One month ago, the Office of the Insurance Commissioner (OIC) announced the approval of a 10.7% increase for premiums in the individual health insurance market through the Washington Health Benefit Exchange. This market is where those not covered by commercial plans (through their jobs) or Medicaid and Medicare can buy health insurance. Many of those are small business owners and their employees, those not working for large companies who can still afford to insure their employees. Some, but not all, are eligible for premium subsidies.
OIC press release: Average 10.7% rate increase approved for 2025 individual health insurance market | Washington state Office of the Insurance Commissioner
And a summary of the above with commentary from a group of non-profit policymakers working to control healthcare prices:
9-11-24 Press Release Insurance Premium Increase Reaction (fairhealthprices.org)
My initial reaction to this announcement was shock, horror, and mystification. Nearly 100 others who commented on these press releases in a large newspaper north of here shared my reactions.
Since then, I have been preparing to write about this topic realizing there is a lot about this topic I did not understand. What have I learned? It is very complicated. Not medically complicated but business and legally complicated.
My hope in this column is to demystify some of the forces driving this insurance rate decision and, consequently, healthcare costs. Healthcare Economics at the 101 level.
Rates for eleven health insurers on the public option have had rate increases approved ranging from 5.7% (for Molina) to 23.7% (for UnitedHealthcare of Oregon). These rate increases do not affect commercial plans …yet. The results of Northwest Health and Providence’s requests will be released soon.
The Insurance Commission is bound (by law) to abide by strict guidelines in reviewing and approving rate adjustments. If the rate change is justified based on the commission’s current criteria, they are required by law to approve it.
Our state Insurance commission is distraught about the situation. Insurance Commissioner Mike Kreidler states in the press release, “The key driver behind these rates is the increase in services used and the cost to deliver that care.”
Due to urgent concern for the rising costs of healthcare, the commission has presented two voluminous reports in the last 10 months to the legislature detailing several policy strategies to slow prices as soon as possible. Stay tuned for more on this and the Attorney General's Office’s recent report on healthcare to the legislature.
Insurance premiums keep going up because the cost of every aspect of healthcare keeps going up.
At the same time, the profits and profit margins of health insurance companies, corporate not-for-profit hospital systems, other healthcare corporations, drug companies, and pharmacy benefit managers keep going up.
As we and society pay more for healthcare, the salaries of healthcare administrators and business leaders remain in the millions. Most hospital CEOs make at least twice what a well-paid specialty surgeon earns. Not only does such a surgeon have at least twice the education of a hospital administrator, but she/he/they took an oath to help the sick.
Or even going down as costs go up?
Currently in our state, eight multi-hospital systems provide >90% of the licensed beds in our state. It is like a game of Pacman with hospital gobbling by giants that prioritize profit and revenue over improved affordability, outcomes, and access for patients. This is horizontal consolidation.
Those same systems employ >65% of the physicians and physicians assistants with hospital-based practices plus own and operate affiliated clinics. Many own and contract with labs and radiology, which their doctors are encouraged to use. This is vertical consolidation.
The problem with consolidation is that though these buyouts and mergers promised to reduce cost, data shows they increase costs and reduce access to care. For instance, less profitable clinics and hospitals are closed.
A majority of Washington’s large healthcare corporations are designated not-for-profit providing loopholes to regulatory oversight.
Private equity’s ownership of healthcare organizations (meaning private investors seeking to make money from the lucrative healthcare sector), is known to be increasing but is currently immune to oversight.
No one knows what it costs a hospital to provide an emergency room visit or an aspirin tablet. Their finances are protected from scrutiny.
You and I are required to file a tax return to the IRS detailing our finances and pay our fair share.
A large percentage of large healthcare organizations are tax-exempt at the state and federal level due to their not-for-profit status and thus relieved of this requirement.
Even though it has been revealed in the press that our state healthcare corporations hold large reserves, real estate investments, manage hedge funds, and pay CEO salaries in the millions, there has been little that can be done to right these inequities.
Healthcare consolidation reduces the role of competition and, thus, on price.
For instance, when a corporation owns the radiology clinic and the insurance company, or has a non-transparent contract with Labcorp to provide services to their patients, who sets prices? They do. And there are neither price limits nor consistency across organizations even for the same services. This is why a chest Xray can cost $200 at one location and $500 at another. Guess which location’s price is higher?
1 VOTE for those who will work to reduce healthcare costs. Reducing healthcare costs will require laws at the federal and state level so vote national and local.
Healthcare is big business working for itself, not for you. Those running on platforms that protect big business instead of anti-trust legislation (which is designed to keep business competitive), will not work to reduce YOUR healthcare costs. You will have to read between the lines and platitudes to decide who you want to support.
2 Take care of yourself and your health first. Preventive measures make a difference – see many past columns on self-care and prevention. That said, sickness and death are ultimately not preventable. Therefore,
3 Get the care you need when you need it even if it requires louder and more forthright self-advocacy to do so in these times. It might mean getting second opinions or driving out of the county. No one but you can decide what is best for you. Do not delay or avoid care because innt the long run it will be more expensive in money and suffering.
Because I took that oath and care about we have all lost in healthcare, I will continue to inform and enlighten as I proceed in my legal and economic education. I grieve what business has done to the art of healing and culture of that calling. And I believe that everyone deserves quality and accessible healthcare regardless of their ability to pay.
Debra L. Glasser, M.D., is a retired internal medicine physician in Olympia. Got a question for her? Write drdebra@theJOLTnews.com
3 comments on this item Please log in to comment by clicking here
Snevets
Thank you again Dr. Glaser for diving into this very deep well of medical insurance and then explaining it in layman's terms.
Tuesday, October 8, 2024 Report this
WillStuivenga
I too am grateful for the attempt to explain the increases in health-care costs. However, I'm confused by this section under the listed reasons for increasing costs:
Lack of regulatory authority over the drivers of consolidation: buyouts, mergers and private equity
A majority of Washington’s large healthcare corporations are designated not-for-profit providing loopholes to regulatory oversight.
Private equity’s ownership of healthcare organizations (meaning private investors seeking to make money from the lucrative healthcare sector), is known to be increasing but is currently immune to oversight. end quote
These two factors as listed seem contradictory to me. If healthcare corporations are non-profit, then why would private equity be interested? Private equity certainly isn't non-profit!
I've always thought that health care SHOULD be non-profit, because the profit motive seems to be a primary driver of increased costs. To me, it seems as though the move in health insurance from non-profit to for-profit, was one of the biggest reasons we have so many problems with insurance denying claims, and increasing rates to consumers. So wouldn't the same be true for healthcare itself?
So what is the solution? More legislation providing better regulation of non-profit health care organizations?
Thanks,
WS
Wednesday, October 9, 2024 Report this
ChuckCross
Thank you, Dr. Glasser for a well done health care piece, AND, thank you for being concerned enough to do your research and share your knowledge publicly. Readers might also be interested to know the a "Non-profit" designation does not limit nor prevent an organization from making a profit. Hopefully you will continue to present on-going articles regarding our healthcare system(s).
Wednesday, October 9, 2024 Report this