“Oregon has received the Obama administration’s approval for a 30-day extension of its Obamacare exchange’s open enrollment period, officials announced Wednesday.
State officials had requested the federal government’s approval for the extension, which has come the day after news broke that the Obama administration will be extending its own deadline for exchange enrollment for anyone who claims they began their application prior to March 31.
Oregon’s exchange, however, qualifies for an even wider extension because its marketplace has experienced possible the worst technological problems of any state. With five days left before open enrollment was supposed to close, Oregon still has no website available for individuals to enroll in health insurance online.”
“The state’s embattled exchange crashed in October and officials are still unable to get it back up and running. Officials shifted the marketplace’s focus to paper applications in November and have since been able to sign up 52,000 for private health plans, but online enrollment still isn’t possible.
A recent private investigation into how Oregon’s exchange was so severely mismanaged discovered massive internal conflict which prevented the exchange from being effectively built, including “ineffective” and “at times contentious” communications between agencies.
So far, the top tech official in charge of creating the website and two successive directors of the exchange have all been forced to resign. The website’s primary contractor, Oracle, has not yet been fired, but Cover Oregon is withholding $25.6 million of contract and has reserved the right to sue the company over payments already issued.
After requests from federal Oregon lawmakers, the General Accountability Office will audit Cover Oregon’s website operations. The exchange spent over $300 million on the website and received several early innovator grants as one of Obamacare’s first supporters.” - Oregon Obamacare exchange gets month-long enrollment delay, daily caller.com, 03/26/2014
Link to entire article appears below:
http://dailycaller.com/2014/03/26/oregon-obamacare-exchange-gets-month-long-enrollment-delay/
“Internet heavyweight Matt Drudge has angered the White House for saying that he’s just paid his Obamacare tax for 2014 in his quarterly estimates.
On Twitter, he declared in a March 21 post, "Just paid the Obamacare penalty for not 'getting covered'...I'M CALLING IT A LIBERTY TAX!"
According to Investors.com, 22 minutes later, White House spokesman Jesse Lee hit back with a tweet saying, "Flat lie. No fee for previous year."
Drudge, who runs the online Drudge Report, is attempting to make the point that the owners of small businesses like him have to pay their estimated quarterly taxes during 2014 with any outstanding taxes being paid by April 15, 2015.
In his case, Drudge has decided to opt out of the individual mandate that he sign up for health insurance or pay the penalty, or tax, for not enrolling. Drudge is paying the tax now instead of waiting for April of next year when he could pay an IRS fine for not filling out his quarterly taxes correctly.
His tweet was also attacked by The Washington Post’s Plum Line blog. "Drudge proudly tells the world he paid the penalty for not having health coverage, which he has termed the 'liberty tax'," according to the blog. "Which is odd, because no one has to pay the penalty until they file their 2014 tax returns in April 2015."
Drudge followed up his message with another tweet, saying, "Dazed team Obama media reporters think Opt-Out tax 'year away'? Not for small businesses that file Qtr estimates. We're there now, baby."
Investors.com quoted the IRS website to prove that Drudge was correct in paying his Obamacare "opt-out" tax this year. "As a self-employed individual, generally you are required to file an annual return and pay estimated tax quarterly," the IRS site says.
And the report noted that the IRS form (1040-ES) for estimating quarterly taxes specifically recommends adding the mandate penalty to line 12 for "other taxes" — to pay before the first quarterly deadline of April 15.” - Drudge Angers White House by Paying Obamacare Penalty Early, Newsmax, 03/25/2014.
"As a self-employed individual, generally you are required to file an annual return and pay estimated tax quarterly," the IRS website states.
IRS form (1040-ES) for estimating quarterly taxes specifically recommends adding the mandate penalty to line 12 for "other taxes" — to pay before the first quarterly deadline of April 15.
