“Something’s Got to Give”
Fresh on the heels of an unbelievable CPI report that suggests healthcare costs only rose 3.6% in the past year, comes news that insurers want big premium hikes or they will get out of the Obamacare business.
Please consider Insurers Warn Losses From ObamaCare are Unsustainable.
Health insurance companies are amplifying their warnings about the financial sustainability of the ObamaCare marketplaces as they seek approval for premium increases next year.
Insurers say they are losing money on their ObamaCare plans at a rapid rate, and some have begun to talk about dropping out of the marketplaces altogether.
“Something has to give,” said Larry Levitt, an expert on the health law at the Kaiser Family Foundation. “Either insurers will drop out or insurers will raise premiums.”
While analysts expect the market to stabilize once premiums rise and more young, healthy people sign up, some observers have not ruled out the possibility of a collapse of the market, known in insurance parlance as a “death spiral.”
The Blue Cross Blue Shield Association released a widely publicized report last month that said new enrollees under ObamaCare had 22 percent higher medical costs than people who received coverage from employers.
And a report from McKinsey & Company found that in the individual market, which includes the ObamaCare marketplaces, insurers lost money in 41 states in 2014, and were only profitable in 9 states.
The clearest remedy for the losses is for insurers to raise premiums, perhaps by large amounts — something Republicans have long warned would happen under the healthcare law, known as the Affordable Care Act (ACA).
“The industry is clearly setting the stage for bigger premium increases in 2017,” said Levitt of the Kaiser Family Foundation.
Obamacare Death Spiral Debate
No Death Spiral: Dr. Mandy Cohen, the chief operating officer of the Centers for Medicare and Medicaid Services (CMS), said in an interview that there is “absolutely not” a risk of a death spiral or collapse in the ObamaCare marketplaces.
Death Spiral or Premium Hikes: Michael Adelberg, a former CMS official under President Obama and now a consultant at FaegreBD had this to say: “Given that most carriers have experienced losses in the exchanges, often large losses, it only makes sense that most exchange insurers will request significant rate increases for 2017.”
Adelberg added “Market exits are not out of the question if an insurer is looking at consecutive years of losses and regulators are unable to approve rates that get the insurer to break-even.”
Death Spiral, Not Tomorrow, Possibly Later: Blue Cross of North Carolina CEO Brad Wilson said in an interview that the company had lost $400 million due to its ObamaCare business. Wilson said he is not worried about a death spiral happening “tomorrow,” but has concerns if the situation does not change over time.
Death Spiral: The most prominent insurer eyeing the exits is UnitedHealth, which made waves in November by saying it was considering whether to leave ObamaCare in 2017 because of financial losses. The company last week announced that it is dropping its ObamaCare plans in Arkansas and Georgia, and more states could follow.
No Death Spiral: The Department of Health and Human Services argues that the attention on UnitedHealth is overblown, given that the insurer is actually a fairly small player in the marketplaces.
Debate Winners and Losers
- The winner in this debate is “death spiral or premium hikes”
- The loser in this debate is the public.
Obamacare has been one disaster after another. Whether by death spiral or massive premium increases, the public loses either way.
Is the Winner 1A:Death Spiral or 1B:Premium Hikes?
We have a possible clue from Dr. Mandy Cohen, COO of Medicare who says, “absolutely no risk of a death spiral or collapse in the ObamaCare marketplaces.”
The smart money bet is generally against those touting “absolutely no risk”.
My personal choice: death-spiral narrowly averted by massive premium hikes, consumer unfriendly rule changes, and worsening coverage.
Meanwhile, like you, I am relieved to discover healthcare costs only rose 3.6% last year. For details, please see Diving Into the CPI: What’s in Your Basket?
Mike “Mish” Shedlock
Being in the health care business, the solution is very simple:
All citizens must volunteer to buy a health care policy from one of the designated providers.
If the people don’t volunteer, then there is a tax to be paid equal to the policy NOT bought.
This will make sure everybody pays their fair share, that people give back to society, that we all are equal, we all work together, we all share, we cooperate, we all get along and we all take care of our “brothers”. It is the only fair thing to do.
