Health insurers plan to raise premiums, even if it means losing customers

The health insurance monopoly has become so concentrated in some areas that insurers can now jack up rates as high as they want – even if it means losing customers – and still continue to drive profits even higher.

Wall Street broker Steve Lewis told investors during a conference call organized by Goldman Sachs last week:

“Not only is price competition down from a year ago… but trend or (healthcare) inflation is also up and appears to be rising. The incumbent carriers seem more willing than ever to walk away from existing business resulting in some carrier changes…”

He went on to say that rate increases could go up as high as 50 percent in some areas, adding: “I think most people would acknowledge that there’s a need for healthcare reform.”

Sec. of Health and Human Services Kathleen Sebelious released a letter to insurance executives last week asking them to post justifications for rate increases on their websites.

But Talking Points Memo reported that AHIP CEO Karen Ignagni said Tuesday that criticizing the insurance industry for jacking up rates would not improve the situation.

“Our industry strongly supports health care reform because we recognize that the current system is unsustainable,” Ignagni said. “The current debate about rising premiums has demonstrated that, in fact, we have a health care cost crisis in this country. Unfortunately, the path that has been followed is one of vilification rather than problem solving.”

Despite her remarks, AHIP is set to pour $1 million into television advertising aimed at derailing healthcare reform.

The proposed healthcare reform bill gives the government the authority to limit excessive premium increases.  The provision was added after Wellpoint, a massive California insurance company, jacked up its rates by 39 percent.

Health Care for America released this new ad (below) in the wake of recent insurance rate hikes.

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2 comments

  1. I don’t understand, what’s the problem with the government limiting excessive premium increases? Isn’t that just regulating monopolies, a.k.a. completely constitutional?

  2. After reading this, a question that I have is: Why don’t these just change insurance companies? I mean, isn’t that the whole point of a capitalist economy? One thing that we have to remember is that these companies are for profit companies. They have stock holders that they must report to. This is something that is fundamentally wrong with healthcare as a business. I believe that it is good and noble for people to make their livings in the healthcare system (eg doctors, nurses, etc). I don’t believe that some guy on Wall Street should be breathing down these peoples necks, trying to get them to cut cost, and raise prices, so his stock’s value can go up. People’s health and quality of life should not come down to dollars and cents. I agree that our healthcare system is flawed, I’m just not convinced that we have acceptable alternative to the status quo. There is a reason that people from other countries come to America for health care; we have some of the best doctors in the world. We have to ask ourselves, how do we keep this same quality of healthcare while reducing cost (and pass this savings onto everyday people)?

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