The major insurance companies are threatening to raise insurance premiums, despite their claims that the Affordable Care Act will raise them. Their threat came amid their record-high profits and a slowdown on rate increases.
The profit margins for insurance companies have exploded over the last few years. According to Bloomberg, the earning per stock share of insurance companies jumped 29 percent from 2008 – 2011. Even in 2008, when the economy took a nosedive, the top insurance companies, like United Health and Aetna, racked revenue in the billions of dollars.
Because they’ve been hauling in cash by the barrel, this childish tantrum by the insurance companies is difficult to understand. Their profits have risen well over 8 percent since health care reform was signed into law, while prices that the companies thought were going to rise are doing so very slowly. According to a report by Kaiser Health News, “private health insurers spending on actual benefits rose only 1.6 percent in 2010. . . down from 3.7 percent in 2009.
Despite the companies reducing their expenses, there are many who foolishly think that the Affordable Care Act will make rates rocket through the roof. Reports indicate that some insurers think that the health care reform will eventually cause a 100 – 400 percent rise in insurance rates. The only thing that would cause the rates to rise would be the insurance companies themselves making the spikes. That would be, and has been, damaging for the patients.
The National Bureau of Economic Research released a report that focused on the economic effects of raising premiums for purchasers. The report indicated that “between 2003 – 2004 alone, premiums went up by 11.2 percent while wages increased only 2.3 percent.” This increase is also reflective of the runaway train that is health care inflation. Insurance hikes also increase the risk of unemployment as “every 10 percent increase in health insurance costs reduces the chances of being employed by 1.6 percent.”
There is a constant back and forth between policy, health care, insurance, and the consumer. But rather than lay out a plan that would best suit the insured, hospitals and insurance companies remain focused on their ever-growing profit margins. And the patients are always getting the tail-end by facing growing costs.
Joshua de Leon is a writer and researcher with Ring of Fire.