Insurers to Get Obama Care Bailout?

[classhandicapper]

http://www.weeklystandard.com/blogs/bailing-out-health-insurers-and-helping-obamacare_774167.html

[DJofSD]

Another too big to fail.

[Clocker]

The bail out was written into the bill. As you would expect, since the industry wrote the bill.

Laszewski writes that Obamacare also contains a “Risk Corridor Program that limits overall losses for insurers.” So insurers not only don’t have to pay out all of their costs; they also don’t have to swallow all of their losses.

Laszewski explains that if an insurance company expects its costs in a given year to be X, and those costs end up being more than X plus 2 percent, taxpayers will come to that insurance company’s rescue—thanks to Obamacare. In fact, once an insurance company covers that initial 2 percent in unexpected costs, taxpayers will cover at least 80 percent of any additional costs the insurer accrues.

[classhandicapper]

It's both criminal and beyond incompetent to even be talking about trillion dollar bailouts before the web page is even working properly. Usually, these actuarially bankrupt programs that the left devises don't actually fall apart for a couple of decades. That way the originators have already been glorified and are long gone when the shit hits the fan and the rest of us are stuck with the bill.

This crap has to be dismantled. Anything less would be borderline insane. Seriously, I'm getting sick of the irresponsibility, incompetence, and criminal behavior in Washington. Most of them should either be jailed or put in special programs for the criminally insane.

[classhandicapper]

The bail out was written into the bill. As you would expect, since the industry wrote the bill.

It's an unholy relationship, but it's one of the primary reasons you can' t have a large government. Corrupt people USE government to advance their own economic and political agendas at the expense of others and corrupt politicians accept the money and support of corrupt private citizens in order to gain and keep power.

Trying to solve problems with government is kind of like committing suicide because you are sick with the flu. There are better ways to deal with the flu.

[classhandicapper]

By the way, the insurance cancellations are still under way also. The private plan my girlfriend has been insured under for years (one of the most comprehensive plans imaginable) was just cancelled. She works for a small business in NY and they got the notice this morning.

They'll have to pay more for a worse plan that will cover her for maternity care (she's past that age), substance abuse (lmao), and a boatload of other things she doesn't want or need instead of the things she and her boss DO want and need. I would have added mental health coverage to the list of things she's not interested in paying for, but in dealing with this bullshit, I'm pretty sure she may eventually need help with anger management, stress relief, etc...

[Tom]

Obama and the democrats in bed with big business....again.
This time, they even wrote failure into the bill!

Time for republicans to take over - enough of the puppets of big business and Wall Street running the show. We need a party that represents PEOPLE!

[Clocker]

By the way, the insurance cancellations are still under way also. The private plan my girlfriend has been insured under for years (one of the most comprehensive plans imaginable) was just cancelled. She works for a small business in NY and they got the notice this morning.



We have only seen the tip of the iceberg. The cancellations this past Oct. and Nov. were just individual policies, which are about 5% of all health insurance. The small and medium size company cancellations are starting now, and will peak in Oct., just before the 2014 elections. Democrats up for reelection this year are running scared.

It's so bad even the Washington Post (http://www.washingtonpost.com/national/health-science/second-wave-of-health-insurance-disruption-affects-small-businesses/2014/01/11/dc2f7404-6ffe-11e3-a523-fe73f0ff6b8d_story.html) had to take notice:

When millions of health-insurance plans were canceled last fall, the Obama administration tried to be reassuring, saying the terminations affected only the small minority of Americans who bought individual policies.

But according to industry analysts, insurers and state regulators, the disruption will be far greater, potentially affecting millions of people who receive insurance through small employers by the end of 2014.

While some cancellation notices already have gone out, insurers say the bulk of the letters will be sent in October, shortly before the next open-enrollment period begins. The timing — right before the midterm elections — could be difficult for Democrats who are already fending off Republican attacks about the Affordable Care Act and its troubled rollout.

[classhandicapper]

We have only seen the tip of the iceberg. The cancellations this past Oct. and Nov. were just individual policies, which are about 5% of all health insurance. The small and medium size company cancellations are starting now, and will peak in Oct., just before the 2014 elections. Democrats up for reelection this year are running scared.

