs) ‘high tech’ and competitive we also need a ‘pay for service’ system for those who can afford to pay the high cost immediate care due to their high demand curriculum.
Eli Staub, in his blog: Rising Premiums Causing Headaches for…Insurance Companies? Asks the question: “ what will it take to get insurance companies to compete for our business by offering high quality care at low costs”?
What will take to get insurance companies to compete for our business?
The answer: Worker-owned competitors and Consumer-owned competitors in business for themselves.
Medicare is the largest insurance company that serves the disabled and the elderly in the United States. Medicaid is the largest insurance company that serves the poor in our country. We, the tax-payers are the investor-owners of Medicare and Medicaid. WE, the tax-payers should form our own, neighborhood-based clinics and elder-care housing and services--owned and operated by health care workers. Our services must be Medicare and Medicaid certified businesses, “offering high quality care at low costs”. Then let the competition for our customers begin!
The direct care workers in the Medicare institutions that serve the elderly are certified nursing assistants. The old thinking around elder care has been to create expensive institutions-- nursing homes, the majority of which are now owned by corporate chains, which are owned by Insurance companies. Their profit motive leads them to keep staffing at a minimum. Nursing Assistants are hard to recruit and hard to retain. But if Nurses and Nursing Assistants owned their own Medicare-certified Home Health Agencies, they could work for their own company and provide elder care in their own communities. A good example of such a scenario is Family House, Inc. in Milwaukee, Wisconsin, started by Cordelia Taylor, RN and her family. She has transformed an entire inner city neighborhood into a worker-owned multi-generational elder care center.
See http://milwaukee.bizjournals.com/milwaukee/stories/2007/10/22/story4.html
Another model of elder care empowerment is the Adult Family Home. Wisconsin has designed licensure for families who create elder care services for one or two residents with County-based regulations while those who house three or four residents get a State license. This common-sense, community-based alternative to nursing homes can become a viable solution to the slump in the housing market if direct care workers purchase a home and set up their own Adult Family Home business.
See http://dhfs.wisconsin.gov/rl_DSL/AdultFamilyHomes/AFHintro
I believe we health care workers can truly create our own companies that can offer excellent alternatives to the current long term care industry options for our elder clients.
We must educate ourselves as entrepreneurs and empower ourselves to take the leap into the corporate world to play hard ball with the big boys, and beat them at their own game.