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Insurance Costs Under Obamacare - Page 30

post #436 of 739
Everybody knew the rates were going to go up in the short term. There's a few new taxes on a few industries but it accounts for a tiny percentage. I've seen the numbers. Rates are supposed to drop down in the long term due to greater visibility and competition

I think they didn't foresee that everybody would raise their premiums as insurance against the future. Insurance companies industry wide are being super conservative and assuming the market can deal with it (although in some cases they're leaving markets). This also means rates should drop down in the near future once the market stabilizes and insurance companies have more data and see that the lack of demand at those prices aren't sustainable but it's possible prices will stay up if it turns out Americans can afford it despite the complaining

Pretty much exactly the same thing happened when they introduced Medicare although with different players. They assumed hospitals would compete for government dollars by lowering prices but the governmental guarantee actually caused all providers to raise prices in almost a collusion like manner

This is a long conjecture but I'm guessing insurers are assuming if families can't afford it they'll be subsidized by the government or at least the government will do something about it even if it's not explicitly guaranteed
post #437 of 739
Another slight doubling of the deductible (that would be a quadrupling, I believe), but at least I can get name-brand birth control pills completely for free!
post #438 of 739
Quote:
Originally Posted by indesertum View Post

Everybody knew the rates were going to go up in the short term. There's a few new taxes on a few industries but it accounts for a tiny percentage. I've seen the numbers. Rates are supposed to drop down in the long term due to greater visibility and competition

I think they didn't foresee that everybody would raise their premiums as insurance against the future. Insurance companies industry wide are being super conservative and assuming the market can deal with it (although in some cases they're leaving markets). This also means rates should drop down in the near future once the market stabilizes and insurance companies have more data and see that the lack of demand at those prices aren't sustainable but it's possible prices will stay up if it turns out Americans can afford it despite the complaining

Pretty much exactly the same thing happened when they introduced Medicare although with different players. They assumed hospitals would compete for government dollars by lowering prices but the governmental guarantee actually caused all providers to raise prices in almost a collusion like manner

This is a long conjecture but I'm guessing insurers are assuming if families can't afford it they'll be subsidized by the government or at least the government will do something about it even if it's not explicitly guaranteed

How in the hell could "they" not foresee it? I mean I'm a fucking idiot and I said it here years ago, and gave as one of my reasons, insurance companies would be conservative in setting rates. Seriously, is Obama & Co. are the best the US has we're fucked.
post #439 of 739
Quote:
Originally Posted by harvey_birdman View Post

But there are Top Men on this. How could it go wrong?

Who?
post #440 of 739
I think it was reasonable to expect some companies would raise premiums to this level but I don't think it was foreseeable that pretty much the entire industry would raise to this level. They clearly knew all companies would raise premiums a bit to account for new taxes but didn't forsee all companies being super conservative. When you see your competitor raising prices to a level where theyre losing customers wouldn't a good way to exploit that be by offering something at a lower price? But if all companies raises their prices none of that will happen.

I think one of the hopes were that companies would innovate to find new ways to improve their margins in order to compete for customers instead of simply raising prices. Clearly this did not happen and companies aren't smart enough to look longer term

Also the one thing people don't understand is that obamacare sets a standard for health insurance. A lot of the ways insurance companies used to be able to use to get profit is now illegal. This translates into greater up front costs in the form of premiums. And I'm not just talking about deductibles. In other words a lot of the hidden costs of your health insurance is now being moved up front in terms of premiums.

People just look at premiums and think of it as the bottom line but premiums were only a part of how you paid for your medical care.
post #441 of 739
Quote:
Originally Posted by indesertum View Post

I think it was reasonable to expect some companies would raise premiums to this level but I don't think it was foreseeable that pretty much the entire industry would raise to this level. They clearly knew all companies would raise premiums a bit to account for new taxes but didn't forsee all companies being super conservative. When you see your competitor raising prices to a level where theyre losing customers wouldn't a good way to exploit that be by offering something at a lower price? But if all companies raises their prices none of that will happen.

I think one of the hopes were that companies would innovate to find new ways to improve their margins in order to compete for customers instead of simply raising prices. Clearly this did not happen and companies aren't smart enough to look longer term

Also the one thing people don't understand is that obamacare sets a standard for health insurance. A lot of the ways insurance companies used to be able to use to get profit is now illegal. This translates into greater up front costs in the form of premiums. And I'm not just talking about deductibles. In other words a lot of the hidden costs of your health insurance is now being moved up front in terms of premiums.

People just look at premiums and think of it as the bottom line but premiums were only a part of how you paid for your medical care.

How could you not foresee massive rate increase? After this year, they are limited by how much they can raise rates. This means the actuaries who were unsure about the costs would rather err on the side of caution and make rates higher especially seeing they will be required to cover more things in the future.

