California Takes on Health Insurance Rate Hikes
State governments are taking a close look at the policies of large state health insurance companies after some extreme rate hikes caused uproar in California.
A recent report from MarketWatch shows that Anthem Blue Cross of California recently hiked premiums up to 39 percent. The move attracted the wrong kind of attention from residents and state lawmakers, as well as the President who warned that more of the same might be in store if America doesn’t pass health care reform.
In the report, Blue Cross officials cite “underlying medical cost growth” for the rate hikes. They also say that healthy people choosing not to get health insurance leaves the market with a consumer base that is more expensive.
Advocacy groups have weighed in, saying this just proves what they have been saying all along—that a private for-profit health insurance system does not work.
The MarketWatch report also mentions Mega Life and Health Insurance in California, where estimated rate hikes reach 25 percent. Public hearings will shed more light on the practices of these companies. These cases highlight a fundamental problem with for-profit health insurance in a down economy; when consumers find that health insurance is out of their financial reach, they will elect to stop buying it. This has a negative effect on the providers, some of whom raise rates further. Other critical issues with America’s individual health insurance system include the “emergency room” care strategy, where those without insurance simply visit emergency care centers for their healthcare needs.
Most Americans and lawmakers agree that something has to be done about health insurance, but debates over a solution continue to leave major reforms undone. State efforts may help provide a window into how the government can deal with rising costs of individual and group health insurance. Those involved in insurance law will want to look at how emerging legislation will change the needs of their clients.
Monheit is the managing lawyer at Monheit Law, outside Philadelphia, Pennsylvania. He has practiced law since 1989. Michael Monheit was the managing attorney of the law offices of Herbert Monheit — now Silverman and Fodera — a firm founded by... Michael Monheit→