"It is true that thousands of small businesses will be forced to pay ObamaCare taxes quarterly in 2014," a Senate Budget Committee aide told Breitbart News on Friday afternoon." - Drudge Exposes Another ObamaCare Lie, Pays 'Liberty Tax', Investors Business Daily, 03/24/2014
Link to the entire articles appears below:
http://www.newsmax.com/Newsfront/Matt-Drudge-Obamacare-healthcare-penalty/2014/03/25/id/561523/?ns_mail_uid=11826812&ns_mail_job=1561657_03252014&promo_code=16EAF-1
http://news.investors.com/ibd-editorials-obama-care/032414-694425-matt-drudge-pays-obamacare-liberty-tax.htm
"MIAMI (AP) — Breast cancer survivor Ginny Mason was thrilled to get health coverage under the Affordable Care Act despite her pre-existing condition. But when she realized her arthritis medication fell under a particularly costly tier of her plan, she was forced to switch to another brand.
Under the plan, her Celebrex would have cost $648 a month until she met her $1,500 prescription deductible, followed by an $85 monthly co-pay.
Mason is one of the many Americans with serious illnesses — including cancer, multiple sclerosis and rheumatoid arthritis — who are indeed finding relatively low monthly premiums under President Barack Obama's law. But some have been shocked at how much their prescriptions are costing as insurers are sorting drug prices into a complex tier system and in some cases charging co-insurance rates as high as 50 percent. That can leave patients on the hook for thousands.
"I was grateful for the Affordable Care Act because it didn't turn me down but ... it's like where's the affordable on this one," said Mason, a 61-year-old from West Lafayette, Indiana who currently pays an $800 monthly premium". - Obamacare plans bring hefty fees for certain drugs, Yahoo news, 03/22/2014
Link to the entire article appears below:
http://news.yahoo.com/obamacare-plans-bring-hefty-fees-certain-drugs-154823920.html
“Republican leaders are making preposterous assertions that President Obama has abandoned a centerpiece of his health care reforms — the requirement that most people obtain comprehensive health insurance or pay a penalty.
In a cartoonish misrepresentation of how so-called hardship exemptions will be determined, the leaders, egged on by their allies in the conservative media, contend that recent steps by the Obama administration under-mine the individual mandate by giving virtually everyone who wants one a free pass to escape the penalty.
These steps are modest midcourse corrections to deal with individual problems in the rollout of a large and complex program. As long as the state and federal officials in charge proceed judiciously, the public will benefit.
The Republicans note, correctly, that some people may qualify for an exemption if their insurance was canceled and they can’t find affordable plans in the insurance market-places. But it’s not enough for applicants to simply say they cannot find an affordable policy; getting an exemption requires them to jump through all sorts of hoops.
Besides submitting a copy of the cancellation notice, applicants must fill out a nine-page form, under penalty of perjury, that requires information for everyone in the family about income, employment and any job-related health insurance. In addition, there is no certainty that an application will be approved. That judgment of the applications will be made by the federal and state officials who run the marketplaces. We hope and expect that they will award exemptions judiciously, rejecting applicants who make willful efforts to evade the law and approving those who made good faith efforts to find affordable health insurance policies.
Republicans also point to a catchall category that says that people may be eligible for an exemption if they “experienced another hardship in obtaining health insurance,” such as, perhaps, difficulty completing enrollment through balky websites.
They must submit documentation “if possible.” But applicants who fail to document their case will only weaken their chances of getting an exemption. As always, the insurance exchange officials will make the final judgment and, we assume, reject specious claims.”
- Health Care Caricature, New York Times, Editorial Board, 03/22/2014 (1)
One must ask oneself: Is it indeed a caricature or is the assertion by Republicans accurate?
To figure out the competing views one first needs to review a recent Wall Street Journal article: ObamaCare's Secret Mandate Exemption HHS quietly repeals the individual purchase rule for two more years, Wall Street Journal, 03/12/2014. Link to article appears directly below:
http://online.wsj.com/news/articles/SB10001424052702304250204579433312607325596#printMode
Within the Wall Street Journal article appears this passage:
“This lax standard—no formula or hard test beyond a person's belief—at least ostensibly requires proof such as an insurer termination notice. But people can also qualify for hardships for the unspecified nonreason that "you experienced another hardship in obtaining health insurance," which only requires "documentation if possible." And yet another waiver is available to those who say they are merely unable to afford coverage, regardless of their prior insurance. In a word, these shifting legal benchmarks offer an exemption to everyone who conceivably wants one.”
