Self-Insured Premiums Jump By 20%, Triggering Warning From White House

About 10% of respondents in our informal poll yesterday about health insurance said they pay their own premiums, and according to a new poll from Kaiser Survey, three quarters of those people just faced a premium increase of 20% on average. The recent hikes have prompted the White House to say it will “sternly warn industry executives” today that insurers shouldn’t try to use the new health care law as an excuse to gouge customers, according to the New York Times.

In reality, that stern warning is pretty much all it can do, because the new law doesn’t give the government the power to regulate premium rates. The Times says the White House instead plans to keep the pressure on insurers by consistently exposing their pricing strategies to the public.

Although a representative of a health insurance trade group told the Times that premiums are increasing because health care costs are increasing, a spokesperson for an opposing group says the numbers don’t support the claim:

But a report released Monday by Health Care for America Now, a coalition that supports the new law, stressed that the growth in premiums in the first eight years of this decade had far exceeded medical inflation — 97 percent to 39 percent.

“As Law Takes Effect, Obama Gives Insurers a Warning” [New York Times]
“Recent Premium Increases Imposed by Insurers Averaged 20% for People Who Buy Their Own Health Insurance” [Kaiser Survey]

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  1. vastrightwing says:

    I’m glad to see that Obama’s administration is taking this very seriously! Finally they’re doing something about the high cost of insurance!

    • ARP says:

      If by the high cost of insurance, you mean retroactively dropping policies for pre-existing conditions, retroactive recission, and other shady means, then yes, they’ve done that.

      • BomanTheBear says:

        I have a feeling vastrightwing is being sarcastic. At least, I really, really hope that vastrightwing is being sarcastic.

      • Pandrogas says:

        Sure, they got rid of a lot of nasty policies, I will give them that. However, the cost of doing that is that they handed over the country to these insurance companies.

        Between skyrocketing rates, fines for not having insurance, no public option, and nobody doing anything about the cost of initial health care (which is why insurance is practically required these days) I don’t know which is worse.

        To mention that this bill/law was mostly a political deflection from the economic problems and the wars, I’m wondering how much longer we as a people can take this crap from the people we hired to keep the place running.

    • trey says:

      yep… there going to make it higher!

  2. SkokieGuy says:

    The White House also “sternly warned” children not to run with scissors.

  3. MitchV says:

    lolz…

    This will not end well (except for the health-care industry).

  4. DanRydell says:

    “Self-insured” doesn’t mean what you think it means.

    • Moweropolis says:

      I was about to say this. They would be charging themselves more money?

    • nbs2 says:

      It’s all the more disturbingly funny when you realize that the fact that you can’t self-insure is the reason that those premiums are skyrocketing.

  5. smo0 says:

    That’s the thing – knowledge is key, informing the public is more than any other administration has done in the past.

    I appreciate this. It’s a step forward.

    Here’s the sticky part – them actually becoming an entity involved in the regulating of “premiums.” That’s government intervention – the thing that tearing this country apart…. we actually NEED it but we don’t WANT it.

    I think it should happen but it should be temporary.

    Like a maid you hire once a week, but a government entity to stick around, make sure everything is running smoothly – then hand the keys back over…. and it’s a heads up to “this better not happen again, if I have to come back here – shit’s gonna get real.”

    So to make it clear: I’m FOR government intervention, but on a temporary basis.

    Crutch.

    • voogru says:

      Nothing is more permanent than a temporary government intervention.

      • BomanTheBear says:

        +1

        I don’t accept any government action that doesn’t have an end date. Considering that they fail to meet those already, one without one is eternal.

  6. Cameraman says:

    Insurance companies: We’re raising prices 20% because f*ck you, that’s why.

    Obama: WTH, guys?

    Insurance companies: Cram it with walnuts, ugly.

    Obama: Lower your prices, or I’ll… uh… tell everyone how much money you’re really making on each policy.

