Increases in healthcare premiums may be here to stay

Several health insurance companies--most notably Anthem Blue Cross in California--are under fire with calls for justification of premium increases. Unfortunately for consumers, a report from the Department of Health and Human Services finds that those numbers are in line with increases sought by insurers in other states, despite robust profit growth for the companies.

"This shocking increase isn't unique," the report says. "Experts predict these increases will continue."

For example, Anthem in Maine was denied an 18.5 percent increase in 2009, but recently requested a 23 percent increase. Michigan's Blue Cross Blue Shield requested increases of more than 50 percent last year. And according to the Des Moines Register, Wellmark Blue Cross Blue Shield in Iowa just announced average increases of 18 percent, which required approval from the state's insurance division. Wellmark insisted that its rate increases had nothing to do with new headquarters being built in Des Moines priced at $194 million.

"[The increases] are a combination of medical cost inflation and increased usage," Wellmark Rob Schweers said. "Also, people are getting sicker as a population. There are more chronic diseases." 

The insurance industry's trade group, America's Health Insurance Plans (AHIP), disputed the idea of robust profit growth, pointing to Fortune's rankings of the most profitable industries. According to the rankings, the health plan industry profits at 2.2 percent, below other sectors of the health care industry.

"Increases in the cost of coverage in the individual market shine a spotlight on the urgent need to reduce the growth of underlying medical costs and to bring everyone into the system," said AHIP President Karen Ignagni in a statement. "If reform doesn't address these pieces, it will not solve the serious problems that individuals, families, and employers face. That is why health plans have proposed fundamental reform of health insurance markets and a long-term strategy to reduce rising health care costs."

The group targeted federal data that shows increased hospital and physician services and rising prescription drug use as reasons for rising costs. AHIP also noted that health plans must have actuarial justification for increases.

To learn more:
- read HHS report and this accompanying press release
- here's the Des Moines Register article
- check out AHIP's press release