Those that refuse can be simply put against a wall and shot to death.
this is sarcasm, yes?
dentss dunnigan said:
I like the part about the firing squad ….
Raising the price and expecting more young, healthy people to sign up is the kind of nonsense only dot gov can come up with. Imbeciles.
Either you eliminate employer plans and get everyone into obama care, or you eliminate insurance and go single payer. Those are the only choices that can ever work.
Allowing health providers to price gouge has to stop. If I try to sell bottled water for $100 in an emergency, I go to jail. Force them to publish their prices and stick to it. Force them to sell their services for the same price, locally and globally. Otherwise, put those bastards in jail.
David A said:
Many other options. Free up real completion including across state lines. Tort reform. (Huge) Greatly simplified policy of care for truly destitute, (No prisoner sex change operations) with emphasis on volunteer clinics staffed by a few paid but mostly volunteers, retired and working, and unemployed doing admin, and sanitary plus simple maintenance, etc, etc…
Centurion, that plan seemed to work for Lenin, Stalin & Mao.
Per Desteen said:
I hereby name myself “Minister of Fair Share”, and will determine Fair Share for all.
(My price list for “adjustments” to your Fair Share is available upon background check, and is payable in gold to my non-extradition treaty non-FATCA bank.)
Everything goes as planned. Look for a proposal for a single payer system before the end of the decade, regardless of who wins in November.
There is no reason health care can not be provided at your nearest Post Office. They have the parking lot, the counters, the employees and large spaces available for examination areas. Perfect locations for the people. Affordable. Convenient. Single Payer. Equal care for all and first world service by people who care.
Trouble is, most of their service windows are closed just when people need them the most, so the Post Office emergency room would always have a huge waiting line.
Some have a parking lot, most of them in the cities don’t. That will help with population reduction, though; along with the lines stretching for half a dozen blocks. Paul Ehrlich would approve.
I think you meant “third world service.”
Reconsidering since you said at the “post office” maybe you meant 5th world service……..
Common Sense said:
Not if Cruz is elected. He has promised repeatedly to repeal every word of Obamacare on Day 1, and he usually keeps his promises.
“While analysts expect the market to stabilize once premiums rise and more young, healthy people sign up”. These “analysis” are smoking Dope! Here is another way to say this, Analysis expect more young people to sign up once premiums increase. They are out of their collective minds!
The young WANT to help in providing Affordable Health Care for all. Why would they not want to join the system? Greed? Selfish? Hate? Racism?
I am sure today’s young appreciate all the Government is doing for them. Health care is a right for ALL and if the youth of today don’t want to volunteer and join and pay their fair share…..then kill them.
just some guy said:
I’m going to have to disagree with you here. Health care cannot possibly be a right since it involves someone else’s labor, and as far as I’m concerned the only people entitled to someone else’s labor on their behalf are ones children, and even then only while they are minors. We as a society may charitably choose to provide health care as a benefit for our citizens, but when you start labeling things “rights” where does it stop. Do we all have a right to food? Clothing? Housing? ……..I think not, and yet I’ve heard those very ideas espoused by prominent folks on the left and tied to the “right to health care” argument. The trouble is that once everyone has a right to to the basic necessities in life there’s no longer much incentive to work, and if enough people stop working those very same basic necessities will quickly be in very short supply.
The “young” people have already given Obamacare a vigorous, Winston Churchill style, two-fingered up V-sign. (That’s the one with the hand palm facing inward.)
Old Guy said:
Centurion I need some of what your smoking. None of my younger employees like the program and think is should be abolished. The Bronze plan this year is 425 a month with 8000 deductible. You do the math most of my employees are college kids and they hate it.
Some are pretty smart and wonder how it passed when the Federal government cannot dictate a citizen buy a private product. At least some critical thinkers still exist.
“Never believe anything until it’s been officially denied.” Bismarck
Couple of thoughts:
– Healthcare has a weighting of about 4 to 5% in the in our (i.e. US) CPI gauge but it accounts for about 17% of US GDP. So, if Healthcare costs only rose some 3 to 4% then one knows that average Healthcare costs rose much more. One can say that costs rose somwhere in the range of 12 to 16%.
