More detail in the article, but I didn’t want to quote too much.
The article is a bit cryptic in describing the exact details of what Rubio’s bill did. But what I gather from the above and the article is that the risk corridors were initially supposed to be revenue neutral and paid from funds collected from the insurers, claims above the corridor turned out to be much much higher than anticipated (due in part to a regulatory decision to allow (mostly healthier) people to keep lower cost plans) and Rubio’s bill blocked the Obama administration from making up the money from other sources.
Considering that the entire point of the article was that the insurers were at risk of not receiving the payments, I would guess that this is not a good “assumption”.
I mean, if you have any actual basis for believing what you’re suggesting is true, by all means trot it out. But just idly speculating that an article in the NYT quoting various important players who know the rules all just missed the boat does not strike me as meaningful.
Exactly. IOW you’re just idly speculating based on nothing at all that maybe a lot of much more knowledgable people don’t know what they’re talking about. Not worth anything.
Thanks for finding this. Our insurance co-op just went out of business since the government didn’t pay it the money it was expecting. If they had received the extra $10 million payment they were on track to pay back their start up loans early. I couldn’t find a one reporting on how the government was able to short pay their obligations like that. It’s funny that not paying that $10 million will end up costing the tax payer $110 million. I wonder how many other stories like that there are and once you account for them whether this actually was a savings.
It’s hard to trust press releases from interested parties. According to a more independent source, while the shortfall in risk-corrider payments may have been the nail in the coffin for that group, the bigger picture is that they were too aggressive on pricing in an effort to build market share, and thus lost money and had no cushion.
Essentially they borrowed a lot of federal money to embark on a strategy that had no room for error, and blew it as a result.
I realize I grabbed a bias cite I was just looking for something quick. Even that article you cited shows that they should have had enough reserves to have another year of similar losses before they went out of business. That doesn’t seem like betting on a strategy with no room for error to me. Pick a strategy and being able to handle two years of failure seems reasonable for a start up. Even the state admitted that they would have certified them if they had received the federal funds promised.
I would bet that they would pay back more of their loans with another year in business then they will going out of business at the end of the month.
why don’t we just set a fixed price for all medical procedures…sorta like the Emperor Diocletian decreed? Example: doctor visit : $100.00, Heart transplant …$100.00. That will save on two things:
-insurance premiums will go down
-billing will be extremely easy
Of course, few doctors will be willing to treat patients on such a fee schedule…but the important thing is; everybody will “have” insurance! that was the “goal” of the ACA!
The nature of the insurance business is that you need to have enough to pay anticipated claims for current enrollees (with some margin) or the regulators shut you down. If you have little room for error on that score, then you have little room for error period.
And it’s not like anyone figured out that they were going to be profitable in Year 2 or Year 3 or ever. They got funded by the government as part of a push to develop co-ops, as part of the ACA. I doubt if the government was handing out money for anyone who announced they wanted to start a co-op, so they must have had something going on, but it’s not like it was entirely backed by people with their own money at stake.
No reason to think that. They probably would have lost even more money with another year in business, and their assets would have been even lower.
Illinois pension plan only offered 3 companies and United was one of them. I chose United and have been well served. However their claims that they are losing money and need to increase premiums ring false. I also am an investor and their financial statements of profit shows they are doing well and would do even better if they were not paying chief officers tens of millions of dollars in executive salaries that could better be spent on enrollees health costs.
Third year in a row my plan has disappeared. I assume this will be the third year in a row I’ll have to buy more expensive insurance with worse coverage. This is getting old.
I’ve worked with the over-65 populations of these beneficiaries. In my experience, veterans who have a decent level of eligibility at the VA don’t want private insurance. If anything, they want more VA. Although they can, in fact, enroll on private plans and keep their VA eligibility at the same time, they simply don’t want anything to do with private insurance. In fact, they don’t want anything to do with Medicare either…they only want to go to the VA. In some places, there are Medicare Advantage plans (Part C) which give all or part of the Part B premium back to the beneficiary every month but VA beneficiaries think that is some kind of trick when it’s really not. Where those are offered, VA beneficiaries can get a really good deal if they look into them. Non-VA Medicare beneficiaries are a different animal. Medicare isn’t too bad by itself but you run the risk of unlimited out-of-pocket expenses if you have major health episodes… ~$1200 for each unrelated hospital admission, 20% of everything under Part B + other various out-of-pockets. It doesn’t seem so bad at first but, as one’s health gets worse, it can really add up. Hence, this population needs to make a cost-benefit analysis as well as weigh risk in deciding what type of insurance to get (either a supplement or Part C), assuming they can afford any extra expense at all.
