As insurance company executives from around the nation congregate to San Diego on Wednesday June 3rd, 2009, Health Access, as part of the Health Care for America Now campaign, released a new report today showing that consolidation in the private health insurance industry is creating skyrocketing premiums for both patients and employers. In California , the state and most metropolitan areas are considered “highly concentrated” under U.S. Department of Justice guidelines. This kind of concentration means that an insurer can, without minimal consequence, raise premiums and/or reduce the variety of plans or quality of services offered to customers.
Health insurance premiums for California working families have increased 96 percent from 2000 to 2007. At the same time, the median earnings of California workers increased 19 percent from $25,740 to $30,702. That means health insurance premiums for California working families have risen five times faster than wages.
Wihle not the only cause of rising health premiums, one factor is the marked concentration in the health insurance market. In virtually every area of California, the new report shows that just a couple of companies have over half the health insurance market. Individual consumers and small businesses have no market power against the Blue Cross and other big insurers, who can set the premiums and the benefits
Consumer groups argued that these finding show it’s time for real comprehensive health reform that includes regulation and the choice of a public health insurance plan so patients are no longer at the mercy of the private health insurers in California. At the state level, they also support AB786(Jones), providing standards for coverage, up in the California Assembly today.
“For too long, insurance companies have competed based on dropping the sick, rather than through lowered costs and higher quality. Now this new research shows that they haven’t even been competing much at all!” said Michael Russo, health care advocate and staff attorney for CalPIRG. “The choice of a public health insurance plan will give consumers better options – and will keep insurers honest.”
The American Medical Association reports that the health insurance marketplace is dangerously concentrated with 94 percent of local markets in the United States currently considered highly concentrated. And contrary to what the health insurance industry claims, these mergers have undermined market efficiency. Premiums nationwide have gone up an average of more than 87 percent over the past six years.
“There is no real choice or competition in the private health insurance market, and only giving everyone the option of a public health insurance plan will guarantee we get quality, affordable health care we all can count on this year,” said Marty Martinez, policy director for the California Pan-Ethnic Health Network. “A public health insurance option will force private health insurance companies to control cost, guarantee quality, stop hiding what they will and won’t cover, and put people’s health before corporate profit.”
Some facts about the insurance industry in California:
* Anthem Blue Cross, a subsidiary of WellPoint Inc. and the state’s largest insurer, controlled 30 percent of the California market in 2008. Together Wellpoint, with Kaiser Permanente, they hold 58 percent of the California market.
* California insurance markets are concentrated. The top two insurers in the Los Angeles metro area control over 60 percent of the market. (The report details similar levels of concentration in most California metro areas.)
* Such consolidation is especially true in smaller markets. By itself, WellPoint, Inc. (Anthem Blue Cross) holds 60 percent of the market in Salinas and more than 50 percent of the markets in San Luis Obispo and Redding .
* Health insurance premiums for California working families skyrocketed by 96 percent from 2000 to 2007.
* For family health coverage in California during that time, the average annual combined premium for employers and employees rose from $6,227 to $12,194.
* For family health coverage in California , the average employer’s portion of annual premiums rose 91 percent, while the average worker’s share grew by 111 percent.
On the conference call releasing the report was Linda Jackson, of Grass Valley , CA , who has experienced the problems in this concentrated and confusing health insurance market. They lost their coverage after being laid off by Formica after 34 years of working there. She and her husband, in their late 50s, now pay over $1100/month, even though they are relatively healthy. They have been shopping around for coverage but their options are limited, and she is worried about getting any new coverage she gets may not be comparable to her current coverage in terms of benefits.
The concentration in the health insurance market is seen not just impacting premiums, but the quality of the health policies and the benefits they provide. The lack of competition is further exacerbated by a confusing and unstructured marketplace, where consumers find it impossible to compare plans. At the federal level, health reform proposals offer a “health insurance exchange” that would standardize and set basic benefit levels, and a public health insurer as a new, affordable option for people to secure basic coverage.
At the state level, AB786(Jones) would set basic health insurance standards to allow for better “apples-to-apples” comparisons, and limit “junk” insurance. Health Access California, the sponsor of AB786, argues that consumers need health reforms that provide greater oversight and standards for the insurance industry, who right now dictate the terms of coverage with their market power. The bill is scheduled to be voted on in the California Assembly today, Wednesday, June 3rd, 2009.
The report is also being released as insurance companies executives from across the nation are coming to San Diego , California , for the annual conference of their trade association, America ’s Health Insurance Plans (AHIP). The report is being release in advance of a Rally for Health Reform, on Thursday, 8-10am, in front of the AHIP conference at the San Diego Conference Center , 111 W. Harbor Drive.
The report was prepared by Health Care for America Now – the nation’s largest health care campaign – is made up of more than 1000 organizations representing more than 30 million people nationwide. President Obama and more than 190 Members of Congress support HCAN’s principles for health care reform. All across the country, HCAN supporters are organized and mobilized to stress the urgent need for health care reform in 2009 — reform that finally puts our health care needs before insurance company profits.