It's so bad even the Washington Post (http://www.washingtonpost.com/national/health-science/second-wave-of-health-insurance-disruption-affects-small-businesses/2014/01/11/dc2f7404-6ffe-11e3-a523-fe73f0ff6b8d_story.html) had to take notice:

I don't even know how to deal with the situation any more.

I'm getting progressively more bearish on the US economy LONG term because of what's going on. I have no idea how you can plan for retirement when the currency is being debased, all the major social programs are actuarially bankrupt, the demographics suggest the left could grow in power, etc...

I'm the schmuck that worked hard, lived below my means, and saved money for my future instead of consuming so I could retire younger and not have to worry about government handouts etc.. when I get older. But in this environment, it's almost impossible to know how much money is enough because so much of it is likely to be inflated away and taxed (if not outright confiscated) as I get older and can't recover. I want to go to Washington and beat them all senseless.

[DJofSD]

Class, let me know when you are planning to go. I'll meet you there.

[Saratoga_Mike]

Laszewski writes that Obamacare also contains a “Risk Corridor Program that limits overall losses for insurers.” So insurers not only don’t have to pay out all of their costs; they also don’t have to swallow all of their losses"

Medicare Advantage and Medicare Part D (drug program) also contain risk corridors - this isn't something unique to Obamacare

[classhandicapper]

Laszewski writes that Obamacare also contains a “Risk Corridor Program that limits overall losses for insurers.” So insurers not only don’t have to pay out all of their costs; they also don’t have to swallow all of their losses"

Medicare Advantage and Medicare Part D (drug program) also contain risk corridors - this isn't something unique to Obamacare

Fair enough.

I'm not familiar enough with the details of Medicare, but I already know that Medicare is actuarially bankrupt. Pretty much every major social program and many pensions won't be able to come even close to meeting all their obligations.

If you are going to put a new program in place, the idea should be to make it as economically sound as possible and to SAVE money given the long term for most health care related programs looks bleak to begin with. We haven't even transitioned yet and we are already talking about trillion dollar tax payer insurance bailouts. That means when it's all said and done it's probably several trillion. It's preposterous.

If I was a moderately more "wordly" person and didn't have family obligations, I'd have to eventually consider taking my assets and ass out of the country and handing in my citizenship papers. Of course that would mean finding a democracy that leftist programs haven't bankrupted (no easy task), but there must be at least one.

[Tom]

Class, let me know when you are planning to go. I'll meet you there.

Shotgun!

[Clocker]

If you are going to put a new program in place, the idea should be to make it as economically sound as possible and to SAVE money given the long term for most health care related programs looks bleak to begin with.

It hardly speaks well for the politicians' confidence in a new program when they build in a bail out.

And it hardly speaks well for their competence when they pass an "Affordable Care" act that does not even attempt to address either health care or its affordability. The law only addresses health insurance, and is based on the absurd assumption that the government can provide more comprehensive health insurance to many more people while decreasing the cost. Haven't heard much lately from Obama and Sebelius about the promised $2500 annual insurance savings for the average family.

[Marshall Bennett]

How else would insurers survive insuring those with preexisting conditions without government support? It's all built into the cost which will be enormous in due course.

[Clocker]

How else would insurers survive insuring those with preexisting conditions without government support? It's all built into the cost which will be enormous in due course.

It has been done for years through state high-risk pools. If you do it that way, it is funded through general revenues, so the subsidy is funded by progressive income taxes and other sources. Under ObamaCare, the subsidies come from the young and healthy who are forced to buy more insurance than they want or need, or pay a penalty.

[mostpost]

Here we go again. The Weekly Standard publishes and article replete with with misinformation, misinterpretation and outright inaccuracies and the lemmings at PA go merrily running off the cliff. Enjoy the trip down guys.

First off, the Obamacare reinsurance program is not a trillion dollar bailout, classhandicapper. The program is in effect for three years, 2014, 2015 and 2016. The total cost is $25 Billion; $12 Billion in 2014, $8 Billion in 2015, and $5 Billion in 2016. The purpose of the reinsurance program is to protect companies from the uncertainties of the market as we transition into the Obamacare era.

