They Said That? 5/22/15

From Clare Krusing, a spokeswoman for America’s Health Insurance Plans, an insurance industry group:

“This year, health plans have a full year of claims data to understand the health needs of the [health insurance] exchange population, and these enrollees are generally older and often managing multiple chronic conditions. Premiums reflect the rising cost of providing care to individuals and families, and the explosion in prescription and specialty drug prices is a significant factor.”

The Wall Street Journal, “Health Insurers Seek Big Increases,” 5/22/15

Ms. Krusing was explaining why insurers across the country are asking for steep rate increases, in one case over 50 percent. As the article explains:

Insurers say their proposed rates reflect the revenue they need to pay claims, now that they have had time to analyze their experience with the law’s requirement that they offer the same rates to everyone—regardless of medical history.

Anyone with a basic understanding of economics, or with some plain old common sense, knew forcing insurers to offer the same rate to all would lead to adverse selection: the sickly would sign up, the healthy who were supposed to subsidize their medical care would stay away. This is precisely what is happening. Consumer “advocates” say this is all insurance company posturing, but one insurer, BlueCross BlueShield of Tennessee reporting losing $141 million from health exchange plans, “stemming largely from a small number of sick enrollees” (there’s that adverse selection thing). The insurer says its proposed rate 36.3 percent increase would only allow it to operate on a break-even basis. That of course, assumes no further adverse selection after the increase, a questionable assumption.

Cheryl Fish-Parchman, an “advocate for the health law,” demonstrated in one sentence that she probably does not have the intelligence to understand either the convoluted ACA, or adverse selection and the insurance companies’ case for rate increases. She said: “We are really wanting to see very vigorous scrutiny.” SLL is in that small camp who believe that what one speaks and writes reflects the quality of one’s thinking. If Ms. Fish Parchman had said: “We want to see vigorous scrutiny,” SLL would have credited her with more intelligence.