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ACA Agonistes
NC Insurer Seeks 34.6 Percent Rate Hike

This is not the rate revision Obamacare supporters are hoping for: Blue Cross and Blue Shield of North Carolina, the state’s largest insurer, has modified the request it made to raise its 2016 premiums by an average of 26 percent—but it’s modified it upwards, to an eye-watering 34.6 percent.

Insurers across the country are currently going through the process of setting the premiums they will charge customers in 2016. They are supposed to estimate how much they need to charge based on how expensive (read: sick) their customer base is, and then they submit their estimate to state regulators, who have the power to approve it or, if they think the insurer math doesn’t add up, lower it. So far things haven’t looked great for the Obama Administration, as several insurers have requested quite hefty increases. In Oregon, not only were requests approved, but the regulator even told plans that did not ask for a hike to raise their premiums. But supporters of the ACA hope that regulators will overall deny the worst hikes, and it’s too soon to tell exactly how it will all shake out.

The news coming out of North Carolina, however, won’t help the Administration’s case. The NYT:

Blue Cross vice president Patrick Getzen says the program has not met expectations that healthier customers would enroll in the second year and that costs would level out after people who avoided doctors for years got treatment.

“Based on our data, neither expectation is proving true. Our claims and expenses are higher than our premiums and we need to take steps now to protect the sustainability of plans for our customer over the long-term,” Getzen said.

How badly you think this process will end depends on whether you think insurers really need the increases they’re asking for. The Obama Administration hopes state regulators will decide that the companies are overplaying their hands, but in at least one case a local commissioner rebuffed federal involvement in the process. When a federal official sent a letter to regulators outlining the reasons why requests should be scaled back, Montana’s Democratic commissioner “said the letter…was interesting, but ‘did not point to any new information that would impact how state insurance departments regulate their health insurance markets.'”

Time will tell, but regardless of how this process works out, we shouldn’t forget that U.S. health care is and remains broken—large ACA rate hikes or not.

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  • Andrew Allison

    We also shouldn’t forget that while health insurance is a major contributor to the cost of health care, the two are fundamentally different. The only way that the risk pool is going to expand to include the invincibles is to make insurance mandatory — which the (uncollectable except from a tax refund) individual mandate has obvious failed to do. It’s also worth noting that because ACA subsidies are based on income, not premium, the increases will be paid by the taxpayer for 87% of ACA enrollees. I wonder how high the cost of the subsidies will have to go before those so opposed to Medicare for All figure out that, imperfect as it is, single-payer is the only affordable solution.

    • JR

      And since single-payer is unaffordable unless you exclude large portions of the population through excessive wait-lists, you get back to the original problem. Namely, the way we deliver healthcare is unaffordable if we want to deliver it to everyone. Passing laws like ACA without changing economic facts on the ground is idiotic.

    • f1b0nacc1

      Not to echo JR too strongly, but ultimately single-payer is not an option unless you want to accept drastically reduced levels of service. Right now, if you can pay for it, you can have as much health-care as you want, but once it becomes a government benefit, that is not a supportable option. The pressure to provide healthcare in unlimited quantities for everyone becomes overwhelming, and it will bust the budget quite effectively. Take a look at the NHS and its budget woes (or for that matter those in France, Germany, most of Eastern Europe, etc) if you don’t believe me. You either end up limiting what sort of healthcare you can access by fiat (hello death panels!), or you end up with a two-tier system where the universal coverage is progressively less useful as the rich go to non-public suppliers. Again, take a look at the UK for an example of this dynamic in action.
      Worse still, unlike most other industrial societies, the US has a very large proportion of minority groups with distinctly sub-par health environments. If you filter them out of the statistics (and this was done often enough during the healthcare debate) you see precisely where the disproportionate spending comes from. Sadly the idea of excluding those segments of the population is a non-starter (and it should be…a government benefit comes from society at large and should go to society at large), but it kills any viable option for universal coverage.

      • Andrew Allison

        With respect, neither of you are following my argument (and both continue to conflate insurance with delivery of care.

        The post makes the point that insurance companies are increasing rates because the risk pool is too small and too risky, i.e., the invincibles are not participating. The only way to change that is to actually make insurance mandatory, as opposed to pretending to. The next logical step is to take the rapid consolidation of the private insurance industry to its logical conclusion and get rid of the associated overhead.

        Furthermore, in every country which has instituted single-payer insurance and has open economy, the option to obtain as much quality of service as you can afford is private by the private insurance companies which co-exist with the single-payer basic coverage, i.e. have a two-tier system, so let’s please stop beating that dead horse.

        The level of service provided by the basic coverage is an issue because (as we’re in the process of discovering with the Abominable Care Act) it’s simply not affordable to provide the level of service to which the insured have become accustomed to everybody. Ergo, as I’ve written previously, the question is whether we as a society want to provide a basic level of care to everybody, excellent care to those who can afford it, or both. Two of those options require single-payer in order to be affordable, and even then as you point out, it’s a challenge. Let me reiterate that I am not crusading for single-payer insurance, simply trying to describe the alternatives.

