Large Premium Increases?

A recent article describes large, double digit premium increases being requested by health insurers, and allowed, in some cases, without objection by regulators in the various states.  Now just what did we expect?

Insurers will soon be required to cover all applicants, without the ability to deny coverage for pre-existing conditions.  Many people will now enter the insured population who have been uninsured, and sick, for years.  Socially, this is a very good thing.  Financially, it is very expensive.

Do we expect insurers to just absorb these costs?  No, we should expect these costs to be built into future premiums.  Consider- would State Farm sell you a homeowners policy while your home is burning?  Of course not.  And if we required them to, that policy would be very, very expensive.  And if we forced them to average the cost of the burning house- many actually, over all policies, the price for all policies would increase dramatically.

And so it is with health care.  Accepting patients who are already ill, while socially positive, is very expensive.

Now I am not a defender of insurance companies.  But I do understand their role, and the simple reality is that if what you are insuring costs more, the insurance policy will cost more.  So as our health care system continues to evolve, we need to focus on costs– the cost of going to the doctor, the cost of staying in the hospital, of paying for drugs and of paying for devices and equipment.

If costs continue to rise, insuring those costs will only rise as well.