Looking into the passage above requires the following steps:
(1) Department Of Health & Human Services, 12/19/2013
Options Available for Consumers with Cancelled Policies
http://www.cms.gov/CCIIO/Resources/Regulations-and-Guidance/Downloads/cancellation-consumer-options-12-19-2013.pdf
(1a) Scroll down to “hardship exemption form” and click the hyper link which leads you to…….
(2) Hardship Categories and Documentation
http://marketplace.cms.gov/getofficialresources/publications-and-articles/hardship-exemption.pdf
(2a) Now scroll down the form to hardship category #14. The fourteenth exemption category reads as follows: “You experienced another hardship in obtaining health insurance”. The required documentation for this particular hardship is described as: “Please submit documentation if possible.”
If one views individuals as intelligent, self-interested and very creative it is not hard to conceive hardship case #14 being utilized to a great degree. Further, as exemption #14 becomes more widely disseminated information among individuals hardship case #14 will likely be utilized in a fashion of increasing at an increasing rate.
Caricature or real information that can be utilized? Looks pretty real.
Notes:
(1) Health Care Caricature, New York Times, Editorial Board, 03/21/2014
http://www.nytimes.com/2014/03/22/opinion/health-care-caricature.html?hp&rref=opinion&_r=0
“Health industry officials say ObamaCare-related premiums will double in some parts of the country, countering claims recently made by the administration.
The expected rate hikes will be announced in the coming months amid an intense election year, when control of the Senate is up for grabs. The sticker shock would likely bolster the GOP’s prospects in November and hamper ObamaCare insurance enrollment efforts in 2015.
The industry complaints come less than a week after Health and Human Services (HHS) Secretary Kathleen Sibelius sought to downplay concerns about rising premiums in the healthcare sector. She told lawmakers rates would increase in 2015 but grow more slowly than in the past.
“The increases are far less significant than what they were prior to the Affordable Care Act,” the secretary said in testimony before the House Ways and Means Committee.
Her comment baffled insurance officials, who said it runs counter to the industry’s consensus about next year.
“It’s pretty shortsighted because I think everybody knows that the way the exchange has rolled out … is going to lead to higher costs,” said one senior insurance executive who requested anonymity.
The insurance official, who hails from a populous swing state, said his company expects to triple its rates next year on the ObamaCare exchange.
The hikes are expected to vary substantially by region, state and carrier.
Areas of the country with older, sicker or smaller populations are likely to be hit hardest, while others might not see substantial increases at all.” - O-Care premiums to skyrocket, thehill.com, 03/19/2014
Link to the entire article appears below:
http://thehill.com/blogs/healthwatch/health-reform-implementation/201136-obamacare-premiums-are-about-to-skyrocket
‘One in three Americans who lack health coverage plan to remain uninsured, citing cost as their chief obstacle, according to Bankrate's latest Health Insurance Pulse survey.
Fewer than a third (30 percent) of the uninsured realize that federal tax credits available through the new Obamacare health exchanges can make health insurance affordable to lower-income individuals and families.
In a telephone survey of uninsured adults drawn from a nationally representative sample of more than 3,000 Americans, one-third (34 percent) said they intend to continue without health coverage. When asked why, 41 percent said health insurance is too expensive, 17 percent cited opposition to the Affordable Care Act, and 13 percent said they're healthy and don't need coverage.
Just over half (56 percent) of the uninsured said they plan to obtain health coverage.
If a late January Pulse survey demonstrated how familiar the overall population is with health reform penalties and deadlines that won't affect most Americans, this first Bankrate.com survey directed specifically at uninsured adults suggests that efforts to reach those most in need of affordable coverage may have fallen short.
"It's hard to generalize, but for some of these folks, it's a case of, 'I'm in pretty good health, I don't think about these things, I know I can't afford it now,'" says Michael Morrisey, professor of health economics at the University of Alabama at Birmingham School of Public Health. "I think it's just rolling past them, and they're not giving it a whole lot of attention." ‘ - Many uninsured still unaware about Obamacare, bankrate.com, 03/17/2014
Link to the entire article appears below:
http://www.bankrate.com/finance/insurance/health-insurance-poll-0314.aspx?ic_id=Top_Financial News Center_link_1
Update: Uninsured: Obamacare Is Unaffordable, American Spectator
http://spectator.org/articles/58149/uninsured-obamacare-unaffordable
“To understand both why the employer mandate needs fixing and what should be done, it helps to look at the data.”