        Finally, your closing argument actually makes my case. You state (incorrectly, but never mind) that, unlike other industrial countries the the US has a very large population of minority groups with sub-par health environments. Aside from the fact that, for example, 10% of the population of France are Muslims in exactly that position, the disproportionate amount of spending actually occurs in the last three months of life regardless of the ethnicity of the patient.

        You close by stating your position that excluding such groups from health care is a non-starter, but draw the contradictory conclusion that universal coverage is not viable. As I wrote above, if (and only if) we are to give some level of care universally, the coverage needs (for actuarial reasons) to be universal.

        Leaving aside the quality of care (a subject upon which we have agreed to disagree [grin]), the fact that the US is spending twice as much on healthcare as the developed countries providing universal coverage which you say they can’t afford should be ringing alarm bells.

        • JR

          I think we want to provide excellent care to those who can afford it. We want to pretend that we are actually providing excellent care to everyone, and the best way of doing this is by imposing very high costs in time, not in out-of-pocket expenses. By making it very difficult to see a good doctor, a lot of people will get discouraged and not seem him/her. Then, when the problem is too difficult to solve, death panel declares that only certain cheap remedies are available, and presto, you spend quiet little. Yes, health care outcomes will vary wildly across income spectrums (like they have for, oh i dunno, entire recorded history) but politicians will be able to say that they solved the problem.
          My problem with advocacy for single-payer assumes that government agencies can successfully manage this enterprise in any meaningful way. Did roll out of the ACA inspire your confidence? I’m not sure “inspired” is the word I would describe my confidence level. I wouldn’t hire most of these people to throw me a rope if I were falling off a cliff.

          • Andrew Allison

            Well no, YOU want to provide excellent care for those who ca afford it and, by implication, to hell with those who can’t. The “making it difficult to see a good doctor” argument is entirely specious outside of Medicaid, as is the death panel argument. Not providing access to affordable care is the ultimate death panel. You’ve also apparently failed to note my repeated statements that I’m not advocating single-payer insurance, merely suggesting that it’s the only way to provide basic healthcare for all. The reason that people with ACA insurance are not seeing doctors, as TAI has pointed out, is that they can’t afford the deductible. ACA, as I’ve repeatedly stated, is a crock of you-know-what designed (by Democrats I should add) to enrich private insurance companies, big pharma and hospitals. The answer to your question is that, warts and all, Medicare (as opposed to Medicaid) serves 16% (and rising) of the population rather well.

          • f1b0nacc1

            A quibble here….
            A standard talking point on the Left (and I am NOT accusing you of using talking points, merely pointing out that this one is used by them a lot) is that death panels are no different than insurance companies in that both can refuse care. There is an important distinction that perhaps you are not taking into account. A death panel is backed by the force of the state, and it’s word is final. Keep in mind that the creators of the regulations that we call ‘death panels’ openly advocate refusing health care (beyond simple palliative care) to those over specified ages, or in otherwise poor health even beyond the state paying for such care…i.e. they advocate preventing providers from providing such care. By contrast, an insurance company is just that….a company, and it can be bypassed in any number of ways. I admit that if you are broke, this is a distinction without a difference, but that argument could be made about almost any aspect of our economy. Unless you are going to define some arbitrary level of healthcare as a basic civil right (and get ready for a fascinating escalator ride if you do), an insurance company has less scope and far less ability to enforce its decisions than a government panel.
            Finally, given the horrific abuses of numerous government agencies (the IRS, the VA, and the DOJ come immediately to mind), do you really argue that a government end of life panel could be abused in ways that a private insurance company simply could not be?

          • Andrew Allison

            I disagree. If death panels existed, they would make decisions for individuals. There’s a profound difference between that and society finding that it cannot afford the cost of treating anybody for certain conditions (which I suspect is eventually going to happen).
            The VA is a single provider health CARE agency, and a very good argument for keeping the provision of health care private (where competition, etc., etc, [grin]). Medicare, for example, doesn’t dictate what services are provided, just the reimbursement. If the reimbursement gets too low, providers will stop offering services, which is the problem (exacerbated by the huge increase in patients thanks to ACA) with Medicare. To lhfry’s point, as a Medicare recipient of 11 years standing, I have never been rejected as a new patient by a gp or specialist, but I may just have been lucky — it would be useful to actually have some actual data on this subject.

