Many people are being forced into a tradeoff as insurance rates continue to rise

By David Lazarus, Los Angeles Times, Sept. 7, 2010

Ruta Vaisnys just got the word from Blue Shield of California: Her monthly health insurance premium will rise by more than 28 percent to $243 beginning next month.

The Silver Lake resident is among the 150,000 Blue Shield customers with individual insurance policies who will experience yet another rate hike Oct. 1. An additional 180,000 Blue Shield members will see their rates go up by an average of 18.3 percent over the next year.

Meanwhile, about 800,000 Anthem Blue Cross individual policyholders will see their premiums rise by an average of 14 percent.

“Your rate is rising for a variety of reasons, all associated with the rapidly increasing cost of medical care,” Vaisnys and other Blue Shield customers are being told by letter.

“Your individual rate reflects a combination of what Blue Shield pays for healthcare, as well as factors that are specific to you – in particular, the product you purchased and your age.”

That may be true. But it also reflects a healthcare system so wildly out of whack that adequate insurance is quickly growing out of reach for all but the wealthiest Americans.

And with coverage remaining primarily in the hands of the private sector, it’s unlikely prices will come down significantly even when the bulk of pending healthcare reforms take effect four years from now. At that time, individual policies will be offered through “exchanges” intended to promote competition.

“We’re losing money on individual policies right now,” said Tom Epstein, a Blue Shield spokesman. “We’ll definitely need to make some money in the exchange.”

Vaisnys’ situation highlights what millions of Americans are now facing.

I first wrote about her in June 2009, after Blue Shield had informed her that her monthly premium was about to soar 54 percent. That included a 28 percent increase that the insurer said reflected its higher costs, as well as an additional 26 percent increase because Vaisnys was about to turn 45.

As I noted at the time, Vaisnys (she went by Miller then, prior to a divorce) was in great health. She worked as an actress. She ate well. She exercised regularly. She didn’t smoke. Her turning 45 was nothing more than an arbitrary blip on the calendar.

Vaisnys is now 46. She attends ballet classes three times a week. She does Pilates. She’s as healthy as ever.

“I have very low blood pressure,” Vaisnys told me after learning of Blue Shield’s latest rate hike. “But I think they’re trying to give me a stroke.

“It makes me angry that they keep doing this year after year,” she said. “I feel so powerless.”

Since we’d last spoken, Vaisnys had switched Blue Shield insurance policies. To lower her monthly premium, she boosted her annual deductible to $3,500 from $2,400.

In other words, she’s had to accept less coverage to keep her insurance costs manageable. And she’s not alone.

A recent survey by the Kaiser Family Foundation found that 16 percent of individual policyholders nationwide have switched to less-comprehensive plans to keep costs down. A quarter of individual policyholders now have an annual deductible of $5,000 or more.

Yet Blue Shield’s Epstein insisted that the company loses money on its individual policies because state regulators won’t let it raise rates high enough to cover the full cost of hospital stays, doctor visits and prescription drugs.

“There needs to be a significant transformation of how medical care is delivered,” he said.

I agree. And while I support the changes that President Obama and Democratic lawmakers have engineered, they don’t go nearly far enough.

The healthcare reforms place a new emphasis on wellness programs, but this needs to be built into the pricing of hospital and doctor reimbursements. Simply put, doctors and medical facilities should have financial incentives from insurers for keeping people healthy, not just for treating them when they get sick.

And it seems increasingly clear that insurance exchanges and mandates won’t do much to lower medical costs or guarantee adequate coverage to all. Most likely, we’ll see insurers vying to offer the most bare-bones policies at the highest prices they can get away with.

Some sort of Medicare-for-all program remains the only equitable way that every American can be provided with adequate and affordable coverage. This wouldn’t be socialized medicine and it wouldn’t be state-run healthcare.

It would be an extension of a social safety net that already exists to prevent millions of people from being denied needed healthcare. Why so many conservatives feel threatened by such an idea is beyond me.

In the meantime, insurance costs will continue rising. Epstein said he expects average annual rate hikes for individual policyholders to remain “in the high teens” for the foreseeable future.

I asked Vaisnys if she’s hopeful her costs will go down once the healthcare reforms kick in.

“I’m not holding my breath,” she replied.

She said her plan is basically not to ever get sick.

You’d think we could do better than that.

latimes.com/health/healthcare/la-fi-lazarus-20100907,0,5223381.column