“Among private industries where pay averages up to about $14.50 an hour, 30 million workers clocked the shortest average workweek on record in November — 27.45 hours — before a further drop in December and January that was at least partly weather-related.
On a net basis, the 644,000 non-management jobs added in these low-wage industries in 2013 through November averaged just 17.9 hours per week.
These grim data points suggest that too-few work hours, as well as low pay, should be part of the conversation on reducing inequality.
Yet these trends have been ignored, ironically, because of growing inequality in work hours. Because the rest of the private sector (managers and higher-paying industries) is clocking a longer average workweek than before the recession, making workforce-wide data look benign, economists haven't noticed that low-wage work hours are shorter, on average, than they were at the depth of the recession. (see two recoveries chart)
An honest discussion over ObamaCare's part-time effect must start with the recognition that something is seriously depressing the hours of low-wage workers.
Correlation — the drop in the low-wage workweek just as low-wage employers had a significant new incentive to cut work hours — does not prove causation. But there is other evidence also pointing to ObamaCare as a principal factor.
Anecdotes of employers cutting work hours to minimize ObamaCare fines have piled up in an array of industry groups where the workweek has been shrinking. Relative to the start of 2013, average weekly hours in November were down 1.2% at limited-service restaurants; 1.4% at supermarkets; 1.5% at clothing stores; 2.1% among providers of home care services to the elderly and disabled; 4.1% at sporting goods, book, music and hobby stores; 4.5% at home-center stores; and 4.9% at general merchandise stores.
The White House has said that a good way to test for an ObamaCare effect on work hours is the ratio of workers usually clocking 31- to 34-hour weeks vs. the number putting in 25- to 29-hour weeks. If that ratio were stable, it would be a sign that employers weren't adjusting work hours below the 30-hour mark. But in the fourth quarter of 2013, this White House-endorsed ratio fell to a 13-year low of 0.6, down 15% from a year earlier.
Predictably, that decline was concentrated in the low-wage segment. Among workers earning $7.25 to $10 an hour, this ratio of workers clocking just above ObamaCare's full-time threshold vs. those just below it sank 24% from the fourth quarter of 2012.
The claim that all job gains in 2013 were part-time was hogwash, but that does appear to have been the case among workers earning within a few dollars of the minimum wage.
An analysis of usual-hours-worked data suggests that all net new jobs in 2013 among hourly wage earners making $7.25 to $10 an hour had workweeks below 30 hours. (See article and accompanying note.)
While the more reliable workweek data from the establishment survey turned lower in the spring, the weakness in the household workweek data didn't become really obvious until the fourth quarter. But such a lag is largely to be expected, because the household survey instructions define "usual" as at least 50% of the time over the prior four or five months.
Because the establishment survey workweek data are telling a similar story, it's much less likely that the more volatile household survey hours-worked data are sending a false signal.
After another month or two of data that aren't infected by bad weather, it should be beyond dispute that ObamaCare's impact on low-wage workers is significant. The question, then, will be what to do about it.” - Fixing ObamaCare Employer Mandate For Low-Wage Workers, Investors Business Daily, 03/13/2014
Link to the entire article appears below:
http://news.investors.com/blogs-capital-hill/031314-693091-fixing-obamacare-employer-mandate-to-ease-hours-impact.htm
“ObamaCare's implementers continue to roam the battlefield and shoot their own wounded, and the latest casualty is the core of the Affordable Care Act—the individual mandate. To wit, last week the Administration quietly excused millions of people from the requirement to purchase health insurance or else pay a tax penalty.
This latest political reconstruction has received zero media notice, and the Health and Human Services Department didn't think the details were worth discussing in a conference call, press materials or fact sheet. Instead, the mandate suspension was buried in an unrelated rule that was meant to preserve some health plans that don't comply with ObamaCare benefit and redistribution mandates. Our sources only noticed the change this week.