This can be fixed by Congress and CMS if politicians can grow enough of a spine to stand up to the insurance lobby. Tell them they can’t sell anything unless they share the risk under Obamacare, and they will change their tune. Everybody knew Obamacare was going to have a very high loss ratio on the front end. That’s what happens when you have a population of people who haven’t been able to afford to go to the doctor for the last 20 or 30 years.
You’re expanding the thread in the direction of your preferred socialism. Eventually someone is going to have to pay for those losses, which amounts to an effective tax on the people.
That’s just not true. If you have any evidence that “everyone knew” this, let’s see it. My recollection is that this was not at all expected. This claim seems like pure revisionism.
Certainly the insurers who are pulling back on their exchange business didn’t know this. And if everyone knew it you would think they would have been among the first.
And they’ve clearly made the assessment that it’s not just “the front end” either. Otherwise they wouldn’t be pulling back or contemplating it.
People who aren’t familiar with the intricacies of insurance don’t realize it but the entire concept of insurance is a form of socialism…it is spreading risk across a pool of premium-payers. There is no fundamental difference between paying premiums to an insurance company or taxes to the government. In each case, one is paying into a risk pool and receiving a benefit when it’s needed. While I’m all for capitalism where it works, it just doesn’t work when it comes to healthcare. Every other industrialized nation has some form of socialized medicine for two primary reasons: it is cheaper because of the government’s buying power and it produces better outcomes. Collectively, we pay far more for our healthcare but not everyone is covered and our outcomes are worse. Here, our politicians don’t have the spine to stand up to the insurance lobby even in cases where it would seem to be easy. For example, Medicare funds the purchase of huge numbers of drugs but, is the government allowed to leverage it’s buying power to negotiate lower prices? Nope…because the politicians are beholden to the pharmaceutical industry and won’t allow it.
What do you think the provisions about pre-existing conditions were all about? The reason these companies lost money is because they used faulty assumptions and miscalculated expected claims when setting their rates.
We’re still in the front end. These guys don’t want to play right now because it’s volatile and it’s hard for them estimate what the costs will be. When things settle down, they will want to jump back in. Personally, I’m not sure some kind of public-private monstrosity will work in the long run. I think we will eventually be forced into some sort of single payer system. Frankly, that is the only type of system that’s ever been truly effective anywhere.
Not so. Risk prevention is a benefit to the one who is paying for it. Socialism is a (supposed) benefit for other people.
What you’re advocating is socialism because forcing the carriers to offer these plans means that the losses for these plans will come out of the pockets of company shareholders or of people in non-exchange (mostly employer-sponsored) plans. None of these people get any benefits out of the exchange plans.
The pre-existing condition provision was intended to be offset by the individual mandate, and other risk-sharing provisions.
Bottom line is that while there was a lot of unknown about exchange plan pricing, the notion that “everybody knew Obamacare was going to have a very high loss ratio on the front end” is revisionist nonsense.
Right. But the point is that these guys have billions of dollars at stake and as a consequence they have the best and the brightest working for them in setting these assumptions. And they couldn’t get it right. And now, there seems to be diminishing confidence that they can make money going forward. That puts the future of the exchanges in doubt.
If the plans on the exchange end up being a few obscure plans with very narrow networks, that is not going to be anything close to what was envisioned.
For starters, insurance doesn’t prevent risk, it transfers risk. Again, I’m not sure how familiar with the insurance industry you are but, as far as “forcing the carriers to offer” insurance goes, this does, in fact, happen routinely within the industry. Although, it’s usually done at the state level. For example, ever hear of assigned risk insurance?
Insurance companies, particularly those that operate across large portions of the country, are structured in a way to play compartmentalized shell games with the money. They may lose money in one account vs another but they rarely go broke across the company. When UHC or Anthem says they lost some money, they are not necessarily telling us all the details. I’m skeptical they are having dire financial problems which cannot be addressed. Rather, I think they are skittish and simply don’t want to deal with it.
That’s the same thing. It minimizes risk for people who have insurance.
I am an actuary, dealing primarily with health care.
What about you?
What’s your point?
Does that mean that you’re retracting your claim, or do you not realize that you’ve just argued against yourself?
You have no basis for this assumption. It’s what you want to believe, and nothing more.
But even if it were true, the implications of bigger insurance companies getting “skittish” and pulling back on their exchange business does not bode well for that platform.
