9-24-09, 10:08 am
While wage growth, impacted by inflation, has eroded steadily over the past decade, the cost of a typical health insurance plan has grown as much as 150 percent, a new report put out by the Obama administration revealed this week. In 2008, for example, prices of consumer goods fell by .7 percent, while insurance premiums dug deep into take home pay by growing 5.5 percent.
Health insurance consumers can expect a similar pattern in 2009.
Putting the issue in stark terms, the report stated, 'Consumers ultimately bear the brunt of costs as increases in hospital, physician, drug, and health plan spending are all passed down the value chain to American families, employers and the government who pay the bills.'
The report also examined the impact of out-of-control insurance premiums on working families in each state. In the past decade for example, Alaskan working families saw the cost of a typical family premium grow more than four times faster than their wages.
Working families in South Carolina, Iowa, Wyoming, Oregon, Montana, Maine and Arizona, for example, also saw insurance premiums grow 2.6 to three times faster than wages, the White House report revealed.
Despite big profits margins, Maine's Anthem Blue Cross Blue Shield, Washington's Regence Blue Shield, and Blue Cross Blue Shield of Rhode Island each demanded double digit rises in the price of family premiums in 2008 in each of those states.
A separate report prepared by the Department of Health and Human Services earlier this summer explained why insurance premiums seem to grow unchecked. According to data compiled in that study showed that numerous states have one or two or just three big insurance companies dominating the market in each state, holding virtual monopolies, setting conditions of coverage and establishing price increases.
The White House report argued that reform measures currently under debate in Congress would regulate the insurance industry and prevent such exorbitant rises in the cost of premiums.
By eliminating discriminatory practices such as canceling coverage due to 'preexisting conditions' or because a consumer is deemed too costly to cover, new consumer protections could reign in the cost of health care and insurance. Reform proposals also include limits on out-of-pocket expenses, protections for retirees on Medicare, prohibition on lifetime caps on coverage and the creation of new coverage for preventive care.
In addition, the administration has argued, the construction of a public insurance program as one of the possible choices for consumers would expand coverage to millions of uninsured people and bring market pressures to bear on private insurance companies to provide benchmarks for coverage and best practices that would bring price inflation under control.
Yale University Professor Jacob Hacker, in a recent report advocating the public insurance option along with insurance regulation, wrote that the public program is essential to make reform work. The public option must 'provide a backup option offering health and financial security to individuals without employer coverage, a cost and quality benchmark, and a cost-control backstop that drives payment and delivery system reform.'
Alternatives to this, Hacker told reporters on a recent conference call, such as the proposed non-profit cooperatives in the Senate Finance Committee's current health bill, simply aren't large or universal enough and therefore would be ineffective competitors with private insurance companies to force them to change their ways.