That seven-page technical bulletin includes a paragraph and footnote that casually mention that a rule in a separate December 2013 bulletin would be extended for two more years, until 2016. Lo and behold, it turns out this second rule, which was supposed to last for only a year, allows Americans whose coverage was cancelled to opt out of the mandate altogether.
In 2013, HHS decided that ObamaCare's wave of policy terminations qualified as a "hardship" that entitled people to a special type of coverage designed for people under age 30 or a mandate exemption. HHS originally defined and reserved hardship exemptions for the truly down and out such as battered women, the evicted and bankrupts.
But amid the post-rollout political backlash, last week the agency created a new category: Now all you need to do is fill out a form attesting that your plan was cancelled and that you "believe that the plan options available in the [ObamaCare] Marketplace in your area are more expensive than your cancelled health insurance policy" or "you consider other available policies unaffordable."
This lax standard—no formula or hard test beyond a person's belief—at least ostensibly requires proof such as an insurer termination notice. But people can also qualify for hardships for the unspecified nonreason that "you experienced another hardship in obtaining health insurance," which only requires "documentation if possible." And yet another waiver is available to those who say they are merely unable to afford coverage, regardless of their prior insurance. In a word, these shifting legal benchmarks offer an exemption to everyone who conceivably wants one.” - ObamaCare's Secret Mandate Exemption HHS quietly repeals the individual purchase rule for two more years, Wall Street Journal, 03/12/2014
Link to the entire article appears below:
http://online.wsj.com/news/articles/SB10001424052702304250204579433312607325596#printMode
Update: Psst! Obamacare Mandate Delayed Again — Quietly. newsmax.com, 03/12/2014
http://www.newsmax.com/Newsfront/Obamacare-mandate-delay-2016/2014/03/12/id/559228/?ns_mail_uid=11826812&ns_mail_job=1559875_03132014&promo_code=16C52-1
“A supposedly temporary “fix” that President Obama announced in November to address the problem of the millions of Americans who lost coverage as a result of his health care law has now been extended through Oct. 1, 2016, the Department of Health and Human Services announced Wednesday.
In an attempt to limit the disruption to the insurance industry that would be caused by the move, HHS also announced that the “risk corridor” program (which has been described as a “bailout” to insurers) would be further modified to funnel more money to insurers in states affected by the change.” - HHS extends 'fix' for plans cancelled due to Obamacare through October 2016, alters bailout to insurers, Washington examiner.com, 03/05/2016
Mr. Obama has delayed, modified and/or removed thirty seven ACA/Obamacare legislative regulations during the very brief history of ACA. Upon normal occasion and in the main, the legislative regulations being tinkered with represent a tinkering related to tax increases to many households and many firms. Stated alternatively, the tinkering merely delays an inevitable tax increase of one sort or the other associated with ACA.
Given the tax delay theme, one might be well served to examine Andrew Mellon and Art Laffer and their proposition of the reverse phenomena: tax cuts. Supply-side economics stresses that tax cuts need to be either permanent or with a long tax time horizon e.g. ten years. How so? (1)
Temporary tax cuts of short duration, as argued by supply-side advocates, merely become saved as the individual or firm realizes the tax is soon to return hence they save their money for the inevitable tax increase. Stated alternatively, temporary tax cuts of short duration create a behavior completely different than tax cuts of either a permanent nature or with a long tax time horizon nature.
Supply-side’s proposition is that the individual or firm faced with a tax decrease of a permanent or long tax time horizon will exhibit behavior differently as uncertainty is reduced or removed [permanent or long-term tax decrease] and the additional resources available will be spent, saved or invested in a longer term fashion.
Also, supply-side tax cuts are generally put forth as an across-the-board tax reduction. That all income strata receives tax relief. That each income strata is a player and interacts in ways with other income strata and hence an equal across-the-board tax reduction interacts in that it aids the role of the income strata in question i.e. particular strata acting the part of consumption, saving and investing. Hence particular income strata aid private capital formation while others are more attune to consumption yet the two interact.
