Health Insurers Contemplate
Universal Health Care

December 9, 2002
Health insurers are increasingly concerned about the growing number of uninsured Americans and are beginning to talk openly about the need for a universal health care system.

Insurers fear that large numbers of uninsured patients will swamp the health care system at the same time that growing numbers of younger, healthier workers are excluded from the risk pool as employers reduce or eliminate health care coverage.

Just last week, the chief executive of Blue Shield of California said more than six million Californians have no health insurance. Bruce G. Bodaken called for a statewide universal health care system that would be financed by employers, individuals and a new tax.

In a speech to the Commonwealth Club in San Francisco, Bodaken outlined a plan which would require all but the smallest employers to offer basic coverage. Individuals able to do so would be required to buy their own policies and tax revenues would subsidize those unable to buy coverage.

The company has commissioned a study of potential taxes, including increases in the state income tax, sales tax and tobacco tax as well as new taxes on health insurance premiums and on hospital and doctors' fees.

Many insurers are developing new "lite" policies that provide slimmed-down coverage at lower cost, hoping to attract customers who either can't afford or don't want to pay for more expensive policies.

In Florida, 30 insurance companies are planning to introduce lower-cost policies next spring, hoping to win back smaller companies that have dropped coverage. The policies will feature higher deductibles and fewer non-critical options.

The insurance companies are in a potentially hazardous political position. At a time when consumers and health-care providers are facing serious financial shortfalls, most insurers are enjoying health earnings, thanks to premiums increases of up to 40 percent for smaller companies and as much as 20 percent for larger employers.

But while premium increases prevent short-term problems by allowing insurers to stay ahead of rising costs, they create potentially serious long-term problems by causing more companies and individuals to opt out of coverage, increasing the financial pressure on health-care providers and consumers.

Or as Chuck Butler, a vice president of Blue Cross Blue Shield of Montana, put it in a New York Times interview: "If we don't do something about the uninsured, the whole health care system in this country is going to collapse and the government will step in."