http://www.nytimes.com/2011/09/28/business/28insure.html?hp
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"There is no more noble occupation in the world than to assist another human being - to help someone succeed." (Alan Loy McGinnis)
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In a study released yesterday by the Kaiser Family Foundation, the data showed the average annual premium for health insurance through an employer reached $15,073 in 2011 - 9% higher than the previous year.
Not to belabor the obvious but higher premiums are inappropriate for a time when unemployment is high and the GDP growth rate is at stall speed. Businesses cite the cost of coverage as a factor in decisions not to hire. The cost of family coverage has doubled since 2001 - wages have increased 34%.
The charts supporting the data from the Kaiser study show annualized inflation at 2% and wages (for those who are still employed) up 3%. Matching this up with a 9% increase in health care premiums makes no sense. Worker premiums have gone up 131% over the last 10 years. Employer contributions have gone up 113% over that same period.
I like to separate guesses from facts so here goes: the facts are that health care and health care-related fields are a good place to land a job because it's hard to see anything but profit margins continuing to go up. I think I'm on pretty solid ground there (so Aetna, and other companies like them should be secure places to work). But, from a management point of view, where's the challenge to get better or to make the work environment better for your staff when raising premiums covers your profit margins (and any of your mistakes). My guess is that it's like running a casino - the management always wins.
My suggestion: correlate premiums to the prior year's inflation rate - then see how well the management does.
The Kaiser foundation estimates that one to two percentage points of the premiums this year are related to provisions of the new health care law already in effect: like coverage for children up to 26 years old and for prevention services like mammograms. Really? I'm sorry, what is health care insurance for?
What's interesting from an economic point of view is that the "insurers" (and I use that term advisedly) are raising rates at a time when many people are putting off going to the doctor in order to avoid co-payments and higher deductibles. And the defense from the "insurers" is: higher premiums need to be charged because their costs would rebound once the economy recovered. Do I need to comment on that?
Stay healthy.
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The sad truth is the last line of you post is the best advice.
ReplyDeleteDon't get sick and you won't have to worry about it - too bad it's usually not a conscious process.
At a time when insurance companies are making record profits, this sucks. It's that simple. How much is enough? Do we really think they'd be gouging people like this if we had a government willing and able to step in if necessary?
The sad truth is not everything should be 'free market'.
I always come back to this - that insurance companies, while yes, making a profit, also have to shoulder the burden of the rising cost of actually caring for people.
ReplyDeleteThe core issue here isn't the insurance companies - we shouldn't be railing against them - but instead, why healthcare is so expensive in the first place.
Just a few important points: 1) The cost (and opportunity cost) of becoming a doctor, 2) malpractice costs & insurance 3) the COMPLEXITY of dealing with insurance from the doctor's perspective
Just three points that need to get resolved in some way. This is straight from the mouth of someone that runs a large healthcare clinic and absolutely knows what he's talking about.
I want to fix it as much as the next guy, but let's look at the core issues and not blame the insurance companies by themselves.
...but let's include them in the blame.
ReplyDeleteThe truth is they're essentially a middle man. They add nothing to the actual treatment of a consumer.
Much the same way if you were a company, and say you needed a rare grain from let's say Australia, to make your product. You'd try to buy that grain as directly as possible, perhaps from the original grower, or maybe from one intermediary. You wouldn't want to go through several levels of intermediaries if avoidable, because everyone takes their cut.
From a transaction cost perspective, you'd want to minimize the number of players. It makes it cheaper for you, and minimizes complexity.
Insurance companies do not minimize cost to the consumer (they minimize costs to themselves), and they do not minimize complexity (as anyone who has routinely dealt with insurance companies on complicated issues will tell you).
Gentlemen: your comments were better than my original post!
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