Health Inc.

On Both Coasts, States Face Off With Rising Health Costs

Washington might have temporarily put the brakes on the health overhaul, but the problems the health system faces aren't going away. Look, for instance, at the recent announcement by Anthem Blue Cross in California of a premium increase of as much as 39 percent for individual customers shows the nasty blame game about where those cost increases actually originate.

HHS Secretary Kathleen Sebelius. i i

HHS Secretary Kathleen Sebelius. Susan Walsh/AP hide caption

itoggle caption Susan Walsh/AP
HHS Secretary Kathleen Sebelius.

HHS Secretary Kathleen Sebelius.

Susan Walsh/AP

Anthem's decision to raise premiums has highlighted for Democrats the type of problems a health overhaul was supposed to fix. The episode has given politicians the opportunity to point fingers at insurance companies, call for increased oversight of rate hikes and even to bolster efforts to withdraw the insurance industry's antitrust exemption.

For its part, Anthem, owned by industry giant WellPoint, points its finger at the ever-rising medical costs. But Washington isn't buying that. Health and Human Services Secretary Kathleen Sebelius said the justification for the rate hike "remains difficult to understand."

It's true that health care costs have consistently grown more quickly than the GDP since the 1960s and show no signs of slowing. For WellPoint in particular, the cost of medical care increased 8.9 percent in 2009, according to the Wall Street Journal. But as Sebelius pointed out that is still significantly lower than the premium increase that was announced.

Anthem also notes that with the economic downturn, many policy holders — especially those who are healthy — are giving up their coverage to save money. This is especially true in California, hard hit by the recession. That leaves the insurer with a pool of enrollees who tend to need more care.

Even as this blame game plays out, one state (that's often at the center of the health care debate, for better or for worse) appears to be taking cost control into its own hands. Massachusetts Gov. Deval Patrick filed a bill Wednesday that would increase his authority to review insurance rate increases as well as health care costs and "disapprove" them if they increase faster than inflation.

Whether Patrick's plan will pass or work to control costs is yet to be seen. But neither side seems too happy with the idea. An insurance industry representative told the Boston Herald, "I'm not sure this proposal will stop small business premium increases, because premiums reflect the cost of hospital services."

But Rich Copp, of Partners HealthCare, which is Massachusetts' largest health care system, told the Boston Globe that insurers are the ones who set rates, not hospitals.

Mertens is a reporter for Kaiser Health News, a nonprofit news service.

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