Just Got My Rate Increase Notice. A Bit of Rant

[MJ]

I just got back to Tucson from Thailand and received a letter from BCBS with the new rates.
I have been tracking the rates for several years and the increases are just insane. I have a high $5k deductible with 80/20% and $40/$70 copay.Tthe 54 - 59 age group has gone from $171 in 2004 to $240 for 2007. That's over a 40% increase. Next year, when I cross into the next age group, the rate will go to $291. Luckily I can afford it.

When is this madness going to stop.

When I go back to Thailand in 3 months, I may very well get insurance there, as I may spend quite a lot of time in SEA over the next 5 or so years and very little time back in the USA.

MJ

[Michael]

Health insurance rate of increase is way beyond the CPI, making it difficult to know how much to plan for.

[RASAP]

MJ,

Thanks for the data point. Now I have at least some idea what the annual increase is for someone my age. Twelve percent per year is as good an estimate as any guess that I've made.

[Beststash]

I recently read that the typical health insurance rate increased 82% from 2000-2006. Why? I hear all kinds of reasons but my opinion is that our healthcare system is broken. It is viewed as a "cash cow" and I predict it will continue to rise until something causes it to stop - the consumer or government.

Again - Why the huge increase in the last 6 years?

Peace

[Buckeye]

Where is all the extra money going? I don't think Dr's incomes have been rising. Who's coming out ahead?

[ziggy29]

High-tech medicine and new miracle drugs cost a lot of money. I know that doesn't account for ALL of the increase in health care costs, but let's face it, I don't think many people want 1960-era medical technology working on them. Everyone wants the newest and the best care, and they want to be treated, and the hospitals often perform CYA routines to avoid being sued. Not to mention the huge medical bills in end-of-life care for many who want superhuman efforts made to save them.

There's really a confluence of several different forces, and unless we're ready to accept compromised quality or rationed care, I don't see a way around it.

[eridanus]

NEW YORK (Reuters) Oct 26 - U.S. health insurer Aetna Inc. on Thursday said quarterly profit rose 28 percent on moderating medical costs and higher enrollment, beating Wall Street's projections and pushing shares sharply higher.

Houston Chronicle - 26 Jul 2007 ~© 2007 AP HARTFORD , Conn . - Aetna Inc . announced a 16 percent jump in profits for its second quarter Thursday as the insurer capitalized on premium and fee increases , membership growth , .

NEW YORK (Reuters) Jul 18 - Health insurer Humana Inc. on Wednesday reported higher-than-expected second-quarter profit, mainly because of improving cost trends, and its shares rose as much as 10.4 percent to a record high.

NEW YORK (Reuters) - Humana Inc. (HUM.N: Quote, Profile, Research) said on Monday that quarterly profit more than doubled on strong Medicare membership growth, prompting the health insurer to raise its 2007 earnings forecast.

WellPoint Inc., the parent of Blue Cross of California, more than doubled its first-quarter profit after a controversial merger that closed late last year.

[Meadbh]

http://www.isc.hbs.edu/pdf/20061212_IHI_FINAL.pdf

Above is a link to the presentation made by Michael Porter (Harvard Business School competitive strategy guru) at the Annual Meeting of the Institute for Healthcare Improvement in December 2006. His main point was that competition in US healthcare is about the wrong things.

Of course he wrote a book about it:
Amazon.com: Redefining Health Care: Creating Value-Based Competition on Results: Books: Michael E. Porter,Elizabeth Olmsted Teisberg

[chinaco]

Originally Posted by Meadbh

http://www.isc.hbs.edu/pdf/20061212_IHI_FINAL.pdf

Above is a link to the presentation made by Michael Porter (Harvard Business School competitive strategy guru) at the Annual Meeting of the Institute for Healthcare Improvement in December 2006. His main point was that competition in US healthcare is about the wrong things.

Of course he wrote a book about it:
Amazon.com: Redefining Health Care: Creating Value-Based Competition on Results: Books: Michael E. Porter,Elizabeth Olmsted Teisberg

Porter is a smart man and very perceptive. He is kinda like a Peter Drucker type.

Unfortunately in real world capitalism, there is always some @$$h0!3 that is more interested in beating someone out of a $ than providing fair value for a $. The insurance industry seems to be full of those types of @$$h0!3s.

I also think our medical providers are out of whack in a number of areas also.

Running a business and providing medical care seem to be two opposing forces.

[Michael]

This article suggests free markets lead to cheap prices, and central planning via regulations lead to high prices:

Health Care Blog

Can free markets work with health care?

[retire@40]

Originally Posted by Michael

Health insurance rate of increase is way beyond the CPI, making it difficult to know how much to plan for.

I use two different inflation rates. One for health insurance at 10%, the other for everything else at the CPI.

[MJ]

Originally Posted by retire@40

I use two different inflation rates. One for health insurance at 10%, the other for everything else at the CPI.

I have been using 12% since I have been tracking insurance rate in areas of the country I was interested in moving.

