Earlier this year Anthem Blue Cross of California (owned by Wellpoint Inc.) announced that it would be raising its insurance premiums by up to 39% this year. Is this increase justified, or are they just trying to increase premiums before the Federal government regulates premiums if the Healthcare reform bill passes?
The facts don’t seem to warrant the large increase in premiums requested by Anthem Blue Cross. WellPoint CEO Angela Braly says its customers’ healthcare costs only went up 8.9% last year. In fact, even 8.9% seems high, given what actuaries at the Department of Health and Human Services indicated in a recent report. To be fair, the increase in premiums anticipates a large increase in healthcare costs in the coming year.
Another reason given by WellPoint Inc. for the large increase is the poor economy. When times are tough, healthy people don’t buy healthcare insurance, so that means that the insured pool is smaller and sicker, requiring more healthcare. This is probably a valid argument, but the Healthcare reform bill would remedy this problem by mandating that everyone buy healthcare insurance.
Consumers and legislators are complaining loudly about the proposed increases. Two members of the House Energy and Commerce have asked for an investigation into this premium increase. A hearing is set for February 24, 2010 in the House chamber. WellPoint Inc. executives are asked to be present to relate the facts that warrant this increase.
WellPoint Inc., the nation’s largest health insurer by membership, had a net income of $2.7 billion, or $5.95 a share, in the fourth quarter of last year, compared with profit of $331.4 million, or 65 cents a share, for the same period the previous year. This is an eight-fold increase over last year’s income. This would indicate that the insurance business has been good during the past year.
In all probability, Well Point is simply trying to increase premiums and thus revenue ahead of the mandates required by the Healthcare reform bill, should it pass. These include:
- The requirement to accept persons with pre-existing conditions
- Regulations on rates and premiums
- Mandated coverage required in each policy
The executives at WellPoint Inc. have determined that their profitability will be adversely affected by the Healthcare reform bill, so they are just trying to remain viable as a company. By obtaining a premium increase before the regulations and mandates of the Healthcare reform bill take effect, the executives of WellPoint Inc. are looking to stay viable.
Interestingly, President Obama’s proposal that he unveiled a couple of weeks ago had a provision that would retroactively address just these types of situations. The constitutionality of any retroactive regulation would probably be challenged in court.
When it comes to choosing the right dental insurance plan in California, there are quite a few things that need to be considered. For instance: Do you urgently require insurance benefits? Are you acquiring a plan mainly to keep up with your preventive care? Do you need an orthodontic treatment? Would you want to continue with your current dentist?
Urgency and Insurance Type
If you are in urgent need of dental benefits, especially right after your effective date, then you may need to acquire an HMO plan. They usually have shorter waiting periods, and you are given all the major services whenever you require them. HMOs typically don’t have benefit maximums.
For instance, if your child urgently requires braces-related help and you don’t have an insurance policy, if you acquire an Anthem Blue Cross stand-alone “Dental Premier Select HMO” or a Delta Dental “Delta Care USA” you’ll get the orthodontic benefit for a reasonably less price if you didn’t have a plan. If you acquire a PPO plan, it is more obvious that there would be a lack of orthodontic benefits, and even if there are, you will need to wait for one complete year.
Moreover, if you require root canals or extraction or a dental crown, there’s a possibility that you could have a three, six or even twelve month waiting period prior to the utilization of those services, plus the final bill could be much higher. For this reason, you should also ensure that you have a high benefit maximum, or you don’t have one at all. Hence it is always better to get HMO coverage if you don’t have coverage and require major benefits urgently.
Preventive Care and Orthodontics
If you are only looking to continue your preventive care, it is better to carry on with the low benefit maximum plans. You can always get an HMO plan in the future if you require major work.
