March 8, 2010

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Premium Hikes Resuscitate the Public Option?

As the public option faded—and was declared dead by most—the phenomenon of insurers pricing their policies beyond what consumers can afford took off like a jet! Last month, Anthem Blue Cross told customers it will hike their health insurance premiums by as much as 39% (with the expectation that some would drop coverage altogether). This rate increases put into high relief the absolute urgency of passing health insurance reform. Last December (2009), the Huffington Post reported Aetna was planning to lose more than 600,000 customers by raising premiums in 2010. Insurers can do this in part because in many markets, no meaningful competition exists, and even more Americans and businesses will be forced to drop health insurance.

The rapacious (and perhaps premature?) behavior of the insurers, along with
President Obama’s plan to regulate insurance premiums, may just be a game changer. The President’s proposal to regulate healthcare premiums forcefully reframes the public dialogue in exactly the right terms: a battle between insurance industry profits and the welfare of average Americans. In addition, the Democratic-authored healthcare package would eliminate the antitrust exemption health insurers enjoy, require insurers to spend a high percentage of their funds on medical costs, and create a commission that would oversee unexpected premium hikes.

 

Moreover, Senators were so outraged by the proposed insurance hikes that more than 30 of them (Senators!) are calling for reinstatement of the public option. If it’s possible for the Senate to use the reconciliation process to include a public option as part of the bargain, as many leading Senators have suggested, so much the better. The public option remains one of the most important and popular aspects of reform.

 

But regardless, Congress must take action to create a framework for a new health insurance system built on the premise that everyone can and must have health insurance they can afford. The deep pockets of the insurance industry have allowed them to exercise undue influence on legislators and to fund misleading television advertising that has soured many people on the concept of healthcare reform. Wouldn’t it be grand if their arrogant increases in premiums put all that money to waste? It’s almost enough to make one believe in karma!

 

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