ACA rebate checks coming

[chucky2]

Perhaps they don't have much of a profit margin because they blow a large amount of their revenues on excessive executive compensation, inefficiency, and bloated staff. Given that people get healthcare regardless if they pay or not, insurance companies funneling money from one party to the other add NO value to the system. They are merely an inefficiency, a middle man who servers no other purpose but to be a middle man. The entire thing needs to be dismantled and simplified. Yes, I'm talking single payer.

First, I'm fine with single payer, I'd rather have had O'Bummer and the Dim party expend the political capital they had after the '08 elections on that. Instead they did the joke they did, O'Bummercare.

That being said, zero'ing all but inefficiency would not make any appreciable dent in healthcare premiums. It's great to talk about to rile up the lemmings, but it's just not enough to matter. As far as inefficiency, every Corp. has inefficiency. If you think the Gov is going to be more efficient than these Corp's that are actually trying to make a profit, you're past the delusional state.

Chuck

 

[chucky2]

Well, there is a way to ask that question in an unbiased manner and receive an apolitical answer. After all, the law's the law and it doesn't hurt to say what the law and interpretive regs say.

I know, I just didn't even want it brought up, because no matter what, it devolves into an argument fest, and I didn't want your great thread and contribution to go there.

But here, rather than play coy I'll just do it:



Well, a few different sources:
1) Any individual or employer who doesn't conform to the "shared responsibility" (mandate) portion of the ACA will have to pay a fine/penalty. Those monies will ostensibly offset some portion of the subsidy cost;
2) Those fines/penalties won't come close to covering the subsidy costs so to make up for the shortfall the ACA levies ~$200 billion in new taxes on health insurance and pharmaceutical companies, which slowly phase in from 2014 through 2020. This interesting mechanic has the effect of taxing health insurers for funds to pay health insurers. But, rest assured that the health insurers will build those taxes into their premiums so you will be paying them.
3) Even that's not enough to cover the anticipated cost of the subsidies, so more money has to be found. Well, it actually doesn't because the subsidy isn't really a subsidy, it's a refundable tax credit like the Earned Income Tax Credit. Legally, anyone who meets the eligibility criteria is entitled to a refundable tax credit at the end of the year but the government recognized that many people wouldn't be able to afford the up-front premiums even if they knew a large check was coming later. In response, the ACA has an acceleration provision which allows someone who is eligible for the tax credit to apply to the federal government for an acceleration of payment on the credit. For those eligible people the fed will agree to pay the refundable tax credit early but only on the condition that it is paid directly to the insurance company (so the recipient can't take the money and run).
So, from a technical perspective, the subsidies are funded by a combination of direct taxation, indirect taxation, and diverted tax cuts.

Ok, so take this $200B. That's $200B per year? Or $200B from 2014 through 2020? What's project to happen per year after 2020?

This is the type of sh1t btw that I suspected was going to end up happening. The money has to come from somewhere, and now from you explaining it, I'm beginning to understand the scheme.

Another question: Exactly where in all this are the actual rising HC costs controlled?

Chuck

 

[sactoking]

Ok, so take this $200B. That's $200B per year? Or $200B from 2014 through 2020? What's project to happen per year after 2020?

This is the type of sh1t btw that I suspected was going to end up happening. The money has to come from somewhere, and now from you explaining it, I'm beginning to understand the scheme.

Another question: Exactly where in all this are the actual rising HC costs controlled?

Chuck

~200B total. Though now that I'm looking at my numbers it's much lower, closer to $100B, so I think I missed something somewhere. At any rate here;s the breakdown:

1/1/12: $2.8 billion pharmaceutical tax
1/1/13: $2.8 billion pharmaceutical tax
1/1/14: $8 billion health insurance tax
1/1/14: Corporate tax rates (average?) increase 15.75%
1/1/15: $11.3 billion health insurance tax
1/1/16: $3 billion pharmaceutical tax
1/1/16: $11.3 billion health insurance tax
1/1/17: $4 billion pharmaceutical tax
1/1/17: $13.9 billion health insurance tax
1/1/18: $4.1 billion pharmaceutical tax
1/1/18: $14.3 billion health insurance tax
1/1/19 and beyond: $2.8 billion annual pharmaceutical tax
1/1/19 and beyond: Health insurance tax equal to the prior year's tax amount plus a % equal to the rate of premium growth. In 2019 it would be $14.3 billion + the average premium growth % of 2018.

I'm aware that there's a hole in the pharmaceutical tax for 2014/15, I don't know if that's intentional in the Act or an omission in the chart I have.

 

[chucky2]

Holy hell! The tax is almost doubling in 5 years?!?!? How the heck is that possible?

