ACA/Obamacare: Largest US Private Health Insurer Has Second Thoughts About On-Exchange Offerings

‘According to enrollment data, more than 500,000 Americans using the exchanges purchased plans from UnitedHealthcare. Those consumers will have to purchase new plans in 2017 should the insurance company leave the exchanges, Ed Haislmaier, a health policy expert at The Heritage Foundation, told The Daily Signal.

“What we’re seeing is that insurers are re-evaluating whether this is a good market to go into,” he said. “Some are expanding; others are having problems, and they pulled back. Over time, what you’ll probably see is fewer insurers offering coverage in the exchanges. We’re already seeing that, even though United expanded in 2015 and 2016, insurers offering coverage is down. It’s going to take a few years to play out.”

Compared to its competitors, UnitedHealthcare was slow to offer products on the exchange when Obamacare first went into effect in October 2013 and sold plans in just four states—Colorado, Maryland, Nevada, and New York—in 2014, according to the state-run exchanges and federal exchange, HealthCare.gov.

However, the insurer expanded its exchange coverage substantially in 2015 and 2016, selling plans in 22 states during the 2015 open enrollment period and 34 states during this year’s open enrollment period.

Competitors Aetna and Humana, by comparison, are offering coverage on the exchanges in 15 states.

Haislmaier said that insurers like UnitedHealthcare may not have prepared for how much plans sold on the exchanges would cost them.

“What you’re seeing is the market itself, and this is attributable to Obamacare, is turning out to be a market that’s predominately low-income individuals between 100 to 200 percent of the poverty line,” Haislmaier said. “They’re buying coverage, getting a substantial subsidy, but gravitating toward the low cost-sharing plans where they get extra subsidies. The enrollees have more of an incentive to use more health care, and that makes those plans more expensive [for the insurer].”

For insurers to profit from the coverage offered on the exchanges, Haislmaier said, they must narrow networks or raise prices, both of which impact consumers.

“The ones who have not narrowed the networks or have been behind the curve on pricing are having losses and reevaluating participation,” he said.’ - How Obamacare Could Limit Insurance Options for Americans in These 34 States, daily signal.com, 11/25/2015

Despite ACA/Obamacare Claims, Health Insurance Premium Increases March On

“It’s been five years since the Affordable Care Act became law, but only two since most of its provisions went into effect. As its detractors predicted, the ACA’s implementation led to a large, immediate rise in health insurance premiums. This is hardly surprising: The law required that a broad swath of treatments be fully insured, thus deepening the moral hazard problems that have long plagued the American health insurance system.

Heritage Foundation microsimulation analysis of the 2015 health insurance offerings on the ACA exchanges found that the sharp 2014 price spike was not reversed. The average health insurance premium rose by 5% this year, much higher than the rate of inflation. But that increase is modest compared to the massive increase in non-group health insurance rates in 2014, which was around 50% on average, with some consumers facing much worse rate jumps.“ - ACA Has Pushed Insurance Premiums to New Heights, WSJ, 03/30/2015

Link to the entire article appears below:

http://blogs.wsj.com/washwire/2015/03/30/aca-has-pushed-insurance-premiums-to-new-heights/

ACA/Obamacare: The National Health-Care Spending Level is Politically Bad, Until It's Politically Good. Huh?

"A slew of new reports suggest that health care costs are growing faster – and the White House says that's actually good news.

To them, more medical spending is proof that Obamacare is working: more people are getting health insurance, so they're using more medical care.

Most of the data – both from the federal government and private research firms – shows that health care costs are rising because people are using more medical services. At the same time, health care prices – how much a hospital charges for a knee replacement, for example, or an MRI – are growing slowly." - White House: More health spending means Obamacare is working, vox.com, 04/30/2014

Link to the entire article appears below:

http://www.vox.com/2014/4/30/5668646/the-upside-of-faster-health-care-growth

 

The Socialized Medicine Scheme: The "sales pitch" of low out of pocket costs

The current Socialized Medicine schemes being presented are being "pitched" as having very limited out-of-pocket costs. You have likely heard President Obama mention the low out-of-pocket costs in his Socialized Medicine stump speeches.

