Wednesday, July 30, 2014 5:10pm CST

And What Did Obamacare Do For Us Again?

January 14 2013 by Kerry Kobashi

Health insurance costs rising
ObamaCare (Affordable Health Care Act) continues to do nothing to cut down the cost of my health care insurance premiums.

I just got a letter from my health insurance carrier stating that my insurance premium is set to go up in February 2013. Guess how much.

A whopping 23.7%

An Act that was passed which was supposed to make health care affordable? One that resulted in a 24% increase? They should have called it the Lets Get More Greedy Health Care Act because I am seeing no benefit from this legislature AT ALL.

When I look at my monthly bills, no bill other than health insurance has risen so fast, so steep over the last decade. Its really crazy how Americans keep taking it on the chin. Our government who obviously knows there is a growing problem, does nothing to regulate it and force costs down. Instead, they try to get people who don't have medical insurance into the arms of insurance companies to fuel their profits.

And in all this, there is no reduction in insurance premiums and no affordability. So just what are we creating health care reform legislation for? To line the pockets of health insurance carriers even more?

It's absurd.

I also cannot but help feel that this is crippling to our economy. Imagine how it affects small businesses, let alone corporations who pay employee sponsored health care. When a good chunk of personal income is being handed over to insurance companies, did increasing taxes for the upper 1% really matter when the other 99% is met with rising insurance premiums to counter it?

Opening up the letter and seeing sticker shock, I then demanded to know the reasons why my insurance provider feels it an increase my rates. They came up with the same boiler plate reasons:

  1. Increased consumer demand for services
  2. Rising medical and prescription drug costs
  3. Advances in medical technology
  4. Changes in benefits and/or taxes required by state and federal law

It was just three years ago that my insurance policy increased a staggering 40%.

So lets do the math. For every $1000 of insurance premium, take 40% and you get $1400. Then add another 23.7% to get $1722. So in a mere 4 years my insurance premium has rose 72%.

Seventy two #$%@'ing percent!

Back in September 2011 I penned Reducing health care costs. In that article I suggested that each State should relax the restrictions for limited choice of insurance carriers and let choice be across state boundaries. All this, to stimulate competition and to let them undercut each other to reduce costs.

We need to start there because if it isn't obvious, insurance carriers are holding State monopolies. The biggest ones have already grabbed the lions share and continue to march insurance premiums up. Here in California, there are only sixteen for-profit health insurance providers available for individual and group coverage.

State of California Health Inurance Carriers
Aetna American National Mony Life
Anthem Blue Cross Blue Shield National Foundation
CIGNA Connecticut General State Farm
Guarantee Trust Guardian Life US Life
Health Net John Alden Mutual of Omaha
Time Insurance New York Life

Source: California Department of Insurance

The consumer is left with two choices:

  1. Stick with his/her existing physician
  2. Move to another health insurance carrier

It isn't necessarily true that the two go hand in hand. A physician may not be associated with an insurance carrier and vice versa. This too affects patient choice. Hospital, physician, and medical group may not even want to do business with a carrier for reasons such as lower payout and tighter restrictions. One would imagine this is where the real business deals are cut as health insurance providers have to effectively market and make "a sale" to the medical industry. This middleman arrangement between carrier and health industry is highly biased towards profit. It says nothing about the patient.

What's really needed is a nationwide healthcare system where hospitals, patients, and physicians are networked together. Eliminate the greedy middleman and replace it with a Federal government agency subsidized by taxpayer funds. This way, the motivations of greed and for-profit are taken out of the equation. There is no need for dual monitoring from the Federal and health insurance carrier perspective. Health insurance companies do not do anything more than pushing paper and making decisions that are profit motivated. They have no desire to cut expenses as long as they can increase rates. Everything then becomes relative to their own profit motive, and not reducing premiums for you and me. The bar continually gets set higher and high and never lowered unless the business model completely falls out and the consumer goes to another carrier offering better quality in health care and lower insurance premiums.

The whole thing is one big Ponzi scheme that will burst like a bubble and collapse. For when the number of patients who make claims for medical services increases (like the wave of Baby Boomers) and which cannot be paid out by the insurance provider due to lack of funds, there will be a terrible mess on our hands. This is the real reason why insurance rates continue to go up.

Unlike the home insurance industry which is greatly affected when a natural disaster strikes, health insurance claims are continuously being filed and it moves in continuum with the population base. In Computer Science, this is called "scaling" to be able to meet demand as the number of resources increase.

Effectively, your health insurance carrier is saying that they cannot scale well and have to pass that onto you, the consumer. And because there are just a few providers that can meet this demand, the infrastructure starts to shake. What's needed is for States to encourage more providers to absorb the scaling to reduce systemic risk.

But is that a good way to reduce risk and stop rising premiums?

Why not do what Canada does and offer a nationwide healthcare network paid for by taxes. Let the Federal government backstop the healthcare industry. Health and money are twin evils when hand in hand masked in the form of greed.

About Kerry Kobashi

Kerry Kobashi picture

Kerry is the founder of KerryOnWorld. He lives in Silicon Valley.