Following are the words of a former state insurance commissioner. Take heed. This lady knows what she is talking about.
The last “experts” you want to listen to are the politicians.
And if your insurance premium is going up, it’s not because state regulators are allowing huge rate increases for no reason. It’s because the demand and cost of health care delivery continues to increase. With insurance carriers required to spend at least 80 cents of every dollar on health care costs, you quickly see that the drivers of increased premiums are not insurance carrier overhead but the costs of drugs, medical equipment, procedures, etc. We are a nation that expects the best in health care for everyone regardless of income or ability. People want to pay for Mercedes-style health care at Yugo prices. Take for example an infant anti-seizure medication on the market. A single dose of this incredible drug is $32,000.
Our leaders have tried to find ways to alleviate costs. We’ve tried managed care, purchasing cooperatives, reinsurance mechanisms, association health plans (AHPs), multi-employer welfare plans (MEWAs), exchanges, health maintenance organizations (HMOS) and standard insurance plans. Some have fared better than others. Many have failed.
Health care entities must have enough capital available to pay bills and provide a “cushion,” should there be extraordinary losses. The theory of insurance is that with more people in the pool paying, you can weather those times when you have less healthy people having claims. You “spread the risk” across everyone in the pool and lessen the individual costs.
The problem is that young healthy people don’t see a need to be in the pool right away because they aren’t accessing the system like the older generations. So, you end up with those older and less healthy folks purchasing coverage and accessing more services. It’s simply not sustainable without regular increases in the insurance premium.