– Charles Hugh Smith (“Of Two minds”) had an interesting article why US healthcare is so extremely expensive.
Stuki Moi said:
US healthcare is expensive because the government and laws are involved. Just reinstate the perfectly workable health care policy in place under Jefferson, and things will work out quite well.
Jon Sellers said:
Thank you. It was time someone brought leeches into this discussion.
From your link:
“Other advanced nations do not spend gargantuan sums on the elderly and end-of-life care. Please look carefully at this chart. No one with any knowledge of life in Sweden or Germany would declare their care of the elderly barbarous, yet somehow Sweden’s cost of care actually declines as the elderly approach the end of their lives, while the cost of care for the elderly skyrockets in the U.S.”
Well, one reason why is because the old folks have all the money:
Note that income drops off after age 75. One doesn’t have to imagine a situation where mom or dad have a “close call” that makes a serious dent in their savings, followed up by moving her into an assisted living facility. Then trying to get medicaid to cover the nursing home means selling off assets, hopefully transferring deeds to children. But either going the medicare route or spending savings, there’s a lot of untapped wealth in senior citizens that I’m certain the medical industry would love to get their grubby paws on. That said, I’ve seen many very nice assisted living facilities that seem to have the interests of the residents at heart.
James R Chaillet, Jr., MD said:
Mish, I think you’re a little off on this one. Massive premium hikes will cause the death spiral. As rates rise, the young and otherwise healthy will be less likely to sign up. That is the penalty will be much less than the premiums for many. Only those who stand to ” make money on the deal”, namely, those who expect to use more than they pay for will sign up. Losses will continue and the rates will continue to rise or, more likely, more insurers will drop out.
OR the administration will try to pull a fast one and bail out the insurers
Tony Bennett said:
You nailed it.
One of the reasons for rate rise is that many healthy young people chose to opt out and pay the tax, er, penalty instead…. leaving plans loaded with older and/or unhealthy people who consume great amounts of health care. Increasing rates will only exacerbate this move by the healthy to STAY AWAY.
So the losers will be those with good health who opted to pay the “tax” for not having a health care policy by facing a higher “tax” in future years. This kick the can approach will last until the “tax” is equal to the premiums of a bronze plan.
The way to reduce health care costs, and the insurance premiums, is to reduce the need for both in the first place. Unfortunately Americans don’t want to make the necessary lifestyle changes for better health. That is their right in a free society; however, in a free society, personal choices leading to negative outcomes are borne by the individual, not other members of society.
I believe the success of socialism in northern European countries is attributed to a large number of individuals who try to avoid needing public assistance in the first place, which can be directly linked to the Protestant Work Ethic which originated in Northern Europe.
Stuki Moi said:
Northern Europe definitely retains a much, much stronger “shaming” than the Anglo countries.
In America, it has gotten to the point where many are literally wallowing in their incompetence and neediness. With large swathes of society, from wealthy pursuers or utterly useless pursuits, to prescription drug addicted trailer park elephants, having gotten so numerous they have succeeded in forming growing subcultures where the refusal to take care of themselves without leeching, is lauded as some sort of “not selling out.” And Britain is not far behind, with it’s ever growing chav glorification.
Northern European countries may well provide the material means to sustain life in self imposed uselessness, but culturally, if you choose to do so, you are made very well aware that you are a leech on society, a loser, and an untermensch.
interestingly enough, part of the reason may well be that in those countries, the social division between haves and have nots are smaller than in the Anglosphere. Their economies are still generally industrial, hence dependent on a large, high skill class of workers. While in the US and Britain, what is left of a productive economy is largely cultural exports, which requires 1 movie star for every 1000 complete indigents. And then, a well established leeching class of a percent or two, whose “job” it is to “protectthe wealth” of the moviestar, to ensure he can continue to purchase high quality goods made in Northern Europe.
So, in Europe, those down on their luck, are still in close proximity to those less so, so the gap doesn’t seem quite as much like two different worlds. While in the Anglosphere, the 1 percenters took it all and have a government and laws designed solely to help them keep it, so why even bother doing anything besides be a trainwreck?
