Health Insurance Premiums Continue to Skyrocket

This week, the Henry J. Kaiser Family Foundation released its annual study about health insurance premiums across the country. Great news! Across the country, your health insurance premiums only increased an average of 7.7%. Of course, the overall rate of inflation increased by 3.5% and workers salary increased by 3.8%.

While our health insurance premiums are skyrocketing, keep in mind that health insurance companies like Aetna increased its revenues by approximately 13% to almost 22.5 billion dollars last year. Humana, another health insurance company increased its revenue by 10% to almost 14.5 billion dollars. Humana even increased its net profit by ten percent last year. Health insurance premiums jump, and at the same time, health insurance companies’ revenues and profits seem to be increasing at an even faster pace.

These facts tell me that I should invest in health insurance companies. The fact that health insurance companies earn a high rate of return does not bother me. Kudos to the Aetnas and Humanas of our country. However, as long as companies have the ability to earn large profits, shouldn’t they also be held accountable when company decisions breach certain obligations owed to policy-holders? If a company makes a decision solely based upon profits and consciously disregards the requirements of an insurance contract, I would hope that the company would be held accountable for its conduct. Such accountability does not always exist these days. Under the current federal law known as the Employee Retirement Income Security Act (ERISA), health insurance companies issuing group health insurance policies are shielded from responsibility for general and punitive damages to compensate victims and punish reckless company actions. These liability limitations give no incentive to insurance providers to treat policyholders fairly. Companies issuing individual non-ERISA family health insurance policies are subject to liability for general and punitive damages for wrongful conduct. I believe that insurance companies treat individual policy-holders more respectfully and deferentially knowing that a breach of policy obligations can expose the company to real damage awards possibly affecting the company’s overall profitability. I sincerely hope that any future debate about capping damages, expanding ERISA legislation or preventing lawsuits against insurance companies under the guise of tort reform would keep these principles in mind and that federal and state legislators will reject future tort reform efforts.