Health Care Premiums: Bend Over ‘n Brace Yourself

Larry Doyle
updated | Author's Website


I guess we might soon expect Ben Bernanke and his pals at the Federal Reserve to discount the cost of health care from the core rate of inflation. I mean the cost of health care is not truly indicative of what it costs to run a family now, is it?

For those not aware, food and energy costs are not incorporated in determining the core rate of inflation. If the Fed discounted the costs of all goods and services, we might just be able to generate a report that reflects stable prices.

Pardon my sarcastic cynicism, but it is hard to restrain myself upon reading a lead story in this morning’s Wall Street Journal that should be entitled, Health Care Premiums: Bend Over ‘n Brace Yourself.  Let’s navigate as the WSJ writes . . .

Health insurers are privately warning brokers that premiums for many individuals and small businesses could increase sharply next year because of the health-care overhaul law, with the nation’s biggest firm projecting that rates could more than double for some consumers buying their own plans.

The projections, made in sessions with brokers and agents, provide some of the most concrete evidence yet of how much insurance companies might increase prices when major provisions of the law kick in next year—a subject of rigorous debate.

The projected increases are at odds with what the Obama Administration says consumers should be expecting overall in terms of cost. The Department of Health and Human Services says that the law will “make health-care coverage more affordable and accessible,” pointing to a 2009 analysis by the Congressional Budget Office that says average individual premiums, on an apples-to-apples basis, would be lower.

Right. Who do you believe? The warning shots coming across your bow from insurance agents follow up on the dramatic increases in health care costs over the last number of years as well.

Other carriers have also projected steep rate increases during private meetings and conversations with brokers. Brokers say they are being told to prepare the marketplace for small-business and individual rate increases as carriers get ready to file specific rate proposals and plan designs with regulators.

Insurers are “not being shy that premiums are going to increase in 2014,” and are urging brokers to “brace our clients,” said John Lacy, vice president of group benefits at Bouchard Insurance, a brokerage in Clearwater, Fla. His firm has been hearing from carrier representatives that individual premiums in Florida could go up 35% to 50%, on average, and small-business rates around 30%, though it hopes to find strategies to blunt the impact.

Do you want to take a local anesthetic, multiple epidurals, or get knocked out completely while you try to assimilate this news of expected dramatic increases in your health care premiums?

Although I would imagine neither the general anesthesia nor the epidurals are likely covered, so you may just want to bite down hard.

Feedback from the field is always appreciated.

Navigate accordingly.

Larry Doyle

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I have no business interest with any entity referenced in this commentary. The opinions expressed are my own. I am a proponent of real transparency within our markets so that investor confidence and investor protection can be achieved.

 

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