The Weekly Standard article says nothing about the program being for three years only, leaving the false impression that this is a permanent thing.

The Weekly Standard makes it seem as if this program is a boon to the insurance industry. It is not. A company will only receive a subsidy if it shows a loss over a certain amount. (103%) Why would an insurance company seek to lose money in order to get a part of that loss returned to it.

The Obamacare reinsurance program pays 80% of the costs of an individual's healthcare costs between $45,000 and $250,000. For the vast majority of people that $45,000 threshold is never reached.

There is a specific tax targeted to pay for the Obamacare reinsurance program. It is a $63 per annum tax charged to the insurer for each insured person on the policy. This is what reinsurance means. It means the risk is spread among a larger group.

The authors of the Affordable Care Act worried that insurance companies would have difficulties assessing risks at the start of the Act. Some companies might attract customers with a high risk of illness, while others might attract younger, healthier clients. The reinsurance program was designed to give those companies three years to solidify their underwriting techniques.

Again; it is for three years, not forever; it costs $25B not $1T. It is paid for by the insurers, not the public; it is a fee, not a tax.

[classhandicapper]

Here we go again. The Weekly Standard publishes and article replete with with misinformation, misinterpretation and outright inaccuracies and the lemmings at PA go merrily running off the cliff. Enjoy the trip down guys.

First off, the Obamacare reinsurance program is not a trillion dollar bailout, classhandicapper. The program is in effect for three years, 2014, 2015 and 2016. The total cost is $25 Billion; $12 Billion in 2014, $8 Billion in 2015, and $5 Billion in 2016. The purpose of the reinsurance program is to protect companies from the uncertainties of the market as we transition into the Obamacare era.

The Weekly Standard article says nothing about the program being for three years only, leaving the false impression that this is a permanent thing.

The Weekly Standard makes it seem as if this program is a boon to the insurance industry. It is not. A company will only receive a subsidy if it shows a loss over a certain amount. (103%) Why would an insurance company seek to lose money in order to get a part of that loss returned to it.

The Obamacare reinsurance program pays 80% of the costs of an individual's healthcare costs between $45,000 and $250,000. For the vast majority of people that $45,000 threshold is never reached.

There is a specific tax targeted to pay for the Obamacare reinsurance program. It is a $63 per annum tax charged to the insurer for each insured person on the policy. This is what reinsurance means. It means the risk is spread among a larger group.

The authors of the Affordable Care Act worried that insurance companies would have difficulties assessing risks at the start of the Act. Some companies might attract customers with a high risk of illness, while others might attract younger, healthier clients. The reinsurance program was designed to give those companies three years to solidify their underwriting techniques.

Again; it is for three years, not forever; it costs $25B not $1T. It is paid for by the insurers, not the public; it is a fee, not a tax.

It's not the Weekly Standard that calculated the cost. It appears the cost was calculated by the CBO (which almost always underestimates the ultimate costs of programs) at 1 trillion.

http://www.cbo.gov/sites/default/files/cbofiles/attachments/44190_EffectsAffordableCareActHealthInsuranceCover age_2.pdf

What it is saying is that the insurance companies will get reimbursed for losses via the government, which ultimately is the tax payer. No one is going to lose tons of money on purpose, but many will engage in business they otherwise would not if there's a huge rebate in case things don't go well. It is also possible they will lose money on the "insurance" (and get reimbursed) but make enough money on float to make the transaction profitable. If you understand insurance, you would know that many companies write insurance at a small loss to gain investable float. This would incentive writing insurance at a small loss. Think of it like betting on horses with a 1% loss, but getting a 5% rebate. You'll do that all day long.


"For some reason, President Obama hasn’t talked about this particular feature of his signature legislation. Indeed, it’s bad enough that Obamacare is projected by the Congressional Budget Office to funnel $1,071,000,000,000.00 (that’s $1.071 trillion) over the next decade (2014 to 2023) from American taxpayers, through Washington, to health insurance companies. "

[Clocker]

Again; it is for three years, not forever;

http://www.freesmileys.org/smileys/smiley-laughing025.gif

Ronald Reagan said that the closest thing to eternal life on this earth is a government program. Do you really believe that this program will not be renewed after 3 years?

