For the first time in ten years, the US health insurance industry is expected to report no rise in medical expenses, according to a new study of 852 health insurers by Weiss Ratings, the nation’s only provider of independent insurance company ratings. Sceptics dismissing this as spin from a pro-insurance lobby group are wide of the mark as Weiss Ratings is far from popular with insurers as it offers free public lists of the 118 strongest and 100 weakest health insurance companies and regularly criticizes health insurers and Obama’s reforms. Weiss also predicts that future insurance increases will be far below what less informed analysts predict. With health reform meaning more Americans will have insurance, and with insurers paying only a fraction of the gross cost that those offering medical tourism compare themselves against, the analysis suggests that a key reason for Americans seeking overseas surgery unaffordable insurance will be a weaker driver than predicted.
Overall, health insurers incurred medical expenses of only $234.9 billion in the first nine months of 2010, representing a $3.7 billion, or 1.6%, decrease from the $238.6 billion in medical expenses reported during the same period in 2009. Weiss Ratings estimates that medical expenses for the entire year will decline as much as $9.8 billion, or 3%, from $323.1 billion in 2009 to $313.3 billion in 2010. Gavin Magor for Weiss Ratings comments, “This is a critical change from the steady and rapid increases of prior years. If it continues in 2011, it should help boost health insurer profits while pressuring companies to curb premium increases and give consumers some much-needed relief.”
The study also found that medical expenses increased sharply from 2005 through 2009, by 48%, an average annual increase of 10.3%, with double-digit increases in three out of the four years. The total number of individuals enrolled in health insurance was 145.0 million at the end of the third quarter, compared to 148.4 million one year earlier. The decline in medical expenses was reported by many companies.
Martin D. Weiss of Weiss Ratings says: “Most large insurers should be able to handle the increased medical expenses expected under the new health care reform.” Health insurers incur medical expenses whenever they pay out health insurance claims, a cost that represents around 71% of their total expenses. The Patient Protection and Affordable Care Act will require individual and small group insurers to spend at least 80% — and large group insurers to spend at least 85% — of their premium dollars on medical care and on efforts to improve the quality of care. Some smaller health insurers may withdraw from the market, be acquired, or fail. However, most of the nation’s largest insurers have the capital and efficiencies needed to handle the expanded coverage and buy out the smaller companies.
Another federal judge has thrown out a lawsuit claiming that President Obama’s requirement that all Americans have health insurance violates the religious freedom of those who rely on God to protect them. U.S. District Judge Gladys Kessler in Washington, D.C. dismissed a lawsuit filed by the American Center for Law and Justice, , on behalf of five Americans who can afford health insurance but have chosen for years not to buy it. The case was one of several lawsuits filed against Obama’s requirement that Americans either buy health insurance or pay a penalty, beginning in 2014. Kessler is the third Democratic-appointed judge to dismiss a challenge, while two Republican-appointed judges have ruled part or all of the law unconstitutional. Kessler decreed that the Supreme Court will need to settle the constitutional issues.
Kessler ruled that Congress has the right to regulate health care spending under the Commerce Clause and that the individual mandate must be viewed not as a stand-alone reform but as an essential part of the law Obama signed 11 months ago aimed at reducing overall costs. She also said that anyone who objects to having health care for religious reasons can choose to pay the penalty instead — as the lawsuit said all five plaintiffs plan to do. Judges George Steeh of Michigan and Norman Moon of Virginia dismissed suits against the individual mandate last fall. Henry Hudson in Virginia ruled the insurance purchase requirement unconstitutional in December, while Roger Vinson in Florida ruled the entire health care reform act unconstitutional last month. The Obama administration is pushing back on the two federal judges’ rulings that declare unconstitutional the linchpin of last year’s health care reform legislation: the requirement that citizens buy health insurance. The Justice Department has filed a memo asking Judge Roger Vinson to clarify his January ruling that struck down the health care law, after concluding the so-called individual mandate was unconstitutional. He has been put on the spot and asked to “confirm that the declaratory judgment does not automatically relieve the parties of their rights or obligations under the Patient Protection and Affordable Care Act.” Separately, the administration has asked the Court of Appeals to reverse the Virginia federal judge’s ruling that strikes down the individual mandate. The government argues the provision is permissible under the Commerce Clause, the constitutional power that allows Congress to regulate interstate commerce.
All the state legal moves and politicking are ultimately no more than hot air as the U.S. Supreme Court will decide the issue. Meanwhile, the President has defused much opposition by agreeing to support bipartisan legislation giving states greater flexibility in implementing the health care law. This allows states to start designing their own health care plans in 2014, three years earlier than scheduled in the existing law.
International Medical Travel Journal