As President Nixon liked to say in the 1970?s (at least comedians made it a standard joke), ?Let me make one thing perfectly clear??? As an insurance agent I have no control over health insurance premiums.
OLD NEWS
On September 23, 2010 I posted ?WHY ARE MY HEALTH INSURANCE RATES INCREASING?? on TIB Tips.? That post was chosen to be on the front page of Word Press.? It was by far the most widely read post of any on either of my insurance blogs.
People from all over the U.S. read that article.? Many of them left comments.? Unfortunately, many of the comments were politically motivated.? I have deleted some of the nastier ones.
What was meant as an explanation for a phenomenon was perceived as a political commentary.
The purpose of the post was to help readers understand that there would be a reaction by the insurance companies to the new coverages that were mandated by the PPACA.? The insurance companies would not sit back and simply absorb the costs of insuring sick children and paying 100% of the costs for Preventive medical treatment and check-ups.
The insurance companies are nothing more than a bill paying service.? If the new health mandates of the PPACA that went into effect on September 23, 2010 caused an increase in medical bills, there would naturally be a pass through of the costs to insureds.
Those ?free? medical check-ups that President Obama and Secretary Sebelius brag about getting Americans are only ?free? to people who have health insurance.? Those people got an increase in their premiums caused by those ?free? check-ups, whether or not they see the doctor.
That article was posted 3 months before the National Association of Insurance Commissioners gave their recommendations to Secretary of Health and Human Services, Kathleen Sebelius, so she could ignore their recommendations and establish the Multiple Loss Ratio, MLR, rules she wanted.
CURRENT NEWS
In the wake of the new restrictions from the new MLR rules a mini premium war has broken out between CIGNA and AETNA here in my home state of Texas.? Actually, I am not certain that classifying it as a premium ?war? is correct.? Maybe premium ?skirmish? is more appropriate.
Both insurance companies have announced that premiums would be lowering for their individual health insurance plans sometime this summer.
On the surface, this is good news and a sign the PPACA is doing its job.? Under the surface, it could just be that they are admitting in their own way that the increases they made to premiums last October were too aggressive.
Even with the premium decreases, the rates for health insurance post PPACA will be higher than they were before the PPACA.
This rate decrease may only be a marketing gimmick similar to the jeweler who artificially raises the mark-up on a ring only to claim it is on sales when he is forced to lower the price back to the ring?s fair market value.
The difference is that the jeweler only has to respond to the laws of the market place.? If he prices his goods too high, nobody will buy them.
Insurance companies have to comply with both the laws of the market place requiring lower prices and the laws of the state?s that require insurance companies to charge premiums high enough to pay that year?s medical claims.
Last week, I attempted to explain more about the legal restrictions health insurance companies have on premiums on TIB Tips in ?WHY YOU CANNOT GET YOUR HOPES TOO HIGH ABOUT HEALTH INSURANCE PREMIUMS.?
PREDICTIONS
I?m not going to say the PPACA is working or is not working.? I feel that is a decision left to the American consumer.
What I can, and will, say, is that something is happening behind the scenes that the typical consumer (and insurance agent) is not aware of.
On January 1, 2014, unless something drastic happens before then, the entire health insurance system, as we know it, will change.? Like it or not, sometime in 2013, every American citizen will have to make an adjustment to his/her health insurance.
Until then, all of us have to make do with the system we have now.
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