          • lhfry

            As a Medicare recipient, I can tell you that it doesn’t serve us well. Try to find a gp who will take a new Medicare patient. This issue was even covered this past year by Angies List. We are experimenting now with a “concierge” medical practice in order to ensure continuity of care over the long term. We are pretty healthy and urgent care centers worked for a while, but when it comes down to it, you need a doctor who knows you. The turnover at urgent care centers and the lack of interest on the part of the medical personnel there unless you have multiple health problems and can be referred on to their connections is a huge problem.
            The only universal healthcare system that would work efficiently is a Brit style NHS with a severely limited range of services. Preventive measures only work with an educated and willing populace. The ACA has not reduced emergency room visits because many of the people with serious health conditions created those conditions themselves and have no incentive to change their behavior. And if they don’t, they will continue to call the ambulance.
            Old people are a problem. Lots are lonely and visit the doctor in order to get attention they aren’t getting elsewhere. Sad but true. How you stop this I do not know, but the breakdown in family relationships, geographic mobility, and the relentless push to transfer family care to government care will continue to make this problem worse. The cost of end of life care is a result of these trends as planning for the end is a long process and involves facing unpleasant facts that are mitigated by a solid relationship between parents, children, and grandchildren. In today’s fractured families these relationships often don’t exist.

          • JR

            I just accept the fact that this is how the world works. You have vastly different health care outcomes across income spectrum everywhere in the world. To pretend that there is a way to somehow equalize that is disingenuous. Do you really think that you and Hillary Clinton will receive the same medical attention?

          • Suzyqpie

            Kudos for…….like they have for, oh i dunno, entire recorded history….point fabulously well made.

