Thursday, September 29, 2005

Asking the Wrong Questions: Conclusion

In Part 1, we broached the subject of rate increases. And in Part 2, we looked at the questions we need to ask about why they went up.
Now let’s talk about what we can do about it.
Well, the first, obvious move is to contact your agent to see what other carriers are available in your area, and how they stack up – both in financial status and rates – to your current carrier. Of course, ones current health status (as well as those of covered family members) will play a role in this process. And remember, just because the new carrier’s rates are better this year, don’t forget that they’re subject to the same issues as your current insurer. That is, their rates are going to go up next year, too. Doesn’t mean that you shouldn’t make the switch, but you need to know that it’s a temporary fix.
Another item to discuss is what, if any, different deductible and/or co-insurance levels will do to help mitigate the rate increase. This is especially relevant when discussing an HSA, because if one has a decent “cushion” built up in the actual account, one can afford to raise the deductible and/or the co-insurance percentage.
There’s one more piece that’s been bugging me: in his email, my friend lamented that he couldn’t afford to raise his prices 30% to match the increase in his health costs. While I obviously sympathize with him, the comparison really isn’t useful. There are pieces to the healthcare puzzle that we, as consumers, have handed over to our insurers, and they have an obligation to pay certain costs. When those costs rise – and they do: med’s especially, but all the high tech stuff isn’t cheap, either – the insurer has an obligation to both it’s stakeholders (owners) and its insureds to have enough money on hand to meet those increasing costs.
Here’s an imperfect, but hopefully useful, analogy: no one likes the price of gas, and it’s especially frustrating when it’s $2.59 on the way in to work, and $2.89 on the trek back home. The only thing that seems to have changed in the intervening hours is that a hurricane is now threatening refineries. But the gas “in the ground” at the station still cost what it cost last week when it was delivered. So why does the price go up? It went up because of the anticipated future cost to replenish the tanks. In the same way, insurers have to guess at the future cost of the services for which they’re going to have to pay.
This is the part of the post where I stand up to receive the slings and arrows of those who will call me a shill for the industry. So be it. But the fact that some carriers raise their rates by some obscene (by our standards) amount doesn’t diminish the fact that the costs of delivering medical services continues to rise, and we want someone else to pay the lion’s share of those costs.
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