California law says that 70 percent of premium costs must equal the average direct health costs paid out, but if that were true, then premiums would go up at exactly the same rate as costs. Since 1990, direct health care costs have risen 5.8 percent per year, while the average health insurance premium has gone up 8.2 percent per year. That’s the average across all insurance industry values, based on the Kaiser Family Foundation reports.
This means a health plan that cost $1,300 in 1990 should cost about $3,800 now, but on average it now costs $5,810. The extra $2,010 (53 percent) is pure profit. Our GOP Insurance Commissioner Steve Poizner has surely known this since he took office four years ago, but has done nothing until now.
The highly publicized premium hikes (up to 39 percent) that Anthem Blue Cross is now trying to get go only to a small percentage of policy holders. These are the people who have to buy their own insurance policy for one reason or another. Mainly, these are the self-employed and small business owners. The self-employed cannot even deduct this high cost from their taxes—but employer-provided health insurance is 100 percent deductible.
We should ask our senators and congressmembers how much money insurance companies contributed to their election campaigns, and think about how much money the insurance companies will spend influencing elections through the media, now that the Supreme Court has removed all barriers to that kind of political influence. — Andrew Peter Clarke, S.B.