It is paid for by the insurers, not the public

Here is a basic fact of life: businesses do not pay fees, taxes, or other costs of doing business. They pass them on to their customers. EVERYTHING is paid for by the "public".

it is a fee, not a tax.

Right. And the "individual shared responsibility" payment under the individual mandate is a fee and not a tax. Or it was until SCOTUS said it was a tax. What difference does it make what it is called?

[iceknight]

Yes, since you are so supportive of this ACA, you are welcome to send me a check for $ 65 EVERY to support the unnecessary increase in premiums for the same plan as I had last year. That is actually a nearly 50% increase on existing premium which I pay as a self employed individual.

Also, when I went to the healthcare.gov website (on Jan 8 - last wed) to check any comparable plans it started me on the sign up process but ran into an obstacle at some BS verification step and told me the system glitch would be fixed in 24 hours. I have tried 3 times since on different days, it has not been fixed and every time I am made to wade through the same questions.

Currently on hold with the toll free number and dealing with elevator music stuff. Definitely not thrilled that I have to pay 50% more on premiums so everyone can get healthcare. I mean, 10% more, I can understand.. 50% more.. that's just crock and I am sure most of it will wind up in the hands of health "insurance" companies.

Update: They have asked me to "not to touch the application" for 3 days till it gets "verified" or something. great work in forcing something on people and not having it ready. I was on the phone for 30 mins and I consider myself fortunate. :lol:

[mostpost]

It's not the Weekly Standard that calculated the cost. It appears the cost was calculated by the CBO (which almost always underestimates the ultimate costs of programs) at 1 trillion.

http://www.cbo.gov/sites/default/files/cbofiles/attachments/44190_EffectsAffordableCareActHealthInsuranceCover age_2.pdf

What it is saying is that the insurance companies will get reimbursed for losses via the government, which ultimately is the tax payer. No one is going to lose tons of money on purpose, but many will engage in business they otherwise would not if there's a huge rebate in case things don't go well. It is also possible they will lose money on the "insurance" (and get reimbursed) but make enough money on float to make the transaction profitable. If you understand insurance, you would know that many companies write insurance at a small loss to gain investable float. This would incentive writing insurance at a small loss. Think of it like betting on horses with a 1% loss, but getting a 5% rebate. You'll do that all day long.


"For some reason, President Obama hasn’t talked about this particular feature of his signature legislation. Indeed, it’s bad enough that Obamacare is projected by the Congressional Budget Office to funnel $1,071,000,000,000.00 (that’s $1.071 trillion) over the next decade (2014 to 2023) from American taxpayers, through Washington, to health insurance companies. "
You are the one who is conflating the total $1 trillion cost of Obamacare with the cost of the reinsurance program. The reinsurance program costs $25 billion over three years. Most of that $1t is money moved over from other programs such as subsidies that were previously paid to insurance companies and health care providers under the Medicare Advantage programs.

[davew]

this was in the original law and needed to get any insurance companies on board, since they are the ones with the risk

it became an easier sell when the government guaranteed they would not lose

[mostpost]

http://www.freesmileys.org/smileys/smiley-laughing025.gif

Ronald Reagan said that the closest thing to eternal life on this earth is a government program. Do you really believe that this program will not be renewed after 3 years?
Ronald Reagan said a lot of stupid things. In fact he rarely said anything that was not stupid. Many, many government programs have been designed to last a specific period of time and have ended on that date. There is no provision in the reinsurance program for an extension. No funding is authorized beyond 2016. A completely new law would need to be passed. Do you really believe that is going to happen?



Here is a basic fact of life: businesses do not pay fees, taxes, or other costs of doing business. They pass them on to their customers. EVERYTHING is paid for by the "public".
Here is a question for you. If "businesses do not pay fees, taxes, or other costs of doing business," then why should a bakery be required to pay for flour? Why should a butcher shop be required to pay for meat? Why should WalMart be required to pay for the shirts it sells.

A company does not just base its prices on the cost of doing business, it also bases it on the price the public is willing to pay. Perhaps it accepts a lower profit margin. Maybe it finds economies in other areas. Or it improves its product line and finds customers willing to pay more for a better products.
It is just not as simple as a one dollar tax increase means a one dollar price increase.






