Public-sector health insurance rates are approved for a 10.7% increase:  What is going on?

Debra L. Glasser, M.D.

Photo by Olympia Wedding Photographer | Loewyn Behold Photography

One month ago, the Office of the Insurance Commissioner (OIC) announced the approval of a 10.7% increase for premiums in the individual health insurance market through the Washington Health Benefit Exchange. This market is where those not covered by commercial plans (through their jobs) or Medicaid and Medicare can buy health insurance.  Many of those are small business owners and their employees, those not working for large companies who can still afford to insure their employees.  Some, but not all, are eligible for premium subsidies.  

OIC press release: Average 10.7% rate increase approved for 2025 individual health insurance market | Washington state Office of the Insurance Commissioner

 And a summary of the above with commentary from a group of non-profit policymakers working to control healthcare prices:

9-11-24 Press Release Insurance Premium Increase Reaction (fairhealthprices.org)

My initial reaction to this announcement was shock, horror, and mystification.  Nearly 100 others who commented on these press releases in a large newspaper north of here shared my reactions.  

 Since then, I have been preparing to write about this topic realizing there is a lot about this topic I did not understand. What have I learned? It is very complicated. Not medically complicated but business and legally complicated.

My hope in this column is to demystify some of the forces driving this insurance rate decision and, consequently, healthcare costs.  Healthcare Economics at the 101 level.

This is the hallway of the ED observation unit at Overlake Medical Center ED.

The facts about insurance premiums

Rates for eleven health insurers on the public option have had rate increases approved ranging from 5.7% (for Molina) to 23.7% (for UnitedHealthcare of Oregon). These rate increases do not affect commercial plans …yet. The results of Northwest Health and Providence’s requests will be released soon.

The Insurance Commission is bound (by law) to abide by strict guidelines in reviewing and approving rate adjustments.  If the rate change is justified based on the commission’s current criteria, they are required by law to approve it.

Our state Insurance commission is distraught about the situation. Insurance Commissioner Mike Kreidler states in the press release, “The key driver behind these rates is the increase in services used and the cost to deliver that care.”

Due to urgent concern for the rising costs of healthcare, the commission has presented two voluminous reports in the last 10 months to the legislature detailing several policy strategies to slow prices as soon as possible. Stay tuned for more on this and the Attorney General's Office’s recent report on healthcare to the legislature.  

What are the effects of increasing healthcare costs on society and individuals?

• Healthcare affordability burdens: 62% of Washingtonians polled experienced at least one healthcare affordability burden in the past year. These include rationing medication, delaying or forgoing care, and depleting savings. These choices lead to higher costs in the long run as well as unnecessary suffering. 81% of us are worried about being able to afford our healthcare in the future.
• Healthcare Debt: National figures for medical debt show that 1in 3 Americans have such debt, and 1 in 2 cancer patients or their survivors do, all of which is higher in disadvantaged communities. There is no data collected on debt in our state. That would require funds and a legal mandate that we do not have.
• 9 out of 10 corporate executives are concerned about increasing healthcare costs including insurance premiums, a cost burden shared by companies and employees.

Insurance premiums keep going up because the cost of every aspect of healthcare keeps going up.

Piggy bank with glasses over a calculator.

At the same time, the profits and profit margins of health insurance companies, corporate not-for-profit hospital systems, other healthcare corporations, drug companies, and pharmacy benefit managers keep going up.

As we and society pay more for healthcare, the salaries of healthcare administrators and business leaders remain in the millions. Most hospital CEOs make at least twice what a well-paid specialty surgeon earns. Not only does such a surgeon have at least twice the education of a hospital administrator, but she/he/they took an oath to help the sick.

What is not going up?

Or even going down as costs go up?

• The availability, access, quality, and outcomes of health care are not going up. Ironically, cost is not tied to quality and outcomes.
• Ironically, we have the most expensive healthcare system in the world despite an increasing infant mortality rate, fewer physician visits, physicians, nurses, and hospital beds per capita than many peer nations.

What is driving cost?

• Consolidation – horizontal and vertical

Currently in our state, eight multi-hospital systems provide >90% of the licensed beds in our state. It is like a game of Pacman with hospital gobbling by giants that prioritize profit and revenue over improved affordability, outcomes, and access for patients. This is horizontal consolidation.

Those same systems employ >65% of the physicians and physicians assistants with hospital-based practices plus own and operate affiliated clinics.  Many own and contract with labs and radiology, which their doctors are encouraged to use. This is vertical consolidation.  

The problem with consolidation is that though these buyouts and mergers promised to reduce cost, data shows they increase costs and reduce access to care. For instance, less profitable clinics and hospitals are closed.

• Lack of regulatory authority over the drivers of consolidation: buyouts, mergers and private equity

A majority of Washington’s large healthcare corporations are designated not-for-profit providing loopholes to regulatory oversight.

Private equity’s ownership of healthcare organizations (meaning private investors seeking to make money from the lucrative healthcare sector), is known to be increasing but is currently immune to oversight.

• Lack of regulatory oversight of healthcare due to systems’ ability to hide the real costs of doing business

No one knows what it costs a hospital to provide an emergency room visit or an aspirin tablet. Their finances are protected from scrutiny.  

You and I are required to file a tax return to the IRS detailing our finances and pay our fair share.

A large percentage of large healthcare organizations are tax-exempt at the state and federal level due to their not-for-profit status and thus relieved of this requirement.

Even though it has been revealed in the press that our state healthcare corporations hold large reserves, real estate investments, manage hedge funds, and pay CEO salaries in the millions, there has been little that can be done to right these inequities.

• The sky is the limit on price-setting

Healthcare consolidation reduces the role of competition and, thus, on price.

For instance, when a corporation owns the radiology clinic and the insurance company, or has a non-transparent contract with Labcorp to provide services to their patients, who sets prices? They do. And there are neither price limits nor consistency across organizations even for the same services. This is why a chest Xray can cost $200 at one location and $500 at another. Guess which location’s price is higher?

Conundrum of decisions concept photo. A black man in an orange shirt is pensive and worried with many arrows going in many directions.

What can you do in these cost-inflationary times?  

1 VOTE for those who will work to reduce healthcare costs.  Reducing healthcare costs will require laws at the federal and state level so vote national and local. 

Healthcare is big business working for itself, not for you. Those running on platforms that protect big business instead of anti-trust legislation (which is designed to keep business competitive), will not work to reduce YOUR healthcare costs. You will have to read between the lines and platitudes to decide who you want to support.

2 Take care of yourself and your health first.  Preventive measures make a difference – see many past columns on self-care and prevention.  That said, sickness and death are ultimately not preventable. Therefore,

3 Get the care you need when you need it even if it requires louder and more forthright self-advocacy to do so in these times. It might mean getting second opinions or driving out of the county. No one but you can decide what is best for you. Do not delay or avoid care because innt the long run it will be more expensive in money and suffering.

Rising healthcare costs are causing huge challenges and economic problems for our society

Because I took that oath and care about we have all lost in healthcare, I will continue to inform and enlighten as I proceed in my legal and economic education. I grieve what business has done to the art of healing and culture of that calling.  And I believe that everyone deserves quality and accessible healthcare regardless of their ability to pay.

Debra L. Glasser, M.D., is a retired internal medicine physician in Olympia. Got a question for her? Write drdebra@theJOLTnews.com