Back On The Hot Seat

Insurers remain their own worst enemies. They keep shooting themselves in the foot! The latest example is how they handed their foes on health insurance reform fresh ammunition, right after President Obama and his allies were left shooting blanks.

Indeed, just when the health insurance reform movement was dead in the water, the industry itself breathed new life into the effort and provided a painful reminder of why comprehensive changes are needed.

For awhile, it seemed obvious that reformers were spending too much time talking about the problems facing the uninsured, without considering the concerns of those fortunate enough to have coverage.

So what do health insurers do? They send rates for individual policyholders skyrocketing. The poster child is Wellpoint's Anthem Blue Cross of California, which announced hikes of up to 39 percent.

The White House immediately pounced on the opportunity, announcing that President Obama will call for new federal powers to block "excessive" rate increases.

This came just days before the president was to convene last week's televised discussion with congressional Democrats and Republicans on health reform, with the gut-wrenching premium hikes on individual policyholders destined to be Exhibit A in the demand for swift regulatory restrictions.

After the fact, insurers tried to explain the cost to cover individuals is rising because healthy Americans who have hit hard times are dropping coverage, while those who are ill or prone to medical problems are hanging onto their insurance if at all possible, skewing the risk pool.

But such excuses are doomed to fall on deaf ears in Washington. Frankly, I would not want to be a Republican defending an insurer's right to jack up a person's health premiums by 39 percent in these horrendous economic times, especially with the kinds of profits many carriers are reporting.

President Obama has Republicans right where he wants them–forced to side with the "profiteering" insurers, or meet him halfway with some "reasonable" reforms.

If Republicans stubbornly refuse to meet this challenge, and the public gets the idea they are standing with insurers against the average person, the momentum for the midterm elections could shift back in the Democrats' favor, making more comprehensive health reforms likely.

Of course, President Obama did not call for federal authority to regulate what doctors, hospitals and drug makers charge for their services and products–even though soaring health care costs is primarily what's driving up insurance premiums. But that's not the point, thanks to headlines about greedy insurers.

Rather than blame the press and grandstanding politicians, however, insurers need to look in the mirror to see who is to blame here. They are guilty once again of bad reputational risk management.

Insurers should have been holding press conferences and symposiums and blitzing the airways with advertisements to set the stage for the hikes to come.

Plus, their timing could not have been worse. Perhaps the increases could have been introduced in stages, with the carriers going to great lengths to point out how they are taking a short-term hit to their bottom lines in the interest of their customers' financial and medical well-being.

Instead, they merely assembled once again with their eyes closed to the world around them, formed a circular firing squad and blasted away at what's left of their battered reputations. Is it any wonder they find themselves back on the hot seat, while those who drive the costs they pay for stand on the sidelines, cheering on their critics?