My specific insurance (BCBS in AZ ) has gone up as follows,
12.9% in 2005
11.4% in 2006
11.6% in 2007

MJ

[Michael]

Mine went up 17% 3 years in a row, and 20% last year. I must be doing something wrong.

[twaddle]

Are those increases purely "inflation" or did you also move into a new age bracket?

Our insurance went down slightly in 2006, and then up 10% in 2007 due to a new age bracket. Either way, it's money coming out of your pocket.

[Meadbh]

Originally Posted by Michael

This article suggests free markets lead to cheap prices, and central planning via regulations lead to high prices:

Health Care Blog

Can free markets work with health care?

The problem with healthcare is its complexity. While some of its components (e.g. elective surgery for carefully selected patients without complications) can be organized to run efficiently on a business model, other parts (e.g. immunization, addiction services for non super rich and famous people, emergency care for people in the boonies) cannot. At least, not if you plan to serve the whole community. How can a for profit organization justify to a board of shareholders the EVA of putting millions of dollars into an obesity prevention strategy that will take a generation to pay off? How can it justify mental healthcare and community support for someone who will never earn enough to pay?

Private companies who can cherrypick the areas of healthcare that they want can do those things very well and efficiently. No private company would willingly touch the most challenging components of healthcare. That usually leaves "society" to tend to those often thankless tasks. Governments are acting as society's agents. I think the real test of a healthcare system is how it treats the most vulnerable members of society.

Just my two cents.

[MJ]

Originally Posted by twaddle

Are those increases purely "inflation" or did you also move into a new age bracket?

The increases I quoted are within the same age group. 4 months after the increase, I will cross it the next age group, then my rate will go up another 21.3%. As I mentioned in a previous post, I probably will get Thai health insurance.

Our insurance went down slightly in 2006, and then up 10% in 2007 due to a new age bracket. Either way, it's money coming out of your pocket.

If you are self insured then you are doing great. When I was getting subsidized insurance from my former employer, they would switch between Cigna, Aetna and United Health, which seem to keep the cost from going up. In fact my last year there, my cost when down 5% with the same benefits.

MJ

[Michael]

Originally Posted by twaddle

Are those increases purely "inflation" or did you also move into a new age bracket?

I moved into a new bracket in one of the years, but the others are inflation.

Originally Posted by Meadbh

How can it justify mental health care and community support for someone who will never earn enough to pay?

You are correct that the free market model is incapable of providing free or below cost services. The only way a free market competition model could provide service to the poor would be something similar to the food stamp program. The poor get food stamps that can be used to buy food at free market grocery stores. To provide for the poor under a free market medical system, the poor would need to get medical stamps that they could take to the local Wal Mart clinic to pay for treatment by Wal Mart trained staff. Alternatively, the gov could just set up gov run free clinics for the poor.

[retire@40]

Originally Posted by Michael

...The only way a free market competition model could provide service to the poor would be something similar to the food stamp program. The poor get food stamps that can be used to buy food at free market grocery stores. To provide for the poor under a free market medical system, the poor would need to get medical stamps that they could take to the local Wal Mart clinic to pay for treatment by Wal Mart trained staff. Alternatively, the gov could just set up gov run free clinics for the poor...

Although nobody should ever be denied health-care, giving free health-care to the poor is a disaster. It is abused beyond belief. Everyone should be required to pay into the system. A graduated pay scale would work well. For example, if you make $20K a year, you pay $200 a year for health insurance. If you make $40K a year, you pay $2,000 a year.

For those who are physically or mentally incapable of earning a living (not those who pretend to have these ailments), should get free health-care since they have no ability to care for themselves.

Finally, health-care providers and pharmaceutical companies should be audited on a regular basis to make sure they are not overcharging. This is the crux of the health-care problem today. Once this is put under control and made more efficient, the health-care crisis in this country will become manageable again.

[Michael]

Interesting. This sounds more like a regulated monopoly than a free market. In a free market, competition keeps costs down and quality high. In regulated monopolies, gov grants the monopoly (license?), then determines a fair price for a product since there is no competition to keep costs under control. The graduated pay for health insurance is also interesting, but a free market is not capable of providing such a product. Might as well just go with national health care, paid for with taxes based on income.I am getting the idea that no one thinks a true free market model would work with health care. In a free market, Wal Mart would train their own doctors (no license needed). Foreign companies could set up clinics, staffing them with foreign doctors. Consumers could choose to buy Lipitor OTC from Amazon.com if the local pharmacy charged too much. Competition would then keep prices low, and quality high, the way competition does in other industries. That is, if a provider charges too much, or provides a bad product, no one would go there and the provider would go out of business. Market discipline (capitalism) keeps quality high and prices low in most industries.Might not work in this industry though, I don't know. In any case, according to the latest polls, it is likely to be President Hillary who decides what model we will have.

[eridanus]

In a free market, Wal Mart would train their own doctors (no license needed)

Ahhh, the libertarian ideal comes to another screeching halt.

Sometimes the free market just doesn't work when the need is to service EVERYONE. One example: US rural electrification.