Insurance Industry Wary of Changes to Premium Rating System Advocates Want

Apr 25, 2008 by Elizabeth Ziegler

(KCPW News) Low-income health care advocates have an ally in Senator Gene Davis (D-Salt Lake County). Like them, he wants the Health System Reform Task Force, of which he's a member, to consider requiring insurance companies to change the way they set their premium rates to a community rating system.

"The discussion of a community ratings system tends to be one of those issues that could possibly help get us to where we want to be," Davis says. "I think it has great possibility, due to the fact that, a community ratings system, what it means, is that we're all in it together, equally, we all share in health care costs equally."

Under this system, individual rates are based on the collective health risks and pre-existing conditions of everyone in the state, rather than assessing individuals or employer groups. Critics of such a program, including Regence Blue-Cross Blue-Shield of Utah President Scott Ideson, say that this would increase the cost for the very subgroup they want to attract - the young and healthy. Davis concedes the only way to avoid this would be to mandate health insurance coverage for everyone in the state, something he says his colleagues in the Legislature are unlikely to approve. However, he says this type of cost-shift already takes place when the uninsured go to the emergency room on the taxpayers' dollar. Ideson says he believes the concept of community rating does not address the fundamental problem with the system, the high cost of care.

"I would want to be very, very cautious about taking community rating as a way to solve the current health care crisis that we're in and bring about true reform," Ideson says. "I think it is just simply a way to spread costs differently and does not address the underlying drivers of cost."

Ideson says reducing the cost of delivering health care can be addressed through increased transparency about the price of medical services and quality of treatments. He also believes that offering incentives to consumers to live healthier lifestyles could reduce the need for care.

1. Anonymous said:

Community rating is a disaster. It reduces responsibility for personal choices. Of course, Sen Davis would promote this. He doesn't respect the individual. He believes government knows best.

Government is the problem with healthcare, not the solution.

2. Tammi Diaz said:

I would like Thank Senator for stand up for the people. The Insurance need to take Responsibility, because if this so called HealthCare Reform Passes it onlyfor the Insurunce Companies. Stop think about are CAPITALIST SYSTEM it about making $MONEY$ not PEOPLE! Thank You! Senator Gene Davis

3. Ed Meyer said:

When I was a young man, I was told to ALWAYS follow the money. Who stands to gain most from the Legislator's efforts, whose contributions gain them preferred access, who retires from the Legislator then becomes a lobbyist for the insurance industry. There are enough honest legislators that I expect some good things to happen, but far shot of what could potentially happen if everyone was at the table for the right reason.

4. Doug Bird said:

"Government is the problem with healthcare, not the solution." you can tell the poster is really thoughtful when he/she just parrots exactly what Newt Gingrich says, despite the fact the American Medical Association and the industry itself want the government to be involved more to guarantee health care for all.

Not all health care expenses are the result of personal choice. Shouldn't have to think much at all to expose that disgusting fallacy.

5. Sharlom Kariuki said:

How is the insuarance industry premium determined?