Insurance Premiums Rise More Than 30%: What Did We Expect?

This is another big week for health care reform. President Obama is hosting a bipartisan summit on Thursday to discuss all options for health care reform -- Democrat and Republican in full view of the American people. I do not expect any major breakthrough on reform but as always, I remain hopeful. The notion that Republicans and Democrats are going to find common ground seems far fetched given the opening positions of both groups. More on this in my next blog.

Also in the news is the recent rate increases for insurance premiums for individual policy holders. In California, Anthem Blue Cross, one of the larger health insurers in this country, announced rate increases as high as 39 percent. The average increase was 25 percent. These increases did not apply to those who get their insurance from their employer or through group plans. Anthem justified this increase by saying they lose money on these policy holders. I have no reason to doubt them although California regulators are investigating their spending on medical claims. It is also important to note that the nations 5 largest health insurers posted over $12 billion in profits last year and Anthem Blue Cross alone posted of $2.5 billion in profits in California the week before the rate increase was announced. Finally, 2.6 million Americans lost their health insurance coverage last year for various reasons.

Here is my point. This is exactly what we should expect to continue to happen without meaningful health care reform. Insurance companies will continue to play by the rules of the game which is what they do today. Expect continued industry profits and reductions in coverage levels and more cost shifting in the form of higher co-pays and deductibles. I was more surprised by the reaction of the public and the President than the actual announcements of the increase in rates. Here is why. The most important aspects of health care reform under both the Senate and House versions of the bills was to increase coverage for millions of Americans, mandate everyone have health care insurance (and provide subsidies for those who can not afford the coverage), eliminate preexisting conditions and the ability of the insurers to drop people when they get sick. Additionally, the bills were going to look at cost reforms and opening up of the insurance markets through state and/or federal insurance exchanges. Without any of these reform provisions, there is not mechanism in place to make sure people have health insurance. There are no rules to prevent the insurance companies from the very behavior we are all outraged over.

The Republican position remains based on the on the idea that the American people did not like the various health care reform bills in Washington because the were too big, too expensive, would facilitate a government takeover of health care, and ultimately lead to the rationing of health care. Let me be perfectly clear, it is simply just not true. While both Democrats and Republicans all believe the current system is not sustainable, the Republican position on health care reform merely makes minor changes to a failed system. When people are healthy and not worried about health insurance or the need for health care services, it is very easy to ignore the fundamental problems in the system. We tend to respond to the sound bites we hear in the news: "Insurance Industry Profits Reach Record Levels" or "Family with Mother Denied Treatment." Sure, those are horrible headlines. No one wants to see that happen in our country. But as the story dies down, we are left with the same fundamental problem, the system is broken. I would venture to guess that a significant portion of the 2.6 million Americans who lost their health insurance last year did not think we needed to reform the health care system last year. I bet they have changed their minds this year.

From my perspective, the outrage over the premium increases of the past few weeks is misplaced. We need to channel our feelings towards forcing our elected officials to start tackling health care reform in a meaningful way. Taking small minor measures will not work anymore. It does not matter whether you are Republican or Democrat. Ironically, there are divisions within each party over what provisions to adopt. Here is what we need to accept if we are going to really fix this problem -- anything short of this will really not work and if you do not believe me, just wait:

1. Insurance companies are going to have to change how the do business and they will only do that if it is regulated.

2. We will have to have individual mandates if we are going to expect the private insurance industry to survive (if we do not have individual mandates, then we will truly have a government takeover of health care insurance).

3. We must generate revenue to pay for the subsidies to cover more Americans. Whether we call it new taxes, assessments, or the elimination of current deductions, it must happen if we are going to cover the costs. If we do nothing, we will pay for it anyway with higher health insurance premiums and state taxes all to pay for the uninsured who will ultimately end up in our hospitals sicker than they would have been if they had access to affordable health care in the first place.

4. Cost controls. Period. We must look at how we spend our health care dollars and make sure we are providing excellent and high quality care without wasting money on unnecessary treatments.

Sure, there are other areas to focus on but if we start here, in one way or another, we will take big steps in fixing the problem and we will no longer need to be outraged when we hear stories in the media that merely shine a light on what we already know is wrong with our current system.

testPromoTitleReplace testPromoDekReplace Join HuffPost Today! No thanks.