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View Diary: Health insurers are not happy (141 comments)

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  •  Actually, I think what's going on is (9+ / 0-)

    about profits, but not exactly the way you describe.  

    By this time of the year, insurers have done all the background stuff necessary to evaluate risk and decide what to charge in premiums.  The ACA limits the differences between what they can charge various demographics -- they can't charge you zillions more in premiums if you have a pre-existing condition, for example.  

    So, their decisions as to how to price premiums for the upcoming year involved a real balance between those restrictions and estimates of how many people would be forced, under the "10 essentials" of the ACA, to buy coverage that they almost certainly would not use, in essence, paying more so as to subsidize those policies where the insurers could not charge as they would  based on risk alone, if the ACA allowed it.  In other words, premiums for things like the exchanges were based on careful estimates of how many people from various demographic would be buying policies, with the notion that the younger and healthier would be paying for coverage they did not need, subsidizing the older and sicker.

    If the President essentially takes some of those younger and healthier OUT of the pool, that will through off that analysis and the insurers will -- as they said -- have to raise premiums for those who do go in the exchanges.  These young and healthy will go back to buying what used to be called "catastrophic coverage" (different from what the ACA requires):  big deductibles where routine doctor visits and preventative care come out of pocket, with everything over, say, $5000 covered, in exchange for lower premiums (maybe excluding maternity care or pediatric care).  If you are young and healthy, those kinds of policies can make a lot of sense for you.  But they don't do much to subsidize others.  So the insurers have to raise prices for others.   That's basic economics.

    Sure the President can say, "It's their decision to raise premium prices."  But that's silly.  Surely he KNOWS how the economics works and surely he KNOWS that taking some young and healthy out of the pool will mean that insurers will raise prices for others.  He can't say, "I know how they are going to react to maintain profitability, but that's not what I WANT them to do, so it's not my fault if my actions cause them to raise premiums to maintain profitability."  When he takes actions like this, he has to assume that insurers are going to do what's necessary to maintain profitability and factor that consequence -- intended or unintended -- into his decision making process.  If he hasn't, that would be completely incompetent, and I don't think the Administration is completely incompetent.  

    Yes, I think he knows this action will mean insurers will be forced to raise premium prices to maintain profitability, and he's going to try to deflect the blame to insurers when people start griping about that.  But I'm not sure it will work.  

    •  So, you're saying the target demographic (5+ / 0-)
      Recommended by:
      bobatkinson, whaddaya, aghazy, Yoshimi, wader

      (younger people) are the ones who got the cancellation letters?

      And yet, they were not steered to the Exchange by the insurers.

      "A strange game. The only winning move is not to play."
              -- Joshua, aka WOPR (War Operation Plan Response) automated nuclear-launch super-computer. "War Games," 1983.

      by Pluto on Thu Nov 14, 2013 at 11:47:00 AM PST

      [ Parent ]

    •  hard to imagine (2+ / 0-)
      Recommended by:
      bobatkinson, whaddaya

      they can complete that actuarial task or re-pricing all their plans in a matter of a few weeks.

      And who know if the website will allow premiums to be changed now that it's gone live and some people have already paid premiums.

    •  this action will have no effect on prices (13+ / 0-)

      Because the effect of this action will be negligible. A small number of people will keep their grandfathered plans, most will migrate to the exchanges because of the subsidies or because of the better coverage available.

      And life will go on. I can't wait to see what next week's episode of "Hyperventilate About Obamacare" will be about.

      •  It's going to effect prices in October of 2014 (1+ / 0-)
        Recommended by:

        What's that old parable about the scorpion stinging the guy who saves him - it's in his nature.  To expect insurance companies to do anything but attempt to maximum profits and minimize is risk is irrational.  So the more mind bogglingly incompetent the government is in the way it implements this law the higher the premiums are going to be next fall.  

        The Republicans will not be calling it Obamacare.   It will be the Unaffordable Care Act.

        •  The question is, "who is the scorpion?" (2+ / 0-)
          Recommended by:
          Lencialoo, wader

          The insurance industry seems to be screaming from some kind of sting from out of nowhere.

