California Health Insurers Cite Rising Hospital Costs

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As health insurers again increase premiums on thousands of subscribers, the industry is seeking to shift the debate over escalating health care costs to the rising price of hospital care.

In California, hospital prices jumped 150 percent since 2000, according to a study of state hospital data conducted by America's Health Insurance Plans, the industry's trade association.

"What this data shows is that there needs to be much greater focus on the underlying cost of medical care that is driving those premium increases," said Robert Zirkelbach, a spokesman for the group.    
"At some point, people will have to address these underlying cost drivers if health care costs are going to come down."

To gauge prices, AHIP used inpatient revenue self- reported by California hospitals to the Office of Statewide Health Planning and Development.

In California, the prices charged to commercial health plans rose by 159 percent from 2000-2009 – more than twice the rate of increase for Medicare, which serves mostly seniors, and more than eight times that for Medi-Cal, the government insurance program for the poor.

"The report's focus on California hospital costs just reinforces what we have been saying the past couple of years. Steep increases in medical costs must be addressed. Our country and state cannot sustain this kind of growth," said Patrick Johnston, president of California Association of Health Plans.

The health insurers' group acknowledged the challenges faced by hospitals and other medical providers as they provide free care to those without insurance or those too poor to pay.

Meager reimbursements from government insurance programs such as Medi-Cal and Medicare haven't helped hospitals' bottom lines.

As a result, hospitals make up lost revenue by shifting costs to patients with private insurance.

Insurance companies say they are merely passing on those increased costs to their customers.

But a group representing hospitals criticized the insurance industry study as a political attempt to shift blame for rising insurance rates.

"It's the continuing saga of AHIP pointing fingers at the hospital industry. … It's really tough for a pot to call a kettle black," said Scott Seamons, regional vice president for the Hospital Council of Northern and Central California.

"I don't know what their objective is here, but it smells," he said.

For years, the insurance industry has been under scrutiny for surges in premiums and has fought a losing battle to garner sympathy from the public and policymakers.

"Unfortunately, for political reasons, people have been reluctant to address underlying medical costs and focus only on insurance premiums," Zirkelbach said.

It's easy to see why insurers have been under fire, particularly among the millions of Americans who buy health coverage on their own.

While insurance premiums are expected to rise by an average of 9 percent next year, rates for people buying coverage in the individual market are seeing steeper increases. Those customers are also paying higher deductibles.

Jamie Court, president of Consumer Watchdog, a left-leaning advocacy group based in Santa Monica, accused insurers of attempting to sow confusion – expressing concern about rising costs while simultaneously increasing premiums.

"It's been very clear to us that … insurance companies have been scapegoating the president's health insurance reform plan for everything that is wrong with health care in this country and using it as an excuse to raise premiums," Court said. "Consumers have been left in a lurch."

Contact The Bee's Bobby Caina Calvan, (916) 321-1067 or [email protected]

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