Wednesday, September 28, 2011

Still Dealing With The Rising Cost Of Health Care

The Kaiser Family Foundation reports that the average annual premium for family coverage through an employer rose to $15,073 in 2011.  That is an increase of 9% over the previous year. 
This announcement could not come at a worse time for the economy and for an administration struggling to get people back to work.  The increase in health insurance premiums would most certainly offset any savings employers may find in the tax cuts proposed in the President’s jobs plan.  Small businesses are less likely to hire when faced with an increase in their group health insurance premiums.  Many will be forced to lay off workers or discontinue providing coverage altogether.
Health insurance providers argue that they are increasing rates to offset the increased cost brought about by the President’s Affordable Health Care Act.  They argue that the requirement that they provide coverage for people with pre-existing conditions and allow parents to insure their children until the age of 26 drives up claims and costs.  They also say that they are raising rates in anticipation of a provision that will take effect in 2014 requiring insurance companies to justify rate increase in excess of 10%.
The administration counter argument is weak. They say that once all the provisions of the bill take effect in 2014 the net result will be more choices, more competition and lower rates.
Here is the truth.
The Affordable Care Act is a watered down law that is a boondoggle for the insurance industry.  The cost containment provisions were weakened to such an extent to insure the bill’s passage that they lack the clout necessary to hold rates in check.  While requiring companies to insure those with pre-existing conditions, allowing parents to keep kids on their policies until 26 and making the coverage portable are good things for the public; the cost controls are too weak to hold down the rate increases that the companies are sure to impose to offset the increase in risk.  The mandate provision that conservatives hate funnels over 40 million new customers into the insurance company pipeline.  Republicans say this mandate is unconstitutional.  But it is necessary if you want to insure everyone through the existing free enterprise system.  The current system cannot work effectively as long as you allow people to receive medical treatment without paying for it.  The cost of their care gets passed on to those who DO pay for their treatment in the form of increased premiums.  Everyone who benefits must pay into the system for the current system to work effectively; hence the mandate. The problem is when you mandate coverage without putting in stringent price controls you open the barn door for the insurance industry to charge whatever they choose.
The assertions that that the new law will allow companies to market across state lines thereby increasing competition and lowering premiums is bogus.  Insurance companies can already market across state lines.  All they need to do is file the appropriate paperwork and abide by the individual state laws.  They choose not to because many feel that the laws in certain states are too restrictive in terms of price control.  The new law does nothing to change that. 
And the anti-trust exemption that the insurance industry enjoys (only the insurance industry and Major League Baseball enjoy this benefit) guarantees that price fixing and collusion within the industry will continue to assure massive profits.  The bill does nothing to address that either.
The insurance industry has made billions upon billions in profits over the past decades.  They are increasing their rates simply because they can.  Their duty is to their stockholders not the general public.  That is the way the system works.  And nothing in the bill changes that.
What we need is a complete overhaul in the way medical coverage is distributed and paid for in this country.  Tweaking a system that has run out of control is not the answer. 
We have had the personal experience of dealing with the private insurance industry for our own medical needs.  We have also dealt with Medicare and Medicaid in handling the medical needs of our parents.  There is no contest.  Hands down Medicare for everyone is the better way to go.
But that is not going to happen in this, the only industrialized country on the planet to disdain the thought of government health care for everyone.  This phenomenon is even more perplexing when you realize that all of us go on government provided health care once we reach retirement.  And any politician who so much as whispers the thought of “reforming” Medicare or Medicaid does so at the risk of serious political and physical harm.
People will complain about the skyrocketing cost of their health care and blame it on Obama’s health care plan. They forget that our health care costs were going through the roof long before Obama came on the scene. 
Credit the President for at least trying to fix the problem.  Obamacare just didn’t go far enough.  And until we make the tough choice to completely overhaul the way we receive healthcare, the cost will continue to rise.           

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