Conversely, Obamacare tax increases are a hodgepodge of differing taxes impacting different income strata in differing fashions. Will differing income strata impacted differently cause a cascade of unintended consequences e.g. private capital formation declines while consumption declines too? Will the two declines interact creating cascading unintended consequences?
The short-term nature of the delayed tax increase likely causes many to merely save resources in order to meet the new higher price related to the rising tax tide which has merely been delayed.
Returning to the thirty seven Obamacare delays with the delays merely extending short-term relief from the inevitable tax increase, then what sort of behavior would households and firms exhibit given the supply-side discussion above? Households and firms would be predicted to save their resources for the inevitable tax increase.
Moreover the amount of tinkering and variety of tinkering raises a question of uncertainty. The thirty seven delayed, modified and/or removed items leaves households and firms very uncertain about “what’s next”. Will all thirty seven be reinstituted tomorrow? Next week? Delays are further modified? Modifications are further modified? Taxes are changed upward or downward? Does the environment of uncertainty fostered delay, terminate or otherwise effect consumer and investor behavior? Further, the uncertainty is dictated by the whims of one individual, Mr. Obama. (2)
Link to the Washington Examiner article appears below:
http://washingtonexaminer.com/hhs-extends-fix-for-plans-cancelled-due-to-obamacare-through-october-2016-alters-bailout-to-insurers/article/2545141
Notes:
(1) Taxation, the People’s Business, Andrew W. Mellon, 1924
http://www.amazon.com/Taxation-Business-Andrew-W-Mellon/dp/1483975894/ref=sr_1_1?s=books&ie=UTF8&qid=1394371135&sr=1-1&keywords=taxation+the+people%27s+business
(2) Risk, Uncertainty and Profit, Frank H. Knight, 1921
http://www.amazon.com/Uncertainty-Profit-History-Political-Science/dp/0486447758/ref=sr_1_2?s=books&ie=UTF8&qid=1394371364&sr=1-2&keywords=risk+and+uncertainty
“We often hear of the wailing by climate activists and in the MSM about the huge cost numbers related to weather disasters, as if somehow these numbers are indicative of a trend linkable with ‘climate change’. For example, USA Today’s Doyle Rice reported in 2012 this headline:
Report: Climate change behind rise in weather disasters
The number of natural disasters per year has been rising dramatically on all continents since 1980, but the trend is steepest for North America where countries have been battered by hurricanes, tornadoes, floods, searing heat and drought, a new report says.
The study being released today by Munich Re, the world’s largest reinsurance firm, sees climate change driving the increase and predicts those influences will continue in years ahead, though a number of experts question that conclusion.”
“Of course, any time an insurance company dabbles in science related to losses, you can be sure there’s a motivation other than pure science behind it. Shalini Mohleji and Roger Pielke Jr. thought this was worth examining to see if it such claims held up, and it turns out, they don’t.”
“The new paper:
Reconciliation of Trends in Global and Regional Economic Losses from Weather Events: 1980–2008, Shalini Mohleji and Roger Pielke Jr.”
“We find that global losses increased at a rate of $3.1 billion/year (2008 USD) from 1980–2008 and losses from North American, Asian, European, and Australian storms and floods account for 97% of the increase. In particular, North American storms, of which U.S. hurricane losses compose the bulk, account for 57% of global economic losses. Longer-term loss trends in these regions can be explained entirely by socioeconomic factors in each region such as increasing wealth, population growth, and increasing development in vulnerable areas. The remaining 3% of the global increase 1980 to 2008 is the result of losses for which regionally based studies have not yet been completed. On climate time scales, societal change is sufficient to explain the increasing costs of disasters at the global level and claims to the contrary are not supported by aggregate loss data from the reinsurance industry.” - Study in weather disasters shows claims of increased damage costs aren’t rooted in climate, but rather, society, WUWT, 02/28/2014
Link to the entire article appears below:
http://wattsupwiththat.com/2014/02/28/study-on-increasing-costs-of-weather-disasters-shows-claims-of-damage-dollars-arent-rooted-in-climate-but-rather-society/
“Insurers are rushing to gather health information from the new customers they won on public marketplaces in a high-stakes outreach effort crucial to their hopes of profiting from the health-care law.
