The Black and White of Health Insurance; Without Reform, Health Care Insurance Premiums Could Skyrocket 79% in 10 Years. Are You Willing to Accept This?

By Frank Knapp Jr., Rock Hill Herald

October 20, 2009

Finally, the health insurance industry has publicly admitted that health insurance premiums are going to rise dramatically over the next 10 years if there is no national comprehensive health insurance reform.

The America’s Health Insurance Plans (AHIP) recently released a report prepared by the accounting firm of Price Waterhouse Coopers that says the cost of health insurance will increase 79 percent by 2019 under our current system without reform. Other organizations not tied to the insurance industry have predicted increases of over 100 percent in the next decade.

As the president and CEO of The South Carolina Small Business Chamber of Commerce, I can safely say that if health insurance premiums rise anywhere between 79 and 100 percent in the next 10 years, few small businesses will be offering this benefit to their employees unless there are tax credits and/or premium subsidies available to bring down the cost.

But the AHIP made another startling claim. Well, actually they made a threat. If Congress doesn’t pass the provisions in health insurance reform that the insurance industry wants, they will increase premiums even higher than if there was no reform.

What the health insurance industry wants is a mandate for every individual to purchase health insurance with a very strong financial penalty for non-compliance. They also don’t want any new taxes on the health insurance sector to help low and moderate income Americans afford the premiums they want us to pay. And they certainly don’t want competition from a government-sponsored insurance plan.

Is this a great county or what? An industry where the top 10 insurance companies have seen their profits increase by over 428 percent since 2002, according to Harpers Index, is boldly blackmailing Congress and every American. If we don’t pass health insurance reform, the insurance industry makes more money. If Congress passes reform they don’t like, the industry threatens to rake in even more money.

Health insurance companies have one priority — profits. They will do whatever they have to do to maximize their profits at the expense of the customer. Traditional competition in this industry doesn’t work; otherwise, their profits wouldn’t have so dramatically increased over the last seven years.

The Small Business Chamber has seen this insurance industry greed in the area of workers’ compensation insurance. Because South Carolina regulates rates in this industry, we have been able to go to court to successfully reduce proposed increases by as much as 44 percent. That is a 44 percent reduction in premium increases the insurance industry claimed it absolutely needed but a public hearing showed not to be true.

Health insurance companies have and will be no different when it comes to greed. If we will not regulate premiums and force the companies to justify those premiums, then we must control premiums through real competition. That is why the Small Business Chamber strongly endorses a public option within the insurance exchanges proposed in all the health insurance reform bills in Congress.

As the only business organization in the state to have ever gone to court to oppose an insurance industry’s rate hikes and force the industry to show us their numbers, we know that traditional competition in the health insurance industry won’t lower premiums. The AHIP now admits that.

The government-sponsored public option will not be subsidized by taxes and it will be required to negotiate payments to health care providers just like private insurance companies. But because this public option is geared toward providing quality, affordable health insurance and not just concerned about maximizing profits, private insurance companies will have to compete by being more efficient with administrative costs, reducing executive’s compensation and not being so profit greedy.

Congress should ignore AHIP’s blackmail attempt and pass comprehensive health insurance reform that includes a public option.

Frank Knapp Jr. is the president and CEO of The S.C. Small Business Chamber of Commerce.

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