A study by Anthem Blue Cross Blue Shield, which was released last week, considers the following three scenarios: a young healthy 25-year-old man with individual insurance, an unhealthy, 60-year old couple, and a family with two children and a small company that employs eight people.
Who will pay the most after reform? The 25-year old man, whose premiums will increase from $90 a month to $216.
Families and small businesses would see increases ranging from 9 percent to 52 percent. Only unhealthy, older people would see a rate decrease, but still see monthly premiums of $1,200.
“The report clearly shows that premiums would go up, rather than down,” said John Martie, president of Blue Cross and Blue Shield. “Some of the reform bills have flaws that ignore important things like access and costs. These numbers are not cherry-picked. The results show that these bills will affect people.”
The study used data from current insurance policies. The reason for the high increases, Martie said, is that the proposed reforms eliminate or constrain rating factors used by insurance companies that reward younger people with discounts.
“And they require that we insure everyone, but they don’t have high enough penalties for not having insurance,” said Rebecca Weiss, director of government relations for BCBS. “The fines right now start at zero for the first year and go up to $750 in 10 years. That doesn’t cover the costs of insuring anyone.”
The study is based on several assumptions, said Dr. Steve Berkshire, professor of health care administration at Central Michigan University. And because Anthem doesn’t explain how it reached its numbers, it could have “cherry picked” the cheapest policies in order to have a wide variance of premium increases.
“They make a lot of assumptions in order to put forth a perspective that’s ‘proof’” the proposals in Congress are a bad idea,” he said. “But that doesn’t mean those assumptions are incorrect — but some of them, we just can’t know yet.”
The assumption for rising premiums for the very young and healthy is based on the fact insurance companies will be required to insure everyone — regardless of health. It also is based on reform proposals that will rate people by community — not illness, gender or work environment, as is current practice.
“Right now, the very young and healthy get a big discount, and some bills in effect do away with those discounts,” Berkshire said. “The fact that younger people will be paying more isn’t really a new thing — we’ve known this. Reform is an effort to smooth out the differences in what people pay.”
Berkshire said some of the premium increases are less than what are seen annually under current regulations. Families with two children would only see a 9 percent increase in premiums, less than the 12 percent annual increase seen during recent years.
Another assumption made by the study is the health of the uninsured population, said De De de Percin, executive director of the Colorado Consumer Health Initiative and spokeswoman for the Health Care for America Now coalition.
“The study also wrongly assumes that the vast majority of people who are now uninsured are less healthy than the insured,” she said. “There is strong evidence to the contrary, as many young people decide not to get insurance precisely because they are healthy. The reason we want to bring them into the marketplace is because they are healthy and will help to spread risk.”
She calls the report “misleading” and “aimed at scaring the public into accepting the status quo.”
“This is another in a series of highly disputed insurance industry reports threatening huge premium increases,” she said. “It is a false and a futile attempt to derail meaningful health care reform. Doctors are not claiming that rates will increase, no one is, except the insurance industry and they have the most to gain from maintaining the status quo.”
Blue Cross is prepared for the criticism, Martie said.
“Don’t leap to conclusions,” he said. “At the end of the day, we are very supportive of reform.”
The Business Health Forum said that Anthem’s projections — which did not include insurance exchanges or reforms for the small group market that would drive down their premiums — is no reason to oppose health reform.
“In fact, it’s a call to work harder,” said Ralph Pollock, executive director. “As we work through the reform process it is evident that money needs to be taken out of the system — period. That’s going to take sacrifice on all parts: insurers, health providers and consumers. Individuals and employers must stop accepting health care and coverage prices at face value, and demand health providers and insurers bring down costs in the system. As consumers, we should take a hard look at what we demand out of our health care system and use it wisely.”