 

[sactoking]

Well, I believe the thinking was that the mandate would "gift" millions of new policyholders to the insurance companies. These new policyholders will be mostly young and healthy (read: profitable), so for that benevolence the government wants their cut of the extra profit.

Whether those profits ever materialize remains to be seen for, while the basic logic is correct, it does ignore the fact that market reforms will cause loss costs for the unhealthy to skyrocket. If all of the anticipated profits from the new customers actually go to subsidizing the loss costs for the infirm then the tax will backfire. If the anticipated profits are not wiped out by the increased loss costs then it will be a success.

Edited: For example, there's a brief from the Agency for Healthcare Research and Quality from January of this year (http://meps.ahrq.gov/mepsweb/data_files/publications/st354/stat354.pdf) that, if I'm reading it correctly says the following:
The top 1% of healthcare users used 20% of the nation's healthcare (by cost)
The top 5% were at 38%
The top 10% was at 44.8%
The top 10% of expenses was composed of 57.9% of expenses for people under age 65 (and thus exchange-eligible)

I extrapolate that the top 10% of people under 65 consumed ~25.94% of all healthcare (by cost)

With the combination of no lifetime benefit caps for "essential health benefits" plus the mandate grabbing up people who would normally be uninsurable, I personally expect that share % to go up dramatically. If it goes up too high (I have no idea how high is too high) then the tax mechanism will invert and, fiscally speaking, it will be a failure.

 

[Svnla]

OP, who is your current healthcare provider?

BlueCrossBlueShield sent me a letter last week and stated they spent over 80% of premium on healthcare related, therefore no rebate check for us.

 

[Hayabusa Rider]

Wow. Some seriously wrong shit.

Medicare uses private companies to do ALL thier claims processing.

Medicare claims are paid faster than private health insurance claims since under their contracts with the private health insurance companies the companies get penalized if they don't pay a certain proportion of claims within a certain amount of time. Private health insurance companies have no such restrictions. Check your private health insurance contract. There is no set time limit to pay a claim. In fact, many health insurance companies pay claims at staggered intervals that are determined by the investments of your health insurance premiums that they hold until a claim is made.

As to your last claim that somehow Medicare employees are involved in holding up claims, thats complete and utter bullshit. The only time Medicare gets involved is with new and/or experimental procedures. And in comparison, private health insurance companies have been known to sit on the same types of claims since they can more easily deny payment if a subscriber has died.

You really know nothing of health insurance and the health insurance industry, do you?

Since I am a provider and file a couple hundred claims live a day, yeah I do know. I deal with this in the real world not sit behind a desk talking about it.

 

[MooseNSquirrel]

No offense intended, but I don't really need a study; I'm seeing it in action.

(Now that I'm at a computer and not on my phone...)
For example, take scenario #1 in my prior post, the one I said was too complex. What happens is each state exchange has the ability to mandate how insurers offer health plans on the SHOP exchange. There are six main options:
1) An employer picks one plan from one insurer
2) An employer picks one insurer and the employees may choose any plan from that insurer
3) An employer picks a metal tier and the employees may choose a plan from any insurer offering that metal tier
4) An employer picks one insurer and the employees may choose a plan from a package offered by that insurer (employees do not get all choices)
5) An employer picks a partnership among multiple insurers and the employees may choose a plan from a package offered by those insurers (employees do not get all choices)
6) Open market, whereby an employee may choose any plan from any insurer at any tier

Group health insurance is generally less expensive than individual health insurance because the group rating mechanism keeps premiums down. Traditionally, for an employer to qualify for group rating they had to have a certain participation ratio among their employees, say 75% of employees had to participate in the group plan. This is why some employers wouldn't let employees opt out of coverage.

Under the ACA the participation ratio will be calculated by employees on the exchange, not employees on a particular plan. If the state allows options 3, 5, or 6 this causes huge problems. Now a company might meet the participation ratio for the exchange but not meet the participation ratio of any particular plan. This will force the insurers to go to individual rating which will be defaulted to higher premiums than group rating.

Example: An employer has 100 employees. The exchange has a participation ratio of 80%. In order to use the exchange at least 80 employees must elect to use the exchange. The exchange allows option 6 and there are a total of 10 insurers offering plans on the exchange. 80 employees elect coverage on the exchange with an equal distribution among insurers (8 people per insurer). While the group of employees has met the participation ratio requirement of 80% each individual insurer will only pick up 8 employees. 8 employees constitutes a "microgroup" and can't be effectively group rated. Premiums will more closely resemble individual premiums, which are higher than group premiums, so the employees will see higher average premiums as a result of purchasing on the exchange.

Its not a study. Just an interesting take on why costs are so high.