    Insurance companies: Hold on, let me call our buddies in the oil industry, ask them how much the public cares about profit when there’s no alternative. Boop, boop, beep, boop boop. Hello, oil industry? Does the public knowing about your obscene profit margins keep them from driving all over reation? Sure, I’ll hold.

    Obama: But, you aren’t even on the phone- you’re just making a telephone shape with your hands…

    Insurance companies: Shhhh, I love this song. Antigua, Jamaica, babe I wanna take you down to Kokomooooo…..

    -end scene-

    • Jevia says:

      Perhaps letting people know about the obscene profits health insurance companies make will make people realize that the “socialism” scare for health care (i.e. more government involvement) isn’t quite so evil.

      • Duke_Newcombe-Making children and adults as fat as pigs says:

        Unfortunately, it doesn’t help. For some sick reason, the peons that are so easily scared of the OMG ITZ SOCIALSM!1!!!! meme show a fierce loyalty to their corporate overlords, and their moneyed betters. This is mainly because of the magical thinking that they could be “them” someday. Sad, really.

    • nova3930 says:

      Obscene profit margins?

      Oil industry: 6.5% on average
      Insurance industry: 4.7% on average

      Compared to

      Personal products (ie toothpaste and soap): 13%
      wireless communications: 9.6%
      waste management: 7%
      cleaning products: 8.5%

      Oh yeah, those oil and insurance profit margins sure are obscene….

      • ARP says:

        When you add “overhead” to profit on healthcare services, it does become absurd. If I paid all my employees $10M a year, but only made 0.1% profit, I would say that’s an issue. You can’t remove salaries/overhead from the profit.

        The advantage government health care is that there is much less overhead. That reduced overhead usually outweighs any government based inefficiency.

        • nova3930 says:

          Divisions of gov’t only appear to have lower overhead than private enterprise because they operate under totally different accounting rules.

          Private industry has to count every cost from the CEO and board of directors on down to the lowliest janitor as overhead.

          Gov’t stops that calculation at the organizational level and does not count the weight and cost of the beauracracy above that along with not counting any associated support organizations.

          Don’t believe me, go look at how medicare calculates their overhead/administrative costs. It doesn’t include all the beuracracy of the social security admin, which they piggy back off of to maintain their “customer” list and do something like 90% of there administration. It sure does look good on paper when you can just ignore 90% of the costs because “its not part of my organizaiton.”

        • nova3930 says:

          and wtf. Overhead has absolutley nothing to do with anything thats being discussed here.

          The “OMG people are making money off something I want” is the height of fucking stupidity.

          The statement was that oil and insurance companies are making obscene profit margins. They’re decidedly and provably not. Unless you want to make the easily disproven argument that companies in those other industries don’t pay big executive salaries and don’t have high overhead costs.

          Hell, manufacturing and wireless communication probably have some of the highest overhead around and they still make higher margins….

          • Duke_Newcombe-Making children and adults as fat as pigs says:

            It’s stupidity that a line of business exists that explicitly profits, and is encouraged to profit, by keeping money paid to it, and withholding as many lifesaving services as possible. That’s “fucking stupid”. I don’t want my health determined by “the bottom line” or someone’s performance bonus.

      • Duke_Newcombe-Making children and adults as fat as pigs says:

        Playing the “margins” vs “profits” word game. I see what you did, there.

    • Duke_Newcombe-Making children and adults as fat as pigs says:

      Pure gold, Sir. +1.

  7. NeverLetMeDown says:

    “But a report released Monday by Health Care for America Now, a coalition that supports the new law, stressed that the growth in premiums in the first eight years of this decade had far exceeded medical inflation — 97 percent to 39 percent.”

    That’s a completely useless statistic. What has medical inflation been for people who self-pay their premiums? That’s the relevant metric.

    The individual insurance market is always going to be screwy, since it has terrible adverse selection problems – if you aren’t covered by a group plan, and are reasonably healthy, you probably aren’t going to pay the high premiums for individual insurance, meaning that only the sickest people do, which raises the cost/customer, which raises premiums higher, which causes the healthiest people to leave, which makes the average customer sicker, etc. etc.