I had to purchase a month-long policy from United because Marketplace.gov had botched my health insurance for April. The “government” agency of Marketplace.gov is the problem, completely out of touch, no knowledge of prior contacts, just unbelievably incompetent. O yes, we actually paid April, but the Marketplace.gov person had cancelled my policy, as though, there is no problem to be uncovered, and these are insurance people. I have at least five cards for this year alone, there have been so many changes.
Ensign Nemo said:
There is a joker in the Obamacare deck that goes into effect after Obama leaves office.
“The Patient Protection and Affordable Care Act (PPACA, as amended by the Health Care and Education Reconciliation Act of 2010), imposes an annual 40% excise tax on plans with annual premiums exceeding $10,200 for individuals or $27,500 for a family starting in 2018, to be paid by insurers. The tax is not imposed on the total cost of the plan, but on the costs exceeding the aforementioned values, which, after 2018, will adjust to inflation annually. These costs include any part of a person’s income allocated to flexible spending accounts, health reimbursement accounts, and health savings accounts, but not expenditures for stand-alone dental, vision, accident, disability, or long-term care insurance coverage. The tax is not a deductible business expense and so plan administrators pay income tax on the excise tax, significantly increasing the effect of the 40% tax. The tax is intended to do three things: help finance the PPACA; reduce overall health care costs; and address the unequal tax benefit of excluding employer-based health insurance coverage from taxes.”
$10,200 a year is just $850 a month. If premiums are hiked as high as everyone expects, then there will be quite a few people who are low-income with “Cadillac” plans.
It’s tax season. Look at your W-2 form, box 12. In mine the “DD” code for employer-sponsored health coverage was just under $8300, which is not that far from the $10,200 threshold. If my rates go up by 23% more than the CPI – which requires hikes of just 8% a year more than the CPI increases, for three years – my plan will become a “Cadillac” plan, even though I have a *very* low-paying job @ $11.10 an hour.
You will see employers ditching healthcare plans left and right if premiums increase and this excise tax is not changed. Union health care plans will simply die. This might be a deliberate feature rather than a bug, as the endgame for socialism is to have single-payer healthcare under the complete control of the national government.
Ron J said:
“This might be a deliberate feature rather than a bug, as the endgame for socialism is to have single-payer healthcare under the complete control of the national government.”
It is obviously deliberate. As Pelosi said, we have to pass it to find out what is in it. The truth was hidden so as to deceive the public.
The Cadillac tax implementation date was pushed back for political purposes, as there was expected to be a backlash against democrat politicians.
As single payer is the goal, the ends justify the means. In Vietnam the village was burned down, in order to save it.
Tim Wallace said:
And for someone like me, now at $36’000 because of the size of my family – this is absurd! The plans are NO LONGER “family plans” but hit you for every member individually.
My only saving grace – one child gets married in August, another is getting his own plan later this year. This will probably get me down near the $27’500 – IF my plan does not go up – but, we just read about that!!
Obamacare – the gift that keeps on giving to those that do nothing and criminally stealing from those who do.
Rick Sandberg said:
Premiums rose 3.6%? What are they smoking? They must be counting the negative premium rise (redistribution) of those who sit on ass and sponge as part of the average. As for our premium, we were paying $320 for a couple (51 and 52 years old at the time) in 2009 for a high deductible policy (10K deductible). Since Obamacare passed and coupled with California’s ridiculous mandates our premium is now $893. That would be a 279% increase. And not one of those losers has said thank you for our helping them to sit on ass.
Rick Sandberg Fresno
Tim Wallace said:
Let’s play “can you top this” – I was paying $695.83 on a high deductible plan in 2009 for a family of six. Today, with 5, I am paying $3’000 a month. A 331% increase. And no choice because I can’t leave my company plan for self-insurance because Obamacare “rule changes” last year. As I said above fortunately two leave the plan this year – but I will probably be paying the SAME amount next year with premium increases.
And Hillary will win election because the 48% who get it all for free.
When you read stories like this about $100’s antibiotic tablets that actually cost pennies you realize that the provision of healthcare in the US is a complete racket!
