Rising HC Premiums: It's Really Not the Insurers Fault

President Obama met last week with a group of major health insurers to warn them against high premium increases. But what is often ignored or forgotten on this issue is that premium increases are often beyond the control of health insurers. Health care premiums are primarily determined by the fees HIs negotiate with doctors and hospitals. In areas where there are provider monopolies, negotiating fees is obviously more difficult for HIs and premiums there will be higher.

So until provider fees are controlled, it really is unrealistic to expect premium fees to do anything but increase. It is well documented for example that doctors in the U.S make significantly more than doctors in other countries. But beginning a discussion of reducing doctors' fees is fraught with political peril given the power of the profession's various lobbying groups.

So what is the answer? HIs need to develop new ways of paying providers that focus on the quality of care they provide not just the quantity. Pilot ACOs now in place in various places throughout the country are one possible answer. But I guess the major point of this post is that HIs are really just a popular whipping boy for this issue. People love their doctors for the most part but not their health insurance executives.