Health plans need to know the health status of those signing up for coverage so they can project whether the costs are likely to outrun the premiums coming in. That information will be critical in figuring out prices for next year, among other things. But, under the law's new rules, enrollees don't have to disclose pre-existing conditions to buy insurance.
Insurers still generally have only early signals, including age and gender, on the four million people who federal regulators say have signed up so far for marketplace coverage. Those details don't paint a full picture of the insurers' potential risk and may even be misleading. That's partly because the young people who sign up for health coverage may be those more likely to have serious medical needs, insurance-industry officials say.
To fill in the blanks, insurers are calling, emailing and writing letters to new enrollees, urging them to divulge information about their conditions, prescriptions and even personal habits, often through online forms called health-risk assessments that have long been used in employer-sponsored wellness programs.” - Health Plans Rush to Size Up New Clients, wsj.com, 02/27/2014
It should be self-evident that the above procedure is not how the insurance mechanism works. An insurer is not in the business of guessing what risk aspects are associated with particular risks and guessing a price. Rather, the insurer measures the risk first then assigns a price to insure the risk. For example, beach front property in Myrtle Beach, SC represents a different risk and associated price than property located in Billings, Montana.
One can quickly see that the one story brick ranch designed home in Billings, Montana is going to be overcharged to subsidize the beach front frame designed home in Myrtle Beach, SC.
One also needs to pay particular attention to this passage in the article: “That's partly because the young people who sign up for health coverage may be those more likely to have serious medical needs, insurance-industry officials say.” The problem expressed in the passage is that one may well end up with an inordinate amount of beach front property and few homes in Billings, Montana. Better yet, the insurer has no idea how many beach front properties it has acquired. Oops!
Upon further reflection, the passage “That's partly because the young people who sign up for health coverage may be those more likely to have serious medical needs, insurance-industry officials say” points out another possible trend/pattern. How so?
ACA/Obamacare, the supposed design thereof, is predicated on a cross subsidy [the least wealthy and most healthy subsidizing the least healthy and most wealthy] associated with signing up 40% of the insured’s in the category of ages 18 to 34. The current percentage is 25% in the age group 18 to 34. What if the lower than projected sign-up rates, 25% vs. 40%, in age group 18 to 34 is associated with the healthy people in age group 18 to 34 not signing up and the less healthy in age group 18 to 34 signing up?
Stated alternatively, age group 18 to 34 is the prize group in the supposed design of ACA/Obamacare. If the scheme designers can attract 40% of the total risk pool from the 18 to 34 age group everything will supposedly be great and grand and the scheme succeeds. But what if the prized group is not the “young invincibles” of stellar health but rather populated by the "young-vincibles" with non-stellar health that represent a much higher price to insure than the designers imagined? If the prize group, the plum as it were, is in fact populated by the young-vincibles then the cross-subsidy fails and more price pressure is exerted upon the total scheme.
This aspect of the ACA/Obamacare exercise ends as:
(1) the designers of the ACA/Obamacare scheme put much weight on a cross subsidy based on the young subsidizing the old. The scheme is predicated on 40% of the exposure units being in the age group 18-34. The scheme only attracted 25% in the age group 18-34,
(2) the same schemers assumed the exposure units associated with the age group 18-34 group would be, in the main, healthy and with low utilization of health-care and hence health insurance. The assumption is reasonable if one takes the group as a whole. A problem arises when the aspects of "the group as a whole" is supplanted with "the group as a hole",
(3) rather than "young invincibles" populating the 18-34 group, the group is populated by the "young vincibles". That is, rather than the 18-34 group having the health aspects associated with the group as a whole, the group is made up of the less healthy segment of the 18-34 year olds with the more healthy not participating,
(4) the cross subsidy of the young to the old, partially or fully fails in its mission as a subsidy, as the price to insure the actual group of 18-34 attracted to the scheme is much higher than designers imagined as the actual group insured does not exhibit the health aspects of the group as a whole.
Link to the entire Wall Street Journal article appears below:
http://online.wsj.com/news/articles/SB10001424052702304703804579382972774459560?mod=WSJ_business_LeftSecondHighlights&mg=reno64-wsj
