Health care’s bottom line

President Barack Obama has jolted the health care discussion back to life, but insurance companies also deserve credit because their recent premium increases serve as a useful reminder of the cost of doing nothing.

A robust health care debate is taking place on the Opinion page blog, A Matter of Opinion, where a small-business owner in Pullman offered a report from the front lines of premium increases.

“Blue Cross just raised my company policy rates by 32.5 percent, while increasing the family deductible from $5,000 to $6,000, and decreasing their payments from 80 percent to 70 percent of costs after that $6,000 deductible is reached,” he said.

That raise is on top of a 15.8 percent increase in 2009 and a 19.6 percent increase in 2008. He was able to keep the increases at 10 percent to 12 percent in previous years by dropping vision coverage and increasing deductibles.

“These kinds of ridiculous increases are by far the largest threat to small businesses,” he went on to say. “My unemployment taxes went down, my state-run worker’s compensation tax went down, my business liability insurance premium went down, the company vehicles insurance premiums went down. Those savings are all eclipsed, and then some, by these kinds of health insurance increases (with accompanying sharp decreases in benefits).”

A National Anthem. The nation’s five largest insurers had combined profits of $12.2 billion in 2009, according to a U.S. Department of Health and Human Services report. Anthem Blue Cross of California is jacking up premiums as much as 39 percent this year. WellPoint, which owns Anthem, is planning double-digit premium increases in many states.

The insurance industry explains that the tough economy has caused many healthy people to drop coverage, while those with chronic conditions have hung onto their policies. In turn, costs per enrollee rise, which forces premiums higher. The industry’s answer is for government to mandate the purchase of health insurance to bring more healthy people into the pool, which would help keep premiums down. That’s what the congressional bills would do.

Another problem is that in many states a single insurer dominates the market. Say, how about a public option to offer competition in those states?

the value GAP. All across the country, business owners, workers and government officials are facing the heat from high health care costs. Our nation is the proverbial frog that failed to jump from the boiling water because the temperature was raised incrementally. The answer isn’t to slowly turn down the heat. We need to remove the pot from the stove.

The Business Roundtable published a survey last year that evaluated health care in the G-5 nations (United Kingdom, Germany, France, Canada and Germany) and found that our system puts businesses and workers at a comparative disadvantage.

“This study shows a significant health care value gap,” said Ivan Seidenberg, chairman and CEO of Verizon Communications. “While, in many respects, the employer-based health care system in the United States is the best in the world – we have groundbreaking scientific advances, cutting-edge medical technology and exceptional doctors and medical institutions – the business model supporting it doesn’t meet Americans’ needs. When we spend more to get less, we all lose – workers, employers and the government.”

So if the emotional and moral appeals for health care reform don’t sway you, how about the fact that our current system is bad for business?