This past month millions of Americans got notice from Blue Cross/Blue Shield providers across the country that their insurance premiums were going way up effective immediately. Here is the terse reason CareFirst/ Blue Cross/Blue Shield of Washington gave its subscribers for raising a monthly premium from $333 to $512 on a middle aged man who is healthy, is not a smoker and is not obese: "Your new rate reflects the overall rise in health care costs and we regret having to pass these additional costs on to you."
Recently, Fox News anchor Bill O'Reilly also received a similar notice from his health care provider, (Anthem Blue Cross), and was told that his annual premium will increase by $2,100.
The excuse given was the same boilerplate as set forth above.
An 85-year-old New Yorker received notice from his health care provider, (Empire Blue Cross/Blue Shield), wherein he was notified that:
1. His Medicare deductible is being increased from $1,068 to $1,100;
2. His co-insurance liability for skilled nursing facilities is being increased from $267 per day to $275 per day and that 60 lifetime reserve days is being increased from $534 to $550;
3. His Medicare Part B deductible is being increased from $135 to $155.
American health care providers are gouging consumers in advance of Obamacare taking effect in 2014.
According to publicly available profit and loss statements, our nation's largest health care providers such as Humana, Wellpoint, United Health Group, Cigna and Aetna collectively posted a net income of over 12 billion dollars in 2009.
Is it not just a little bit suspicious and beyond coincidence that so many Americans are receiving these letters from separate "independent" health care providers all over the country? The letters are almost identical in content and verbiage.
According to the Consumers Union report, not-for-profit Blue Cross/Blue Shield groups are raising health insurance premiums by as much as double digits to build up their cash reserves -- in some instances to more than three times what states require.
It is no secret that these companies generate substantial investment income from reserves.
Here are just a few of the worst examples cited by Consumers Union:
- Blue Cross Blue Shield of Arizona raised its reserves from $648 million in 2007 to $717 million in 2009 (more than seven times the amount required in that state). During that time, individual policy rates jumped about 40 percent.
- Health Care Services Corp., which includes Blues plans in Texas, Illinois, New Mexico and Oklahoma, built up its surplus from $6.1 billion in 2007 to $6.7 billion in 2009, five times the minimum in those states. Meanwhile, its plans' rates rose by up to 20 percent a year.
So which is it? Are the companies raising rates to build reserves or are they raising rates in advance of rising costs they are anticipating by Obamacare, or are they raising rates because of an actual rise in the delivery of actual medical costs? You cannot get a straight answer.
If, in fact, health care providers are sitting on piles on cash that is far in excess of what it should be under state laws, why are they not rebating those surpluses to policyholders, as many automobile insurance companies do?
Another example of how Obamacare has influenced the behavior of health care providers is that under the new federal law it mandates that no more that 20 percent of every premium dollar be attributable to administrative costs. Therefore many companies who currently run 26 percent of administrative costs for every dollar have now "reclassified" many administrative services as "medical" so they do not lose income and can avoid reducing overhead.
In April of this year, the U.S. Senate reported that Wellpoint alone reclassified more than half a billion dollars in services from "administrative" to "medical."
The bottom line is that in advance of Obamacare the consumer is getting taken advantage of with any recourse.
Looming over their heads is a law that does not even take effect until 2014. In the meantime We the People are stuck between greedy insurance companies and incompetent government.
Now is the time to repeal and replace Obamacare. The answer to health care reforms does not lie in creating a government system it lies in improving a free market system. Here are some of the reforms that should be done:
1. Creation of refundable credits for health care costs;
2. Strengthening health savings accounts;
3. Repeal of the 7/5% threshold on deduction for medical expenses;
4. Allow for purchase of health care insurance across state lines;
and 5. Facilitate the import on FDA approved drugs.
At a time of deep recession, high unemployment, record home foreclosures and personal and business bankruptcies, the last thing we need is further economic uncertainty looming with regard to nationalized health care.
America, let's not accept commercial gouging or government incompetence and bureaucracy. Let's fix what needs fixing!
Bradley A. Blakeman served as deputy assistant to President George W. Bush from 2001-04. He is currently a professor of Politics and Public Policy at Georgetown University and a frequent contributor to the Fox Forum.
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Former deputy assistant to President George W. Bush