2016 was a terrible year for insurance costs. Double-digit ACA premium increases were common. Insurance and provider monopolies and near-monopolies look likely to support future increases. But as we go into 2017, it's reasonable to ask: How long will consumers put up with this?
Payers have argued providing insurance coverage for more patients, who have been typically sicker as the ACA prevents them from rejecting those with pre-existing health conditions, has led to substantial financial losses. So they have requested a steep increase in premiums of 25%, on average, for the 2017 coverage year.
But this comes as some payers, including the five largest ones in the U.S., have remained highly profitable. Aetna, Anthem, Cigna, Humana, and Unitedhealth, four of which have multibillion-dollar plans to merge, have collectively profited more than $65.5 billion post-ACA, Public Citizen reported in October.
Meanwhile, salaries for C-suite executives were raised by 57% last year at Health Care Service Corp. (HCSC), which operates Blue Cross and Blue Shield plans in Illinois, Montana, New Mexico, Oklahoma, and Texas, according to a recent analysis by Modern Healthcare. The top ten company executives saw their combined earnings increase from a total of $36.1 million in 2014 to $56.7 million in 2015.
Hospitals, health systems feel the squeeze
Consumers are not the only ones affected by these issues. Hospitals and health systems may actually be the ones that have felt the squeeze the most, and they have acted in ways that are pushing up costs.
Health systems are consolidating at a rapid pace, and many of them say they have done so to have more leverage with insurance companies. This activity has in turn led to monopolies and duopolies on the provider side as well, which results in not only increased prices to consumers, but also a decrease in quality care as competition is significantly reduced.
"Hospital prices in monopoly markets are more than 15% higher," Federal Trade Commission Director of the Bureau of Competition Deborah Feinstein said during an event held by financial consulting firm KPMG in September.
With the ACA gone, what will be used next as a validation for price increases?
Requiring more transparency around payers' operating costs and salaries of their C-suite execs could help address these issues. But with Republicans promising a repeal, the ACA may not be available as cover for high costs much longer.
One of the Trump's administration's main objective in healthcare reform is to allow payers to sell plans across state lines. The ACA actually has a provision for the interstate sale of insurance, but states are required to enact a law authorizing it. If this regulation is among those that will be removed, the lack of competitive pricing among insurers may continue into 2017.
Thus, insurance companies looking for whom, or what, to blame for the increases may face an uncomfortable reality soon: For every finger they point, three fingers might point back at them.