Anti-trust laws exist to protect consumers from this very industry practice because Price-fixing is often a result of industry collusion. Both Coca Cola and Pepsi, for example, cannot get together and decide to raise their prices at exactly the same time.If the heads of Pepsi and coke got together and decided that they would jack-up their prices by $1 at the same time, then consumers would have no recourse other than to stop buying soft-drinks all together. Either that or consumers would have to pay exorbitant prices for soft-drinks. But the soft-drinks are very important to us, and so we have Anti-trust laws in this countrty which makes this practice–which can be described as collusion-illegal.
If coke were to raise its price by $1 and Pepsi stayed the same price, many people would leave Coke and buy Pepsi instead. And so Coke and Pepsi are both inexpensive.
In the United States, logically, the insurance industry is exempt from antitrust laws under the McCarran-Furgeson Act, and so your health insurance company may collude with other insurance companies and discuss raising prices at the same time. This appears to be what they did. Only it seems that Aetna was more candid about the effect of these rate hikes on the customers.
Aetna’s president explains:
“The pricing we put in place for 2009 turned out to not really be what we needed to achieve the results and margins that we had historically been delivering,” said chairman and CEO Ron Williams. “We view 2010 as a repositioning year, a year that does not fully reflect the earnings potential of our business. Our pricing actions should have a noticeable effect beginning in the first quarter of 2010, with additional financial impact realized during the remaining three quarters of the year.
Aetna estimates that their New Years rate hikes will effect “between 300,000 and 350,000 members next year from its national account as well as another 300,000 from smaller group accounts.” Merry Christman.
This is just one more reason to support health reform that has a strong Public Option, especially if you are one of those Aetna customers who must forgo health insurance because of the companies obligation to it’s shareholders and the bottom line. If health reform does not have a Public Option than these rate hikes will still happen, but you will be MANDATED TO STILL HAVE EXPENSIVE INSURANCE.
Lest you think that there is little recourse right now, especially if you are sick and can’t get new insurance because you have a preexisting condition, take some comfort: You can always go and fucking DIE.