        • f1b0nacc1

          Lets start from the end of the argument, and work our way backwards.
          The US spends about double on healthcare coverage because we provide a substantially higher level of healthcare for those that are actively consuming it, i.e. those who are actually sick. The survival rates for cancer patients, for instance bear this out nicely, but if we do life expectancy comparisons for people in the same demographic and ethnic co-horts (i.e. Japanese-Americans to Japanese, or Swedish-Americans to Swedes), we see that those living in America (and this includes expats in the US as well) live longer and healthier than their counterparts in the ‘home country’. This really isn’t much of a surprise, when you think about it, as American healthcare is geared to treat sick people, not to keep them from getting sick in the first place. We might argue about whether or not this is a desirable practice (reasonable people can certainly differ), but the outcomes shouldn’t be much of a surprise. My point is that because of this, American healthcare is likely to be more expensive as it is treating those who will by definition consume it at a greater rate than those in say France or Britain where there are institutional barriers to them doing so.
          With this point in mind, it is obviously impossible to provide the ‘American’ level of healthcare on a universal basis, though I freely concede it would be practical to do so for a ‘lower’ level (i.e. more preventative, geared to palliative rather than curative treatment, etc.) for those would couldn’t afford otherwise. Given our legal system, however (as well as our political one), I doubt very strongly that this would be viable, particularly with the courts now ruling that disparate outcomes represent discriminatory practice. We are already seeing insurance companies being sued for not providing extremely expensive treatment for various diseases (Hepatitis-C, for example), and this is likely to be only the beginning. While bad PR for a private insurer is damaging, but survivable, it would be lethal for elected officials who are trying to defend a public insurance scheme that refused to provide such treatments.
          The American percentage of ‘unhealthy ethnicities’ is far, far higher than any other developed nation (do you really want to compare Muslims in France to blacks and Latin-Americans in the US?), and more importantly since the American system (as I point out above) focuses on curative, rather than palliative or preventative, treatments, they are a far more expensive group to include. Just treating heart disease among blacks in the US (who tend to suffer from it 10 years earlier than their white counterparts) is a staggering cost. Note again that our unfortunate fixation with identity politics makes any rational healthcare policy to deal with this difference problematic at best.
          Finally there are drug and device costs. For better or worse, the US acts as a market sink for these costs because we are so large and because we consume so much of them. It is utterly unfair (American costs are typically 2-3 times that of those in any other country on Earth, and for all I know, elsewhere in the Milky Way…grin…), but the alternative is to force pharma (either by regulation or by purchasing all drugs and devices through a single source, which would amount to the same thing) to lower their prices. A quick review of the SEC filings for any of these firms shows pretty conclusively that if we adopted this practice, their response (given there very small profit margins) would be to simply curtail any R&D beyond only the most immediately profitable drugs. Fine if for now, but that means we will gut medical progress 5+ years out, and give very little room for future development. I will concede that we might differ on this, but as a 56 year old male, that isn’t a trade-off I am willing to make, and I rather doubt most other older Americans (many of whom could be persuaded to vote on this issue) would either. Given the very large percentage of medical costs driven by drugs and devices, it isn’t hard to see how this acts as another driver of high American costs, and one that isn’t amenable to much in the way of reduction. Like defense spending, this is another way that the US subsidises the rest of the world.
          All of this then points to why universal coverage simply does not work unless there is an explicit guarantee that such coverage will remain at a ‘lower’ quality level, a political non-starter, and likely a legal one as well. Adopting universal care as anything other than an aspirational slogan then simply isn’t going to happen unless we find some way to repeal the laws of mathematics. I freely concede that we could adopt some of the universal care, but ultimately the political and legal pressures to ‘make it more fair’ would become overwhelming (want to see how that sort of idiocy happens? bring up the subject with FG….grin…), and that road leads to ruin.
          I don’t dispute your argument that insurance is problematic because the young invincibles aren’t foolish enough to participate, but that isn’t necessarily an issue with insurance per se, but with the American way of treating health insurance as a pre-payment plan, instead of a catastrophic care plan. Covering virtually ever aspect of healthcare (literally from cradle to grave) at all levels (from minor doctors visits to heart transplants) is insanity, and is at the core of the European problem with out of control costs of their systems. To use an overused metaphor, auto-insurance doesn’t cover oil-changes, and health care insurance shouldn’t cover minor issues either. It is no accident that areas where insurance hasn’t been involved (Lasik comes immediately to mind) costs have actually fallen…I believe that Jacksonian Libertarian would call this the magic of feedback (or somesuch moniker.), but I am sure you get the point. There are numerous insurance reforms that could be introduced that I have little doubt that we could both agree upon, and many of these would indeed have a positive impact on the marketplace, in facttreating it as a marketplace might be a good first step!
          Allowing the government to provide a ‘baseline’ insurance (i.e single-payer or universal insurance under whatever guise you want to call it) is even worse. Medicare is horrifically expensive, care is terrible for the dollars spent, and ridden with corruption and abuse. I don’t have to depress us both by recounting the record of the only fully run government medical program (the VA), and I know you aren’t calling for that drastic an intervention, but why would you believe that the government can handle any other aspect of the medical process any better? Insurance companies are horrible, no doubt (part of this of course is that they are set up by definition to say ‘no’ to people in horrible situations….even if they were saints we wouldn’t like them!), but does the ACA given you any reason to believe that the government is going to be better? I would love to see less consolidation in the insurance industry (it is a horrible process that gives us very little in the way of benefits – rarely if ever does it reduce overhead, for instance – with a loss of flexibility and contact between the providers and the patients)….that can be dealt with in several ways that don’t involve overt government interference. But the ultimate end-point for such consolidation is a huge entity which would embody all the negative aspects of the government without even the pretense of being run for public interest or embodying any accountability.
          Sadly insurers are responding quite rationally to government interference, first by simply buying off the government (the revolting background of the ACA embodies the worst aspect of crony corporatism and big government incompetence), and secondly by expanding into vertical management of the process, by investing in (or buying outright) health care providers, accelerating the consolidation of these providers, another awful side effect. God forbid I should point to the French as a good example of how to avoid this, but even they handle it better than we do. I realize that you are advocating insurance coverage, not provision of care (note that most public insurance schemes adopted around the world do NOT provide care), but the dynamics of the market are leading to such consolidation and it is being supercharged by the ACA and other public insurance procedures. We need LESS restriction of market forces here, not more of them, and number one on the list is to discourage large-scale aggregation.
          In short (and I apologize, for this is hardly ‘short’) I do understand your argument, but believe that the unique (for better or worse) aspects of the American way of healthcare make it unsuitable for a public insurance or heavily aggregated private insurance approach. I wouldn’t mind seeing some sort of universal catastrophic coverage (to deal with real medical hardships, or otherwise uninsurable cases), but unless this is VERY narrowly defined (unlikely) all we will get in the long run is the sort of mess we see with Medicare now, but on a much larger scale.
          I hope that my somewhat aggressive tone is not seen as anything other than a passionate attempt to engage you. I understand that we disagree on some aspects of this debate, though less so than either of us might admit (smile), and I do respect your argument as such.

          • Andrew Allison

            The subject of my comment was insurance, and I thought we’d agreed to disagree on the standard of healthcare issue? Despite its exorbitant cost, the standard of US healthcare (including cancer survival) is in the second tier of OECD countries (https://en.wikipedia.org/wiki/List_of_OECD_countries_by_health_care_outcome).
            The problem, which you indirectly acknowledge, is that we provide good healthcare for those who are insured, not those who are sick.

          • f1b0nacc1

            Once again, you are looking at an apples to oranges comparison (though even in those charts, the US comes out looking pretty good). Japan and South Korea (or the Nordic states) have a completely different population composition (i.e. demographic and ethnic breakdown), and thus can be expected to have dissimilar survival rates. The US is also a 320 million person mass, not a small and relatively homogenous population with fortunate genetic breakdowns. Finally, as you point out, American healthcare provides superb care for those who are covered, not for those are sick….and that coverage is not practical to provide for all possible individuals, as much as we would like it to be. This isn’t a matter of raising the standards of everyone’s coverage…math makes that pretty much impossible….

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