One of the accomplishments the Connecticut state legislature is proud of for this past legislative season is a new law which would permit small businesses, nonprofit organizations, and towns to join the pool insuring state employees.
However, it seems like legislators might have forgotten about actuarial and economic realities in the measure. From the Courant:
On Monday, Rell released a letter from Anthem Blue Cross and Blue Shield of North Haven that said the insurer would be forced to increase its rates by 4 percent — or more than $24 million — for the fiscal year that starts July 1.
Anthem President David R. Fusco said “we must also rescind the second- and third-year rate caps for 2009 and 2010″ that the company had agreed to in its three-year bid to provide health insurance for state employees.
Since the bill would open the pool to more than its current clients, Anthem says that is “a material change to the underlying assumptions of the bid” and allows it to recalculate the bid.
Oops.
Once the dust settles on incremental gains from marketing arrangements and volume efficiencies, not to mention the shuffling of dollars to cover uninsured patients and uncollectable bills, the fact remains that certain populations are fundamentally more or less expensive to underwrite than others.
If a group is receiving a low rate due to a better expectation of future results, and the doors are opened to higher-risk insureds…well, the difference in cost is going to have to be made up someplace. The net result may be beneficial for some, but others will definitely be left with a higher bill.
That is, of course, one of the challenges facing the country in the current health care debate. While many (most?) folks would love to see everyone have access to affordable healthcare, frequently through some form of a universal health care plan….the details are a little fuzzy when it comes to generating a credible estimate of how much it’s going to cost, and exactly who is going to pay how much to make that happen.