Out of the Woods

I am happy to reprint a portion of a blog by Dr. Josh Freeman whose incisive commentary on the current state of health care and its associated industries are the delight of many health care providers. If health care is important to you, you may want to consult his blog to be instructed and edified.

Insurance company profits up and patient care down

By Josh Freeman, MD at http://medicinesocialjustice.blogspot.com

Almost a year after the passage of the Affordable Care Act (ACA), amidst the dire predictions from the right about everything from death panels to socialism and their bloviating about overturning it, it turns out that the fears of the “left” are more accurate; that is, that it is insurance companies, not the American people, who are receiving the greatest benefits. There have indeed been benefits to consumers; notably the ability of young people to stay on their parents’ insurance until 26 and the elimination of restrictions on pre-existing conditions, and there will be more later on as 2014 rolls around. But the biggest impact of the bill so far has been inflating the coffers of health insurers.

The lead article in the New York Times, May 14, 2011, by Reed Abelson, is "Health Insurers Making Record Profits as Many Postpone Care." In his wonderful daily commentary on health news, Quote of the Day, Dr. Don McCanne simply observes “The headline says it all.” That’s the gist of it, but it does deserve a little more discussion. For one thing, the health insurance companies, despite record profits over the last two years, are continuing to raise their premiums very significantly, justifying this by saying that they expect that, as the economy improves, people who have been delaying getting health care will begin to do so and create a great demand.

“Yet the companies continue to press for higher premiums, even though their reserve coffers are flush with profits and shareholders have been rewarded with new dividends. Many defend proposed double-digit increases in the rates they charge, citing a need for protection against any sudden uptick in demand once people have more money to spend on their health, as well as the rising price of care.”

Excuse me? This is a justification for raising rates now? That people, insured people, find the co-pays and deductibles currently in place to be so high that they are denying themselves needed care, so maybe later they’ll want to get it, so then it will finally cost the insurers money, so let’s pre-emptively raise premiums to cover it? Meanwhile, what it actually does is to ensure that even fewer people access care because the higher rates mean that they opt for policies with even greater co-pays and deductibles or even drop their insurance altogether.

The article quotes a number people, including physicians, describing how they or their patients have gone without or put off obtaining health care.

“’I am noticing my patients with insurance are more interested in costs,’ said Dr. Jim King, a family practice physician in rural Tennessee. ‘Gas prices are going up, food prices are going up. They are deciding to put some of their health care off.’ A patient might decide not to drive the 50 miles necessary to see a specialist because of the cost of gas...”

While the insurance companies are using the opportunity to stash away even more money for the flood that may, or may not, come: the Times quotes an industry analyst as saying about demand for health care services “The big question is whether it is going to stay weak or bounce back…Nobody knows.” They are raising their rates by double digits (for example, an Oregon Blue Cross/Blue Shield raised them by 22%), while having big profits (“…big insurance companies have reported first-quarter earnings that beat analysts expectations by an average of 30 percent.”)