Aon

August 25, 2009

Aon Consulting surveyed more than 60 leading health care insurers, representing more than 100 million insured individuals, and found that health care costs are projected to increase by 10.4 percent for HMOs, 10.4 percent for POS plans, 10.7 percent for PPOs and 10.5 percent for CDH plans.

In addition, health care rate increases for retirees over the age of 65 are projected to be 6.6 percent for Medicare Supplement plans and 7.3 percent for Medicare Advantage plans.

http://aon.mediaroom.com/index.php?s=43&item=1676

Comment:

By Don McCanne, MD

Under the management of private insurers health care costs continue to increase at outrageous rates – this year at 10.5 percent. With the decision of Congress to leave private insurers in charge, and with no measures that would have any major impact on slowing health care spending, it can be anticipated that these outrageous increases will continue even after reform is enacted.

The Medicare Supplement (Medigap) and Medicare Advantage plans are also private insurance plans, and so you might expect their increases to be similar. In fact, though technically complex, rate setting of these plans is linked to spending in the traditional fee-for-service Medicare program. The fact that rate increases in these programs are lower is not due to any efficiencies instituted by the private plans, but is due to greater efficiency of the public Medicare program.

In fact, there is much waste in these private Medicare programs.

The Medicare Advantage plans are overpaid deliberately to give the plans an unfair competitive advantage over the traditional Medicare program, with the intent of privatizing Medicare. Most of the extra payment is wasted in administration and profits, and what little benefit there is should be given to all Medicare beneficiaries, not just those enrolled in these plans.

The Medigap plans provide the worst value in the private insurance market. The insurers pay a much lower percentage of the premiums they collect for actual health care than they do in any of their other insurance product lines. Americans would be receiving a much greater value if the benefits of the Medigap plans were rolled into the traditional Medicare program, and these wasteful private supplemental plans were totally eliminated.

This Aon report should lead to two obvious conclusions: 1) get the private health plans out of our Medicare program, and 2) replace the private employer-sponsored plans with an improved Medicare program for all of us.

If you agree, let President Obama and the members of Congress hear your message loud and clear. Immediately.