Saturday, October 31, 2009
Thursday, October 15, 2009
Following the old adage to never stop digging when you've created such a nice hole for yourself, AHIP is now touting a report (pdf) released by one of its member insurers: the Blue Cross Blue Shield Association. Like AHIP's report, Blue Cross Blue Shield finds that premiums will shoot into the sky with health-care reform. Like AHIP's report, Blue Cross Blue Shield leaves out little things like the insurance exchanges, the excise tax, the delivery system reforms and pretty much everything else in the bill. Like AHIP's report, Blue Cross Blue Shield argues for a stronger individual mandate, which makes policy sense, even if the conclusion is presented dishonestly. Like AHIP's report, Blue Cross Blue Shield does not present any options for funding a stronger mandate.
But what's interesting about the BCBS report is how clearly it shows that insurers have gotten themselves into this mess. Essentially, they've spent so long pricing the sick and the old out of the individual market that they don't really know what to do when they're allowed back in. Consider this paragraph from the analysis:
Insurance reforms alone will substantially increase claims costs in the individual market. The individual market “risk pool” will be less healthy than today and will drive higher insurance premiums. We estimate the average medical claims for the uninsured are 20 percent higher than claims in the current individual market. In addition, certain segments with high medical utilization who are now insured through other arrangements will enter the individual market as a result of guaranteed issue and modified community rating requirements. This includes people enrolled in state high-risk pools, people on COBRA through their former employers’ coverage, and other group conversion policies.
Or this one:
In most parts of the country today, insurers in the individual market are permitted to underwrite and design benefit plans with a variety of price points. This flexibility enables a stable, competitive insurance market. Perhaps most importantly, it offers the greatest affordability to attract younger and healthier members and helps encourage wider enrollment in health insurance.
This is the house they've built: an insurance market where plans are written for the healthy and all legal efforts are made to exclude the sick. That's meant premiums are somewhat lower than they'd otherwise be, but only because the people who most need health-care insurance aren't able to afford it, or in some cases, aren't able to convince anyone to sell it to them. Now that arrangement is ending and they're scared that they can't provide an affordable product to the people who need it. They may be right, but it's evidence of how deeply perverse their business has become, not of what's wrong with health-care reform. When they say that the individual market would be cheaper in the absence of health-care reform, they're saying the individual market would be cheaper if they could continue refusing to sell affordable insurance to people who need health-care coverage.
This isn't an argument against health-care reform. This is proof of its necessity.