“The drugstore I use didn’t even have it in stock and quoted me a price — $400. An alternative doxycycline would cost me $175. I went to another pharmacy and asked them did they have tetracycline in stock? What would it cost me? The guy quoted me a price — $11.79. He told me to come back in half an hour while they transferred the prescription and got it ready.
A half hour later, I went back and when the guy rang it up, the real price came up — $428. There was a conference at the pharmacy and much confusion. Four people working there came over to explain to me that the price was the price. I also found out that the doxycycline alternative would cost me $295. I have medical insurance, but it doesn’t cover drugs.”
Health care is not a right. Health care is not a free market. Costs could be lowered easily.
1. Break the monopoly by doubling the number of medical schools and permitting Skype medicine with physicians in other nations.
2. Require a physician to quote a price before treatment.
3. Allow insurance companies to compete across state lines.
4. Tort reform
5. Deregulate medicine.
7. Permit mail order purchases of medicine from international pharmacies.
1. Who is paying start up costs for all of these new medical schools? How do you verify the qualifications of physicians in other nations? Right now you can skype anyone you please, so why does it matter if it’s permitted?
2. You’d have to require the insurance companies to disclose the price. Most doctors have no clue how much these things cost and many hospitals can’t say either because it’s down to what the insurance companies negotiate. Asking what treatment would cost if you were on Medicare is the closest you can usually get to a “true” cost.
3. This might help, if the states could agree on regulations, but since certain states want to protect their right not to play by a national system, interstate competition isn’t possible.
4. Tort reform is helpful, but only a small piece of the puzzle.
5. How deregulated? Where do you draw the line between acceptable risk and negligence?
6. How would you verify quality and potency? If your neighborhood drug dealer doesn’t have an incentive not to cut their drug with fillers why would a foreign pharmaceutical manufacturer be any more ethical?
Health care can’t be a truly free market, because free market doesn’t care about people, only profit. (See drug shortages in the U.S.)
David A said:
There are reasonable cost effective solutions to your negativity. Tort reform would be very large, and you underestimate those costs. Many nations have similar qualifications so a little discrimination could open up markets. Interstate competition would open up a great deal, and force changes in those very restrictive states. By free market he means rejection of monopolies and I have worked for many free marked people that care about other people, OTOH, when I go to the DMV,,, (You catch my drift) You see massive centrists governments do not care about people as their power, and human failings, are unrestricted. Study “Democide” death by Government.
8. Allow fitness instructors and nutritionists access to your insurance plans. An oz of prevention…
Ya’ll forgot “Common Core!”
They want access too!
Reed Bates said:
“If you think healthcare is expensive now, just wait until it is free.” -Ronald Reagan
Ha ha ha ha!
“There they go again.” – Ronald Reagan
the Healthcare providers are making Quadrillions in profits-who needs socialism? lol
Reblogged this on John Barleycorn and commented:
Damage control before Nov elections
Before the government got involved I would go to my doctor. His staff was one nurse, a receptionist and himself. I paid him and filed my own bill to the insurance company. Another doctor was in the office too so they could share a receptionist. Today that same office needs an office manager, staff for billing and insurance. My sister in law is an insurance guru for a team of doctors, not even the office manager and she makes 50K a year. I wonder why healthcare is so expensive.
Insurance companies prefer to at least break even … and this is a surprise to anyone? Big Bro will have to step in to keep the charade alive, VOILA! Single payer! This was the plan all along.
Wasn’t single payer an original Hillary goal?
Premiums only will increase 3.6%. Boloney. My Blue Cross premiums increased
8% in 2015 and in 2016 my premium Increase is 25%.
Why would anyone believe anything the government says, they’ve been lying to us about Obamacare from the beginning.
The only way for the people to win is if bankers stop printing health care super inflation. Service inflation is out of control. Everything from education to health care to hiring a company to rake your leaves is astronomical.
Only the most moronic government in history can design a health car program that requires 100% membership and than have the health industry loose money.
Alex Spencer said:
From what I’ve seen from the healthcare industry lately, most would be better off not utilizing it. At a very minimum you need to diagnose and make a treatment plan before you enter the medical practice. Only then can you have some assurance that the advice received is not serving the interests of the medical practice rather than your own health.