Why did Anthem (California Blue Cross/Blue shield) raise rates up to 39% on 80,000 individual policies in California?
They call it a recessionary death spiral. As more people become unemployed and lose income, the healthy people often drop individual health insurance and gamble on not becoming ill. That leaves only the unhealthy high-cost individuals left in the insurance pool the plan covers, so the costs increase rapidly.
Without healthy people in the plan to cover the increase costs, more will make the same decision to drop out or will be forced out by the increased cost of the plan itself. But it will also increase the costs to health care providers as they treat uninsured patients, and that will jack up costs to the employer group plans. The providers will raise prices on all medical services so that the payments made by those who still have insurance will also cover the bad debts that result from treating those without insurance.
Result? All health care costs rise (faster than inflation) and all health insurance costs rise. But the healthy uninsured and the very wealthy who don't need insurance to pay their medical bills win economically. The various levels of government will end up paying even more of the health care costs in America than they presently do.
The only long-term solution for this is to provide universal coverage to all Americans. With such very large insurance pools the costs of health coverage become much more predictable. It is, among other things, a major cost control measure on heath care expenses.
That's what both the Senate and the House health care reform bills provides. What do the Republicans offer? Continue the current failed system with tax cuts for the wealthy.