  8. obits3 says:

    “the growth in premiums in the first eight years of this decade had far exceeded medical inflation — 97 percent to 39 percent.”

    The problem with this logic is that there may not be a direct relation between the two. What do they mean by medical inflation? Is it the cost of ONE procedure or the cost in aggregate. For example: Are they talking about ONE $100 procedure becoming $139 or the number of $100 procedures going up by 39% or some combination of both?

    The cost of ONE procedure could go up a little bit, but if MORE procedures are done as a whole that increases the risk/cost for the insurer. This is the same reason that preventative care is less costly for the individual but more costly in aggregate (if everyone does it).

  9. dolemite says:

    Nope, just insurance companies getting greedier is all. Privatized health insurance = bad idea. They are in it for the profit, with no motivation to help control costs or their customers whatsoever. We are totally, 100% at their mercy…especially in many areas where there is little to no competition.

    • TuxthePenguin says:

      You know, we did once survive in this country without medical insurance… just saying.

      I’m not going to reargue this whole thing since its not worth it, but controlling costs isn’t something that SHOULD be done on the insurance level – it should be done on the patient level by you saying “ya know, I probably don’t need to run six tests for this…”

      Do any of you know, off the top of your head, how much seeing the doctor for a routine checkup costs? Or how much a physical costs? See, that’s part of the problem. Try finding it out, that’s another part.

      But we can all find out how much it costs to fly from LA to NY…

      • MitchV says:

        ding! ding! ding! You nailed it.

        Until savings are driven by the patients/consumers, insurance is only going to obscure the true/outrageous cost of health care.

        Michael Moore needs to be doing an addendum to Sicko where he visits European countries dealing with an enormous amount of debt. Tell me about the French laundry service for new mothers now!

        • ARP says:

          What about all our debt from tax cuts for the wealthy. At least, they actually got something for their debt.

          • jim says:

            tax “cuts” do not create debt. it is out of control spending that creates debt. Regardless of tax cuts the wealthy still pay the bulk of all collected taxes in this country. You might want them to pay “more”, to pay their “fare share”, but the reality is the more money you take out of the private sector and give to government, the less money there is to create jobs, unless you are talking about wonderful government jobs or government contracts.

            Look at your friends who are out of work and then get a job. Where do their jobs come from? How long are they going to last?

      • the Persistent Sound of Sensationalism says:

        It’s been an interesting 18 months without health insurance. On the one hand I constantly worry that something will go wrong, on the other hand, I’ve only spent $65 for a visit to the chiropractor in that time, for an overall savings of $3,355 (monthly premiums at $190/mo – $65). However, if I were to break an arm or land in the E.R. for anything remotely serious, that savings wouldn’t be worth it. It’s not like I’ve been able to squirrel away $190/mo while going to school full-time and working a part-time internship.

        rant
        The state says because my internship now offers insurance and because of my wage, I don’t qualify for assistance, even though the monthly premiums would take most of my paycheck and shorten the term of my employment (which lasts until grant funds run out).

        I can’t get loans above and beyond my tuition because of credit mistakes I made long ago, so until I have my degree and work full-time with a living wage and benefits, I just have to be extra careful and not get sick.
        /rant

    • nova3930 says:

      Oh yes. Its so horrible. Next thing you know private farmers will be charging people for that life sustaining food they produce and have us right under their thumb where they want us…

  10. banndndc says:

    Gee, what a shock. Who could have foreseen that forcing people to buy something would result in price increases and not decreases?

    • obits3 says:

      You have to understand that it doesn’t matter if you really do any good. All that matters is that your intentions were good. What? You think that plans should make logical sense? This is America! All we have to do is say “Yes We Can!” and *POOF* Everybody Happy =D **Sarcasm**

    • ARP says:

      That requirement has not started. So this is in anticipation of regulations starting in a few years.