I'm not an expert like Pio is, and I'm sure he can go more in depth; however, there were a lot of people warning of this since the debate on the bill started.
post #442 of 739
Read what I goddamn wrote. I said it wasn't foreseen the entire industry would react with massive rates. Some companies will be super conservative others would be less so to exploit the void left behind by the former. This will probably still happen but not in the extreme short term

The other thing is they foresaw a lot more people signing up for the exchanges to pad companies bottom lines. That hasn't happened and premiums for everybody went up.
post #443 of 739
Quote:
Originally Posted by indesertum View Post

Read what I goddamn wrote. I said it wasn't foreseen the entire industry would react with massive rates.

I'm sorry but it was foreseen. Team Unicorn just did not want to believe it.

Also, insurance has always had "standards." You know that so to present it as this is a new thing is wrong.

Quote:
Originally Posted by indesertum View Post

I think one of the hopes were that companies would innovate to find new ways to improve their margins in order to compete for customers instead of simply raising prices.

This is meaningless. The ACA requires 80% of all premiums to be used on medical care and the rest rebated. To be clear the small and mid group market has to rebate MLR under 80% and large group MLR must be at least 85%.

As I admit I'm an idiot, here's the idiots at CMS: http://www.cms.gov/CCIIO/Programs-and-Initiatives/Health-Insurance-Market-Reforms/Medical-Loss-Ratio.html
post #444 of 739
IMO it was foreseen but not to this level and this widespread. For example nobody saw the hiccup with the exchanges coming when this was put out and nobody saw the rise of premiums from this.

You mean standards like a statewide risk pool and not being able to raise premiums due to claims history, health status and the like right?

I think the mlr requirement is somewhat stupid because in principle it favors large corporations over smaller ones (which will probably lead to more consolidation despite the stricter rule for larger corporations) but that's not what I was talking about. Part of the hope was insurance companies would innovate and reduce things like administration costs in order to charge less premiums to be competitive in the stricter market place instead of simply raising premiums. Some companies already market their 90% mlr rates and things like that. Also from what I remember these figures were supposed to be more apparent and guide customers in choosing plans.

I think I get what you're saying but your statement is a little misleading when you said the rest rebated. Fwiu companies rebate the amount under the 80% line. In other words if they use say 70% of the premiums they have to rebate whatever is necessary to get them to 80%
post #445 of 739
Thread Starter 
What do you mean? None of the problems were unforeseen, and to suggest they were is ridiculous. Hell, this thread started before the damn thing was passed.
post #446 of 739
Yes, as I said, companies must rebate any amount under the benchmark MLR. You had talked about increasing efficiencies on margins and thereby Team Unicorn figured lower rates and you said you believe companies are stupid for not taking the long view by doing this. As I said that is a meaningless thought as margins have been capped at a theoretical 20%, and one could only reach that, with 0% administrative costs. Basically they've removed incentive.

Actually, I think a way to game the system, would be to increase MLR costs. While you still have your cap of 20% maximum obviously 20% of $5 billion is more than 20% of $1 billion, so even though your % is capped your raw dollars can increase. If this happens remember you heard it here first. FWIW the behaviour of utility companies under the Averch-Johnson Effect made me think of this where a padded MLR is congruous with over capitalization.
post #447 of 739
Thread Starter 
Quote:
Originally Posted by Artisan Fan View Post

Wellpoint, one of my clients, did a study and estimated some premiums could triple under the new plan.

Just bumping this in memory of the much missed, and much maligned, Artisan Fan.
post #448 of 739
Quote:
Originally Posted by Piobaire View Post

Well, don't forget this article from from November of 2009. I think we can answer the question at this point of, "What really happened in the first years of Obamacare?" We all know premiums have jumped drastically and much/most of it was due to requirements being implemented under Obamacare. We now have insurance companies telling us what their planned premium intentions are for 2014. We now know Medicare had the rates for many providers cut but up to 20% on October 1, 2011. We now know Obama is talking about more Medicare cuts, many insurance products will no longer be offered in 2014, and the exchanges are kind of a crap shoot at this moment.
post #449 of 739
Quote:
Originally Posted by itsstillmatt View Post

Quote:
Originally Posted by Artisan Fan View Post

Wellpoint, one of my clients, did a study and estimated some premiums could triple under the new plan.

Just bumping this in memory of the much missed, and much maligned, Artisan Fan.

Thanks Matt. How is everyone doing?

Interesting enough I just completed a three month strategy project for a major Blue Cross Blue Shield and they are losing money on individual plans which is common. If not for the commercial side, they would lose money and they make less than 2% in net profit anyway.
post #450 of 739
Quote:
Originally Posted by suited View Post

We're getting hit with a big increase and consequently our employer dropped their contribution to our HSA plan. About 1/3 of the company was in the room at the time when the rep explained how the ACA affected our costs. There were 3-4 people in there that voted for Obama and also have the HSA plan - the look on their faces was memorable.

There should be a meme of this.
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