What Is Going On in Our Health Care System?

Consumers Union analyzed 10 Blue Cross Blue Shield health insurance plans and found some interesting details.  The companies are often keeping upwards of three times more “reserve money” in their coffers than the minimum recommended.  That money is intended to ensure they can continue to pay for their sick customers if the market suddenly changes, but they have stashed away billions over the past decade – well beyond the minimum backup.

Why is this a problem?  Well, it certainly makes insurers look like liars.  They keep raising their rates, year after year, claiming that costs are rising and they simply have to charge more.  They blame trial lawyers and hospital inefficiencies – anyone but themselves.  Meanwhile, it turns out they’ve been saving billions of dollars all along.  Case in point (from USA Today):

Blue Cross Blue Shield of Arizona: A $717.1 million surplus in 2009, seven times the regulatory minimum. The plan raised rates for individual market customers by as much as 18% in 2009. Company spokeswoman Regena Frieden said: “We believe the amount we have in reserves is appropriate.”

The Consumers Union report declares that industry regulators should step in and monitor how much companies are putting away for themselves.  I don’t necessarily think that is the right answer.  They are a company – let them do what they want and live or die by the reaction of their customers.  That said, I think health insurance as it stands now is a farce. It is so highly politicized and there are so many layers of deception and bureaucracy that all of the humanity has been stripped out of the field.  Nor is it only the insurers – the government and poorly run hospitals have also done a lot of damage.

The only real and lasting answer is awareness.  People need to become aware of what they are buying and how it works.  They need to know the dollars and cents of the care they are receiving and how that connects to what they’re paying for insurance.  This is the only way to force insurers, doctors, and hospitals to become more efficient, more careful, and more affordable.

Is there hope for the industry?  Probably not.  The new health care reform policies will simply add a lot more government entanglement to the mix, making the industry even more obscure to the average person.  I’ve already received work notices about the incredible increase in paperwork we (or our insurance agents) will be forced to submit as part of this “reform” package.

In the long term, the real solution may be to do away with insurance entirely (or at least, limit insurance to extreme catastrophic insurance) by saving and helping the needy around us.  But the new Obamacare package will do nothing but entrench health insurance even more as a constant in the health care industry, and we can see from this story how well industry giants like Blue Cross Blue Shield are treating people.  I’m not optimistic.

Picture above from flickr user femaletrumpet2 licensed under Creative Commons Attribution-Noncommercial-NoDerivs 2.0 License.