California Rising

You should go read Krugman today, but here's a taste.

Health insurance premiums are surging — and conservatives fear that the spectacle will reinvigorate the push for reform. On the Fox Business Network, a host chided a vice president of WellPoint, which has told California customers to expect huge rate increases: “You handed the politicians red meat at a time when health care is being discussed. You gave it to them!”

Our health care system is unraveling. I'm sure though, that the GOP is busy working on an alternative for the meeting at the WH next week.

[chirp]

[chirp]

Executives at WellPoint had to know that raising rates right now would lead to a shit storm. Did they do it simply for "sound business reasons" or because they wanted to raise the temperature on health care reform a bit? I don't know.

The weak economy and the unrelenting rise in the cost of medical care make it increasingly difficult for companies to avoid substantial rate increases — even if those increases provide fresh fodder for Democrats seeking to pass the now-stalled health care legislation in Congress.

“If they are losing money, they need to raise prices,” said Charles Boorady, an industry analyst with Citigroup.

Even so, he faults WellPoint for seeking the increases in the current political climate. He likens it to someone waving a five iron on a golf course during a lightning storm. “You’re asking to be electrocuted.”

Under that political pressure, the company has said it will delay the California rate increases until at least May 1.

But from a business perspective, WellPoint, one of the nation’s largest insurers and the operator of commercial Blue Cross plans in more than a dozen states, may have few alternatives as a company accountable to shareholders demanding higher earnings. The money WellPoint makes from selling policies to individuals and small businesses is an important source of its overall earnings. But the company says it lost millions of dollars last year in California on individual policies.

“They’re not prepared to lose money on this line of business,” said Cathy Schoen, senior vice president for research at the Commonwealth Fund, a nonprofit research group in New York. In fact, she said, many carriers choose not to sell policies in the individual market.

Many health policy analysts point to the sharp price increase sought by Anthem as evidence that the way individual insurance is sold in this country needs to be changed.

“What they did is actuarially sound and totally legitimate,” said Andrew Kurz, a former insurance executive with Wisconsin Blue Cross and Blue Shield who is a vocal critic of the current health care system. “It’s the marketplace that is wrong, not Anthem.”

When insurance company executives are demanding an end to the status quo, things are seriously fucked up.