The four components that likely need explained regarding out-of-pocket costs, in a general sense, are:

(1) Doctor Office Co-Pays: the insured must make a payment, representing a portion of the total payment, at the point of service at the Doctor's Office. Generally, the covered event is the Doctor's charge and any basic tests that can be accomplished in the Doctor's facility. Typical Co-Pays are $25, $50, and $100,

(2) Out Patient Prescription Drug Co-Pays: the insured pays a portion of the prescription price based on a sliding scale. For example, a co-pay of $10 for generic drugs, $50 for named brands (many sliding scales exist),

(3) Major Medical Deductible: the amount of money the insured must absorb before coverage begins for those covered items not mentioned in (1) and (2) above.

(4) Major Medical C0-Insurance: after the Major Medical Deductible is satisfied, the insured participates in the further eligible charges over a specified range. For example, the insurer pays 80% of eligible charges and the insured pays 20% of eligible charges over the next $10,000 of charges after the deductible is satisfied. Stop Loss is the maximum amount the insured must pay under the co-insurance arrangement. In the example above, 20% of $10,000 is $2,000 which is Stop Loss.

Beyond all the other short comings of the Socialized Medicine Scheme discussed previously (see links below), attempting to "sell" a Socialized Medicine Scheme based on low-loss-cost -participation by the insured merely makes the Plan Cost much more expensive.

Think of it this way, as a sales pitch, having to pay very little out-of-pocket sounds great. However, the less the insured participates in the loss, means the more the insurer participates in the loss. The more loss exposure the insurer is faced with, the higher the premium.

The sales pitch of low out-of-pocket costs, like any "sales pitch", omits the remainder of the story. The remainder of the story is that low out-of-pocket costs translates into very high premium costs.

However, the premium cost story gets much uglier. Low out-of-pocket cost which translates into high initial premium cost becomes a cascading price spiral. Why? The low out-of-pocket costs further translates into over utilization. That is, with very little to be paid out-of-pocket, the insured is more apt to seek services. The more services used means more losses incurred meaning premiums must rise to cover the increased losses.

Further, the increasing cost spiral gets fueled by another aspect. Say premium "x" is charged for a low out-of-pocket plan. In a Socialized Medicine Scheme many individuals receive subsidized premiums. Hence certain insureds pay x -subsidy = y premium. These individuals not only have low out-of-pocket costs, they have low premiums due to the subsidy. Low out-of-pocket costs coupled with low subsidized premium generally escalates over utilization and hence more upward premium pressure.

The escalating price spiral receives even more fuel due to "forced participation". Consider those individuals forced to participate in the plan, who previously did not want to buy health insurance for any variety of reasons. These new "forced insureds" find the cost a burden. They also see the cost being forced upon them as a cost they need to recoup. The mind set becomes: if I have to pay "x" premium then I'll get "x" amount of services, further creating over utilization which further drives the price spiral.

As the Premium Price Spirals upwards, the sales pitch becomes "switch the pitch". Suddenly Co-Pays, Deductibles, etc., are raised to lower utilization rates to decrease the rate of the increasing price spiral.

However, these increased Co-Pays, Deductibles then become a situation argued as "fairness". That is, lower income participants complain they can not access the system due to high out-of-pocket costs. These participants want the Government to subsidize their Co-Pays and Deductibles.

Beyond the escalating price spiral brought to you by a Socialized Medicine Scheme, the "sales pitch" of everyone with low out-of-pocket costs is painting each risk with the same paint brush. That is, needs based insurance planning is being supplanted by a sales pitch. The Private Sector has long known that each individual has differing needs. Hence the plan discussed for each Individual Risk is an attempt to meet the Risk's (insured) need. For example, the multi millionaire can self insure, the self employed single carpenter who is 35 years old wants a high deductible catastrophe plan, the business with young middle income workers in their family years needs group coverage that includes wellness coverage, and so on.

Links:

http://thelastembassy.blogspot.com/2009/09/socialized-medicine-pricing-scheme.html

http://thelastembassy.blogspot.com/2009/08/socialized-medicine-price-distortions.html

http://thelastembassy.blogspot.com/2009/08/socialized-medicine-decisions-on-cost.html

http://thelastembassy.blogspot.com/2009/08/obamacare-cascading-rationing.html