The Truth about Health Insurance Premiums and Profits

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On a recent Fox News debate about health insurance, Democratic political strategist Bob Beckel explained that, “The president needed an enemy, and the insurance companies are it.”

Proving that point in a Pennsylvania stump speech, President Obama asked, “How much higher do premiums have to go before we do something about it? We can’t have a system that works better for the insurance companies than it does for the American people.”

On February 20, President Obama used his weekly radio show to express outrage that a fraction of Californians buying individual Anthem Blue Cross Blue Shield (BCBS) plans “are likely (sic) to see their rates go up anywhere from 35 to 39 percent.” He used those figures to justify preempting state regulation “by ensuring that, if a rate increase is unreasonable and unjustified, health insurers must lower premiums, provide rebates, or take other actions to make premiums affordable.”

There was always something peculiar about this desperate effort to demonize certain health insurers. Individual plans account for only 4 percent of the insurance market. So why do they account for 100 percent of the president’s fulminations about insurance premiums? Could it be because insurance premiums for the other 96percent have not been rising much?

Nonprofit BCBS plans account for a third of the private health insurance market. Michigan’s nonprofit asked for 56 percent premium hike without the national media taking that Hail Mary pass too seriously. But even Obama finds it difficult to accuse nonprofits of being too profitable, so he needed to pin his enemy badge on a for-profit firm

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