Health Care Reform Creates the Perfect Storm

Unfortunately the Health Care reform Bill passed by Congress this past year has created the perfect storm. While there are clearly some very positive benefits to consumers in the bill they don’t come without a cost, a very steep cost to some.

1st - The additional benefits to consumers covered by this bill will add to the cost of the health insurance premium we all pay going to forward

2nd - The regulatory burden placed on health insurance companies to comply with the 2,500 page legislation and 10,000+ pages of regulations is not small

3rd - The MLR issue has had probably the biggest impact- Companies are now mandated to maximize the amount of premium allocated to pay claims- in the case of individual insurance its 80% and group is 85%-- again while that is clearly good for consumers it comes with a cost- The overhead and marketing costs will still need to be paid so using a smaller % only leads to higher premium

These are the immediate issues – there are lots of other longer term problems with this legislation such as the individual mandate. The concept is that in exchange for these increased costs and burdens, insurers will get 35 million new paying customers thru the exchanges we have heard so much about. Again, a great idea, but flawed in reality. The penalty for not purchasing insurance is non-enforceable. The IRS is prohibited by the legislation from enforcing the penalty. Couple that with the insurance companies having to waive all pre existing conditions and you have the perfect storm of "If I can wait to purchase insurance until I am diagnosed," then the basic assumptions of insurance spread the risk over a large body is broken.

The net result of all this is increased prices in the future, even more than we have seen in the past ten years. In certain markets 30% and 40% price increases for 2011 have become the norm.

That’s the bad news- the good news is that MBO and our partners have been working hard to ensure we can continue to provide all our customers with the quality products and a fair price as we have for the past eleven years. These are challenging times requiring innovative solutions. I am confident we will have some exciting solutions for you to review in the next few months.

As if that’s not bad enough- unemployment rates and extension of unemployment benefits for the third time come with a cost- Congress was right to extend the benefits to those less fortunate but again it comes with a cost- the states are raising their unemployment rates to employers. We are doing our best here to find every way we can to be as efficient as we can so we can minimize the impact of these increased costs.

Its not all bleak- Business indicators are pointing to a continued recovery- I have heard predictions of as much as 20% increase in the stock market next year—Growth cures all ills!!