Continuing with your Current Dentist
If you want to continue with the current dentist, but you are unhappy with your insurance coverage, then you should go for a PPO plan. Typically your dentist is not included in an HMO plan, and also in some PPO plans. Therefore, it’s ideal to get services from a local agent, and let him/her search for suitable contracted providers in your area. If your dentist isn’t a part of the networks that you are interested in, then you should seek out a new plan. You should be able to find a good dentist in your area if applying for a PPO plan. On the other hand if you are acquiring an HMO plan, you can still get a good dentist, but you will have less providers to select from.
The California Health Care Almanac recently released its annual report on the uninsured in the state. The report has been released annually for over 20 years and over that period the percentage of Californian’s, who are not eligible for Medi-care, and are not covered by an employer’s healthcare insurance has risen by 9%. The rate of uninsured Californian’s has risen only 6 tenth of one percent in the past 8 years, from 20% in 2000 to 20.6% in 2008 (The latest year that statistics are available). California has a higher percentage of uninsured residents than the National average and the largest actual number of uninsured individuals—6.6 million.
The general trend of the healthcare insurance picture in California is that both the number and percentage of residents that are uninsured is increasing at a rate that is slightly greater than the rate of the uninsured in the nation as a whole. While California has the largest number of uninsured individuals of any state, it ranks 8th for the number of uninsured when stated as percentage of population with a rate of 20.5%. The national average for the uninsured is 17.5%, and Texas has the highest percentage of uninsured residents at 27.6%
The trend for who provides the healthcare insurance coverage is changing from privately provided coverage to publicly provided coverage. Employer provided healthcare insurance has declined by 5.2% over the past 8 years, while individually purchased healthcare insurance has increased only 1.1%, leaving the public to provide healthcare insurance to increase by 3.6%. The number of people eligible for public healthcare insurance is increasing faster than the number of individuals receiving public healthcare insurance.
An interesting statistic is the one concerning the changes in the types of insurance coverage in different income brackets. The insurance coverage source (private, public, or uninsured) stays essentially the same in the lowest (under $25,000/year) and the highest (over $75,000/year) income brackets. The trend in the two middle ($25,000 – $75,000) income brackets is moving from private sources to public sources and uninsured. The percentage of the two middle income groups who rely on public sources for their healthcare insurance has essentially doubled from 1994 to 2008
The highest number of uninsured residents is among the self-employed and those working for employers with less than 25 employees. It is curious to note that among residents employed by the public sector, the uninsured rate is 8.3%, higher than the national average for public employees.
As is to be expected, the rate of uninsured individuals is highest in the younger age groups when children are no longer covered by their parent’s healthcare insurance plan. Younger individuals tend to have lower family incomes and the lower income brackets also have higher uninsured rates than higher income brackets
The percentage of uninsured individuals differs along racial/ethnic lines as well. The only ethnic group that has a larger percentage of uninsured individuals than the state average is the Latino group at 29.9%. The report also lists the uninsured rate of non-citizens in California at 48.3%.
Analysis of the Data
While the report is titled ‘California’s Uninsured’, it spends a significant amount of time tracking the trends on who provides the source healthcare insurance. Whether the individual is covered by employer provided healthcare insurance, privately purchased healthcare insurance, or publicly funded healthcare insurance, the aggregate will be the total of insured residents. If you do not have healthcare insurance it doesn’t really matter to you who provides the healthcare insurance for those who have it.
One statistic that clearly demonstrates a major flaw in the entire healthcare insurance system is the number of individually purchased healthcare plans. Only 7.7% of residents purchase their own healthcare insurance. This means that very few California’s are taking responsibility for their own healthcare.
The fact that California’s uninsured rate is slightly higher than the national average can be explained for two reasons:
1) California’s population is younger than the national average, and many young people make the sound financial decision to forego healthcare insurance.
2) California has a high rate of non-residents, and non-residents have a very high rate of uninsured for healthcare. Latinos account for 58% of California’s uninsured population.
The complete study can be found in the California Health Care Almanac: California’s Uninsured, December 2009
