Editorial: About Your Premiums

Editorial: About Your Premiums
Copyright by The New York Times
Published: September 24, 2010
http://www.nytimes.com/2010/09/25/opinion/25sat1.html?ref=opinion


With health insurers jacking up their premiums by double-digit amounts for people who buy their own policies, Republicans have been predictably eager to blame health care reform. Consumers, and voters, beware.

If your premiums are spiking suddenly, you can blame economic reality. The cost of medical care continues to soar upward, and the recession led many healthy people to drop coverage, leaving less-healthy enrollees who cost more to insure.

As for health care reform, the major elements, and major costs, don’t even kick in until 2014. The only provisions with the potential to affect premiums right now are a handful of consumer protections that are popular with the public, and not especially costly to implement.

Starting this week, insurers are prohibited from setting lifetime limits and restricted in setting annual limits on what they will pay for care, banned from rescinding policies after a beneficiary becomes sick and prohibited from excluding children with preexisting conditions. The new rules will also allow dependents up to the age of 26 to remain on their parents’ policies; preventive care will be provided without cost sharing; and there are new processes to appeal insurance company decisions. The critics aren’t saying anything about the huge value of those immediate benefits.

These new requirements do impose some new costs on insurers, but they certainly can’t be blamed for the double-digit increases many insurers have been seeking. If you listen closely to the insurers, they admit that.

The Department of Health and Human Services estimates that the average premium increase to pay for the new benefits should be about 1 percent to 2 percent, roughly consistent with an independent evaluation by the Urban Institute. If those estimates are optimistic, they are unlikely to be off by much. A Wall Street Journal analysis found insurers in various states seeking increases of 1 percent to 9 percent to pay for the new requirements and often even more to cover rising medical costs.

Some of the largest health insurers created a stir this week when they announced that they will no longer issue new child-only policies to people who buy their own policies. They were worried that, with no immediate mandate that every child carry insurance, parents would hang back until their children got sick.

It is disappointing but less draconian than it seems.

The market for child-only policies is small, and such children can still be covered through family policies, public programs for low-income people and new high-risk pools. The problem should disappear in 2014 when everyone will be required to carry insurance.

Not all the news about the insurers is bad. As Reed Abelson reported in The Times on Thursday, some companies are preparing to meet the challenge of reform by upgrading information technology systems, training employees and reducing overhead costs. Of course, the critics of health care reform aren’t mentioning that either.