        •  Under 80/20, that is not a given. (3+ / 0-)
          Recommended by:
          Yoshimi, Lencialoo, wader

          The insurance companies are actually now limited as to how much margin they can tack on. And that margin, 20%, includes administrative costs, marketing and profit. Unless their costs for care go up (and they are actually leveling out) they can't just jack the premiums up to take profit.
          This is the "socialized" part of Obamacare, Profit Control.
          And with now preventive care included and Charity care (uninsured ER visits) reduced, the cost of healthcare should actually go down somewhat, shrinking the baseline even more and with it, the margin, a win for US, a disappointing future for the Insurance companies.
          And it couldn't happen to a nicer bunch of guys!

          If I ran this circus, things would be DIFFERENT!

          by CwV on Thu Nov 14, 2013 at 01:44:39 PM PST

          [ Parent ]

          •  They should not have assumed that would happen (0+ / 0-)

            in year 1-5.  They needed more subsidies early on to ease whatever pain was going to be caused by this transition.  Even best case, you could not expect the markets to adjust completely in years 1 to 5 or whatever.  

            In so many respects they just underestimated the implementation issues.  It's not fair to blame the public for being surprised.  They were never even informed.  

    •  Younger folks are less likely to hold insurance (4+ / 0-)
      Recommended by:
      whaddaya, stellaluna, Aquarius40, wader

      now, and most likely to qualify for subsidies on the exchange. It's the 50+ group who have the most to lose--assuming they have no preexisting conditions to begin with.

      Very few young people are both self-employed and earn enough to disqualify themselves from subsidies.

      And God said, "Let there be light"; and with a Big Bang, there was light. And God said "Ow! Ow My eyes!" and in a flash God separated light from darkness. "Whew! Now that's better. Now where was I. Oh yea . . ."

      by Pale Jenova on Thu Nov 14, 2013 at 12:15:19 PM PST

      [ Parent ]

      •  Where do you get that information? (2+ / 0-)
        Recommended by:
        justmy2, annecros

        A married couple, both self-employed, who earn more than a combined $62,040, do not qualify for a subsidy. That's not exactly a ton of money.  

        •  If you are self-employed (0+ / 0-)

          you can often reduce your taxable income by moving your business deductions around. While I agree that 62K after expenses is still not "a ton" of money, if they are young, their insurance premiums wouldn't be all that much (compared to age 50+ at any rate). And if they have children, the level goes higher.

          Of course, single payer works better. But seriously, where would they get insurance on the current system, unless they have zero preexisting conditions? (VERY rare for age 50+)

          And God said, "Let there be light"; and with a Big Bang, there was light. And God said "Ow! Ow My eyes!" and in a flash God separated light from darkness. "Whew! Now that's better. Now where was I. Oh yea . . ."

          by Pale Jenova on Thu Nov 14, 2013 at 05:26:23 PM PST

          [ Parent ]

    •  Subsidizing others (6+ / 0-)

      has always been a basic insurance principle. Premiums subsidize all the selected members of a plan. People who were deemed likely to cost more than their premiums were "rated" according to their perceived risk of costing more. Young people who parse the current situation as "unfair" to them because they are less likely to need long-term or expensive care need to get past this narrower self-interest and recognize that those policies they were buying would dump them and/or increase their premiums after they got sick, usually both with premium hikes first. When too large a proportion of plan members got sick over time and couldn't legally be dropped from a plan, the insurance company would drop the whole book of business by "withdrawing" from the health insurance market. They could do this on a state-by-state basis and, thus, not hurt themselves profit-wise too much. They didn't even have to drop all their business within that state - they could opt-out of doing just health insurance.   Young people should think about motorcycle and auto accidents as well as cancer, heart attacks, back problems etc. If that happened to you while on one of those "catastrophic" individual plans you would have no financial protection whatsoever, over time, and then you would have to throw yourself on the mercy of Medicaid or some other government program. It's more fair to all if all are involved at similar levels. If we are all insured at the same levels, no one is abandoned when and if they get sick. Young people become older. All will eventually need more care than the average 25 year-old.

    •  I highly doubt it will work. (1+ / 0-)
      Recommended by:

      People are going to connect any future rates changes to ACA.  Pure and simple.  

      Which is why it was critical to control costs in the bill, through something, anything.  But they decided the market for an inelastic product would do it. Hope that works out, but I doubt it, as I did in 2010 and 2009.

      "Small Businesses Don't Build Levees" - Melissa Harris Perry

      by justmy2 on Thu Nov 14, 2013 at 01:31:00 PM PST

      [ Parent ]

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