    • nova3930 says:

      Nobody could have anticipated that mandated expansions of coverage (ie limitless coverage, requiring insurers to recognize ob-gyns as primary care physicians, coverage for “children” up to age 26), which is what is now taking effect, would increase costs.

      No wait. Anybody with half a fucking brain could see this was going to happen because it happened in MA, TN and several other states that tried this same ridiculous shit. But Dear Leader El Presidente was the smartest guy in the room so *his* plan wasn’t going to do that, despite being functionally identical to all the prior plans.

      Hell I predicted it in the comments to this very blog months ago with the prediction that the end result would be private insurance would either be regulated out of business or into being a de-facto arm of the gov’t. The ultimate end goal of the “gov’t is always the answer” loonies is to make sure we the people have no choice and are forced into dependance upon the gov’t.

      Watch for the pace to accelerate once the rest of the provisions of the law start taking effect. I’m willing to bet that unless this travesty of law and liberty is repealed, private insurance will be dead within 10 years….

  11. Tom Servo says:

    It’s as though health insurers want to anger the public into a single-payer system …

  12. SomeWhiteGuy says:

    What’s not said are the regulations that the administration is putting on the insurers is driving some of these costs up. Lookup ICD9/ICD10 and HIPPA 5010 regulations. The administration expects these changes to go seamlessly into the industry without costing any extra money. Changes in processing and training costs money. Insurers can’t do these things at no cost.

    Full disclosure: I work at a major health insurer in the IT department. I’ve been working 50+ hours per week since HCR passed just to prepare for the changes that will go in 4 years from the date it was passed. We’ve already implemented the Dependency up to age 26 requirement that’s due in August, and are working on the rest. It’s costing a lot of time and resources to get these changes in.

  13. colorisnteverything says:

    Well, it’s great that they have to inform us what they are charging, but if EVERYONE is doing it, how does it help us? We can’t NOT have insurance now and there really is NO alternative if all the insurance companies do the same thing (which they will). Imagine that! Health insurance costs have been increasing for decades, but so have administrative costs. Admin costs make up a huge amount of what we pay in premiums. And that is probably why we spend 16% of our GDP on health care – twice that of the UK where everyone has a RIGHT to health insurance. So, I don’t buy that suddenly health care has gotten 20% more expensive.

    • madmallard says:

      part of the problem is consumption. Obama passed this bill and almost instantly, consumption jumps a huge amount. yet supply, both admin and actual care providers, is not going to go up rapidly enough to compensate for this legislation…

  14. Moweropolis says:

    Self-bought policy != Self Insured. Just an FYI.

    • madmallard says:

      you’re asking people to educate themselves to have actually known the difference. shame on you… ;p

  15. jim says:

    Not an issue, as long as Obama delivers on his “free healthcare for everyone!!!”

    WHAT!!! It’s not going to be FREE???

    Think of the CHILDREN!!!

    All of you pro-healthcare people have been suckered into wanting this. The big shift will be that young healthy people will now be subsidizing older sicker people, and what doesn’t get paid for by you youngsters will be subsidized by the government, who essentially will borrow money your children will have to repay.

    In effect a massive ponzi system, one of a few sponsored by our government. Ponzi schemes only work as long as there are an increasing amount of suckers buying into the system with the promise of benefits. With the declining economy and population that day will be coming soon.

    • BomanTheBear says:

      Problem is that there’s a difference between suckers buying into the system and the government mandating people to buy into the system. It’s less a scam than it is a stick-up.

      • jim says:

        The suckers are the voters who elect politicians that create unsustainable policies.

        The real mandates are what should be applied to the government, that it cannot spend what it does not have and any spending guarantees it does have to be directly indexed to the money collected for that purpose, and that no surplus be collected (and wasted on other things).

        government should not be in the business of guaranteeing everything for everyone.

    • colorisnteverything says:

      I highly doubt that the NHS is a giant ponzi scheme. Thus, not all who believe in effective health care support this sort of fragmented, sad system with little to no regulation. I am all for a single payer system which, while not perfect, would not allow for private insurance companies to run the show.