Right. And the "individual shared responsibility" payment under the individual mandate is a fee and not a tax. Or it was until SCOTUS said it was a tax. What difference does it make what it is called?
Fee or tax. Regardless of what you call it, the Supreme Court said it was legal

[mostpost]

this was in the original law and needed to get any insurance companies on board, since they are the ones with the risk

it became an easier sell when the government guaranteed they would not lose
Right. It gave them a three year window to adjust their underwriting policies to the new situation. It seems to me that they would do this as rapidly as they could.

[Clocker]

(Tap dancing around reality playing word games.)



And the usual ad hominem attack, this time on Reagan. Hint: Reagan had a much better grasp on the nature of government programs than the ankle biters that attack him as stupid.

[elysiantraveller]

http://www.freesmileys.org/smileys/smiley-laughing025.gif

Ronald Reagan said that the closest thing to eternal life on this earth is a government program. Do you really believe that this program will not be renewed after 3 years?


:lol: :lol: :lol:
Of course it will! They've already extended practically every other provision on the bill!!!

[classhandicapper]

You are the one who is conflating the total $1 trillion cost of Obamacare with the cost of the reinsurance program. The reinsurance program costs $25 billion over three years. Most of that $1t is money moved over from other programs such as subsidies that were previously paid to insurance companies and health care providers under the Medicare Advantage programs.

OK, I read the original piece and it does appear the Weekly Standard article is probably misleading about the 1 trillion.

The things is, I'm hardly comforted by the fact that the trillion we are talking about is not just from Obamacare. I don't like this relationship either way! Nor do I trust that when the 3 years is up and the insurance companies have to reprice adequately that the government is going sit back and watch another round of sticker shock. There will be some kind of extension that adds to the cost.

The one thing you can be certain of is that whatever the government is projecting, it will invariably be worse. The only way to pass most of this crap is to lie about the cost or back end it. No one wants to put their political objectives or career on the line by telling the truth.

Like I said, the small business my girlfriend works for got their cancellation notice today. A replacement policy is going to cost more, cover less of what they want, and more of what they don't want or need. So the disruption is not over and even more people are going to get pissed than are right now.

The larger picture is that the true debt and deficits are massively higher than reported. All the existing programs are going to lead to a large debasement of the US dollar (which is already under way), massively higher taxes on people that actually try to be productive and save for their future, and most likely draconian cuts to those same people and others because they will be means tested. What we needed was greater efficiency and bang for the buck so we could cover more people and bring down the long term IOUs. We didn't need a program that added costs!

[Clocker]

The one thing you can be certain of is that whatever the government is projecting, it will invariably be worse.

The administration just released data on web site enrollments. To pay for ObamaCare, they said they needed 38% of those enrolling to be in the 18-34 year old bracket. Preliminary numbers show 24%.

Those numbers are pretty much meaningless anyway. The administration counts anyone that completes an application at the web site as having insurance. The application is just the first step. Then the personal information in the application has to be verified by the appropriate federal agencies, the final data has to be correctly forwarded to the insurance company, the insurance company has to issue a policy and send a bill, and the applicant has to pay the bill. Only then does the applicant have insurance.

Preliminary indications in the media show that the adverse selection problem of younger people not signing up will be much worse than anticipated.

[classhandicapper]

Preliminary indications in the media show that the adverse selection problem of younger people not signing up will be much worse than anticipated.

It doesn't surprise me.

I've always had insurance, but I have relatives and have known lots of other young people that don't get insurance from work. They see no reason to buy an expensive policy when they are never sick enough to need it and have way more immediate financial needs. None of them is thinking about the remote possibility they will need surgery, expensive treatment etc... That's the kind of stuff you think about when you get older.

The smart ones can sense it's a horrible deal. So they are going to do everything they can to avoid this.

If the whole thing collapses, it will be a good thing. But it would still have been a monumental waste of time, resources, and money when it's obvious the goal should have been greater efficiency and choice to reduce costs. Then we could use the savings to cover more people through existing programs and greater affordability.