For health insurers doing business in California, this is the worst of times, politically speaking. The national movement toward health reform is coinciding with an election year in which several key California players are running for higher office, and they are all eager to put the industry in the spotlight. Combine that with rising costs (and profits), and you have a recipe for a political free-for-all. It is almost starting to feel as if health insurance is becoming the next tobacco industry — a political pariah for whom polite people simply wouldn’t work.
Attorney General Jerry Brown, a Democrat presumed to be running for governor, has issued subpoenas calling on health insurers and managed care plans demanding records to support what he says are “possibly illegal” rate increases.
Insurance Commissioner Steve Poizner, a Republican running for governor, pressured Anthem Blue Cross into postponing a planned rate increase while his department, plus the Legislature and even Congress, investigate the company, its profit margin and its administrative costs.
Assembly Health Committee Chairman Dave Jones of Sacramento, a Democrat running for insurance commissioner, has held a special hearing to examine Anthem Blue Cross’s planned rate increase, at one point asking the firm’s CEO, “Have you no shame?”
All of this is entertaining, to a point. And some of it might actually produce information relevant to the health care debate. But we should keep in mind that each of these politicians knows, or should know, that health insurance company profits and administrative costs remain a relatively small factor in driving the cost of coverage skyward.
The biggest reason that health insurance is getting more expensive is that health care is getting more expensive. Our population is aging, and as we age we demand, and get, more care. Most signs also suggest we are not as healthy a population as we used to be. Just look at the rates of obesity and diabetes, among other ailments. And when we get sick, we want the best doctors and nurses, the newest and cleanest offices and hospitals, and the best drugs and technology in the world, all available on a moment’s notice. We want titanium knees that cost tens of thousands of dollars and electronic heart monitors read in real time by a technician who calls us when there are signs of an impending problem.
There’s nothing wrong with that, but it all costs money. And it is going to cost money, whether the evil health insurers are managing the system or the government is in charge. You could, in theory, instantly reduce the cost of the system by eliminating the private insurers and their profits and marketing costs. That would be a one-time savings. But then what? All of the other costs in the system would continue to climb at the same rate they are now, unless the government used its power to force down physician and nurses salaries, drug company reimbursements and hospital costs, or took actions to limit our access to medicine, tests, drugs and technology. There is a reason that the health care sector is the one of the few in the current economy that is still adding jobs. (And most of them are pretty good jobs, with healthy salaries and good benefits.)
According to the most recent figures from the federal government, Americans spent $2.3 trillion on health care in 2008. Of that, about 7 percent, or $159 billion, went to private insurers after deducting all the costs they pass through to the doctors, hospitals and other health care providers. Overall, health care costs nearly doubled between 1998 and 2008, increasing by 96 percent. If we had eliminated private insurance companies in 1998, and assuming they provide no benefit in managing costs, health spending still would have increased by 83 percent during that decade, according to the numbers from the Centers for Medicare and Medicaid Services.
I’ve got no love for health insurance companies. I’ve had my own run-ins with them (ironically over their attempts to limit the cost of my family’s care). But when this election year is over and the current political bash-fest comes to an end, the core costs of health care will still be there, and chances are they will still be rising. If that’s a problem, at some point we as a state or nation will have to address it. For real.