  16. waltcoleman says:

    The government is forcing new mandates on insurance companies. Someone has to pick up the tab. Did anyone really think insurance companies were gonna eat the cost of insuring high risk patients and floating grown adults on their parents insurance policies? Regardless of what empty promises were made by Obama, the cost of health insurance will continue to rise, and that cost is going to come out of the pockets of the average consumer.

  17. Arthur Pennant says:

    Seriously. I’m from Massachusetts. I voted for Obama, and then I voted for Scott Brown. True, the majority of our residents support Romneycare, but the majority of our residents don’t have to get their own insurance. *With* a public option, it still sucks if you’re trying to get your own insurance, but I planned on moving once I was off my parents’ insurance. It’s not a model to emulate.

    What the hell was wrong with Wyden-Bennett? Oh, right. The unions hated it because it would tax benefits, the insurance companies hated it because it would screw with their bottom line, and the teabaggers hated it because they hate the idea of health reform.

  18. spamtasticus says:

    I have a solution. Everyone stop paying insurance companies a dime and just pay your doctor when you need him/her.

    POW!

    Problem solved. Healthcare prices would plummet, doctor’s profits would climb and we would cut out the mother of all middle men, after the government that is.

    • jim says:

      good theory, however fear of litigation causes doctors to perform unnecessary tests. Add to that their own extremely high insurance costs. The current bill does nothing to address any type of tort reform.

    • dangermike says:

      Yeah, seriously. You look back at when my parents were growing up and not only was it paid out of pocket, but it was *typical* for doctors to make house calls.

  19. TasteyCat says:

    The choice between insurance and Obama’s new “penalty” (don’t let him hear you call it a tax) would be an easy one for me if I ever had to make it. You’re better off just dumping that same money in the bank and using it as you need it instead of throwing good money after a bad system.

  20. Sepp_TB says:

    Wow, please use correct terminology. I was confused for a very long time reading this posting, and then read the article and was more confused.

    Self-Insured is a very specific term in the health insurance industry. It describes a company that funds health care for their own employees. They may or may not administer claims processing on their own, many contract with insurance companies to do this for them for a fee. Often called Admin Service Contracts, or Admin Service Organizations, Third Party Administration, and several other terms. They all fall under the umbrella in the health insurance world known as self-insured. But the money that goes to a doctor after one of their employees goes comes right from their bank account, not an insurance companies and there is no premium set by a health insurance company at all.

    This article is talking about individual coverage, or direct-pay, where a person buys insurance from from a health insurance company not as part of any group or association, but entirely from their own pocket. From a health insurance perspective these are the riskiest types of people to insure, as the only folks that tend to buy into it are unhealthy and know they’ll be needing medical services soon, this makes premiums increase, making people who are healthy enough to go without coverage leave, making the pool less healthy overall, increasing rates further, and causing a spiral. The premium rates are outrageous, and this is the one segment where something must be done and not enough was by this reform. People in the direct market do not qualify for Medicaid or any other safety net program and stuck in a very unfortunate situation.

    So, hugely different things.

  21. Mr Fife says:

    “…insurers shouldn’t try to use the new health care law as an excuse to gouge customers…” Umm…do they really need a reason?

  22. DragonThermo says:

    HAHAHA! Obama gonna kick some health insurance company butt! All because his ObamaCare law drove them to do it. :-D

  23. tz says:

    The legislation said everyone needs to have a buick policy if not cadillac. You can’t have high deductibles, nor pay less if you aren’t in risky groups.

    So my affordable insurance will likely go up 500% (five hundred, yes) because I will have to insure for almost the first dollar and I will be in the same risk pool as a diabetic that has had a heart attack.

    So I might have to go uninsured – the IRS penalty will actually be less than what I am paying now and I might be able to afford that instead of 1/10the to 1/5th of my pre tax dollars going to premiums.