close up of insurance definition

As we approach Jan. 1, 2014, there’s been a lot of conversation about rising health insurance premiums. The Administration has consistently said there’s no reason for premiums to go up. The insurance companies have consistently blamed rising costs of care. The providers have consistently blamed insurance companies.

Now employers are expected to increasingly choose self-insured status, acting in their own economic interests. Insurers are also seeking to maximize their premium intake at this time of upset in the market. And real people? They’re looking on in horror and apprehension.

It’s hard to avoid the conclusion that premiums and prices will go up, probably by an unconscionable amount, and that the people who get hit the hardest will be the people who usually get hit the hardest. Oh, and young people: Will they simply choose not to take part in a system that is not affordable?

California, geography: “Health insurers are facing new rules and restrictions on how they set prices as part of the Affordable Care Act’s aim to expand coverage to millions of Americans. No longer can insurers deny coverage because of a preexisting condition or place lifetime limits on medical care. While a person’s

age will remain a factor in setting rates, older customers cannot be charged more than three times what younger customers pay.

“California also has rejected an option under the federal law that allows health insurance companies to charge smokers up to 50 percent more for their premiums.

“All this leaves geography as one of the few ways insurers can adjust premiums. The premiums will not be set for most consumers under the law until summer, although estimates are available at the website of California’s health benefits exchange, . … consumer advocates are concerned that smaller regions will give health plans the opportunity to target poor, rural or less healthy communities with higher rates” –Judy Lin, the Associated Press, Geography to play larger role in health premiums – Houston Chronicle.

Self-insurance increases:  “Self-insurance was already growing before Mr. Obama signed the law in 2010, making it difficult to know whether the law is responsible for any recent changes. A study by the nonpartisan Employee Benefit Research Institute found that about 59 percent of private sector workers with health coverage were in self-insured plans in 2011, up from 41 percent in 1998.

“But experts say the law makes self-insurance more attractive for smaller employers. When companies are self-insured, they assume most of the financial risk of providing health benefits to employees. Instead of paying premiums to insurers, they pay claims filed by employees and health care providers. To avoid huge losses, they often sign up for a special kind of “stop loss” insurance that protects them against very large or unexpected claims, say $50,000 or $100,000 a person.

“Stop-loss insurers can and do limit the coverage they provide to employers for selected employees with medical problems. As a result, companies with less healthy work forces may find self-insuring more difficult. … Insurance regulators worry that commercial insurers — and the insurance exchanges being set up in every state to offer a range of plan options to consumers — will be left with disproportionate numbers of older, sicker people who are more expensive to insure. Robert Pear, “Some Employers Could Opt Out of Insurance Market, Raising Others’ Costs, The New York Times

More premium shock warnings: “Higher premiums could undermine a core promise of the Affordable Care Act: to make basic health protections available to all Americans for the first time. Major rate increases also threaten to cause a backlash just as the law is supposed to deliver many key benefits Obama promised when he signed it in 2010.

” ‘The single biggest issue we face now is affordability,’ said Jill Zorn, senior program officer at the Universal Health Care Foundation of Connecticut, a consumer advocacy group that championed the new law.

“Administration officials have consistently downplayed the specter of rate increases and other disruptions as millions of Americans move into overhauled insurance markets in 2014. They cite provisions in the law that they say will hold down premiums, including new competitive markets they believe will make insurers offer competitive rates.

“Exactly how high the premiums may go won’t be known until later this year. But already, officials in states that support the law have sounded warnings that some people — mostly those who are young and do not receive coverage through their work — may see considerably higher prices than expected.” Noam N. Levey, “States worry about rate shock during shift to new health law,” The Los Angeles Times

Jeanne Pinder  is the founder and CEO of ClearHealthCosts. She worked at The New York Times for almost 25 years as a reporter, editor and human resources executive, then volunteered for a buyout and founded...