In a really unexpected piece of amazingly unpredictable economic data, we learn the following about the Health Insurance markets nationwide.
In New Mexico, market leader Health Care Service Corp. is asking for an average jump of 51.6% in premiums for 2016. The biggest insurer in Tennessee, BlueCross BlueShield of Tennessee, has requested an average 36.3% increase. In Maryland, market leader CareFirst BlueCross BlueShield wants to raise rates 30.4% across its products. Moda Health, the largest insurer on the Oregon health exchange, seeks an average boost of around 25%. – Wall Street Journal*
So how could this happen? Barrack Obama was gonna pay my car off. He was gonna pay my mortgage. It was all gonna be hope and change! Well, hope is not a plan and change doesn’t necessarily imply a 1st derivative in a positive orientation. Also, letting the government set insurance rates independent of market influence does lead to a propensity for politically savvy insurance executives to buy up a few politicians and effect regulatory capture. This could be the new motto of DHHS since the glorious dawning of The Unaffordable Care Act.
So what then happens once the government is regulated by the insurers instead of vice versa? The insurers and their payees then indulge in a nice, happy leverage fight over the surplus generated via the political corruption inherent to the Unaffordable Care Act. One group of auxiliary care providers eager to drink from the HMOs’ milkshakes consists of the companies that run air ambulance services. The Centives.com economics website offers details.
The air ambulance business has been booming. Since insurers usually pay the costs, companies have expanded their fleets and increased their coverage. The ambulances save lives. However, they’re falling upon hard times since insurers are beginning to ask consumers to pay more of their bills. Moreover, rapid growth in the industry has left it with a problem of oversupply, with each helicopter flying a fifth less than it used to in 2006. Costs are high. Helicopters start at about $4 million and can cost much more. The average flight is estimated to cost anywhere between $7,400 and $10,000. The average bills have gone up from $17,200 five years earlier to $40,800 now*. Those who go out of business first might be the non-profit ones who don’t have cash buffers for a decrease in demand.
The insurance companies are good at intimidation in their own right. They make other people pay them 100%+ mark-ups. They don’t let people drink from their milkshakes. This leads them to take defensive action and not pay for air ambulance transport. This means the patient, generally recovering from some horrific wound, then gets a $47,000 unpleasant surprise. Let’s hope the poor patient isn’t suffering hypertension when the bill arrives. The New York Times tells us quite the sad tale of how this whole Unaffordable Care Act drama is playing out.
Clarence W. Kendall, a rancher in Pearce, Ariz., was moving bales on top of a haystack when he fell eight feet and struck his head on the corner of a truck below. His health insurance covered most of the cost of treating the head trauma caused by the accident. But there was one bill, for $47,182 that his insurance did not pay. It came from the company that transported Mr. Kendall in a helicopter ambulance to a hospital in Tucson on the day of the fall, nearly two years ago. “That initial bill nearly gave me a heart attack,” he said. “I thought they’d have to come and get me again.” Mr. Kendall has not paid the charge, which he said was equivalent to a year’s income. As a result, Air Methods, the nation’s largest air ambulance operator, with over $1 billion in revenue last year, is suing him.
So insurers accomplish the regulatory capture of our caring and compassionate government. The Unaffordable Care Act allows them to petition for ridiculous rate hikes and thereby make obscene and unjustifiable profits at taxpayer expense. The people getting paid by the insurers watch all of this with a gimlet eye. They see the fat wallets and want their cash-stuffed envelope as well. Companies like Air Methods then charge the insurers ridiculous rates in line with the ridiculous rates that the insurers will not pay. At that point, these costs get passed to the insured patient who can’t afford them. This is how the Unaffordable Care Act helps make healthcare that much more unaffordable.
*-Via The Market Ticker.
**-As someone who makes a part of his living estimating the cost per operational hour of much more complicated helicopters than these medevac ones, I can only offer the considered opinion of “No ****ing way!”