Reason for 39% Health Insurance Hikes: Customers Are Likely to Use Their Insurance

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WellPoint, which raised health insurance premiums by 39% for many customers in California, explains that the price hikes are due to demographics. Their customers, you see, are now more likely to be older and sicker. You know, they’re the type of people who actually need insurance.

The story:

In a memo obtained by The Associated Press, WellPoint Inc. tells Health and Human Services Secretary Kathleen Sebelius that because of the weak economy, healthy people are dropping coverage or buying cheaper plans. The decline in premium revenue means there’s less money to cover claims from sicker customers who are keeping their coverage. That resulted in a 2009 loss for the unit. The insurer says its 2010 rates aim to cover the shortfall expected from the continuation of that trend.

So: The ideal customer is someone who is healthy and never makes claims. That’s a pretty good business model. You pay me, and get nothing in return.

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