• Guest, The rules for the P & N subforum have been updated to prohibit "ad hominem" or personal attacks against other posters. See the full details in the post "Politics and News Rules & Guidelines."

Americans to get $1.3 billion in health care rebates

Page 3 - Seeking answers? Join the AnandTech community: where nearly half-a-million members share solutions and discuss the latest tech.

Mursilis

Diamond Member
Mar 11, 2001
7,760
11
81
Incorrect. The top 1% pay a disproportionate share of federal income taxes, not all taxes, and the contribution of payroll taxes to federal revenue currently rivals income taxes. Billionaires only pay SS taxes on the first $110K of earned income, nothing on capital gains or dividends.

Workforce participation rate is extremely low due to the marvelous & ceaseless efforts of Job Creators, and federal revenues are at their lowest % of GDP since 1950. The top 1% share of national income doubled over the last 30 years, too, and their effective tax rate fell by 1/3.

Anybody who thinks that America's wealthiest are somehow overtaxed is delusional.
Your rant about SS taxes is disingenuous, but you probably already know that. As for the rest, yes, the 1% are getting a sweet deal on taxes, so why aren't the Dems addressing that? They used to hold Congress, and just kept the good times rolling for the ultra-wealthy.
 

Hayabusa Rider

Admin Emeritus & Elite Member
Jan 26, 2000
50,879
4,210
126
UHC is by far the best thing that can happen to small businesses. Takes a big part of the risk of going out on your own out of the equation.
In theory. What if the implementation is horrid? The reality of our system strongly suggests the practice of medicine will be driven by political concern and regulation, not best practice.
 

Hayabusa Rider

Admin Emeritus & Elite Member
Jan 26, 2000
50,879
4,210
126
Really, so if I give a drug to someone, that means someone else is not going to get it? Nothing that can be done about it, like I don't know, the drug company making more? I guess I better stop buying Tylenol, wouldn't want other people to be in pain on my account.
Well you say you are an engineer. Lets cut your resources and quadruple your workload. Get all your work done with no more time and no drop in quality. Pull it off and the tylenol is free.
 

Ausm

Lifer
Oct 9, 1999
25,215
13
81
In theory. What if the implementation is horrid? The reality of our system strongly suggests the practice of medicine will be driven by political concern and regulation, not best practice.
I think this is a pertinent possibility for all phases of the ACA due to the Republican's constantly trying to unfund it or obstruct the implementation of this new Law.
 

actuarial

Platinum Member
Jan 22, 2009
2,814
0
71
In theory. What if the implementation is horrid? The reality of our system strongly suggests the practice of medicine will be driven by political concern and regulation, not best practice.
Well the implementation of your current system is horrible, and the economic consequences of private medical insurance ensure that even with a good implementation small business suffers.

I would wager that any currently implemented UHC in the world is better for small business than what the US has (note that I'm not saying for EVERY small business, but rather small business in general especially in terms of encouraging the creation of new small businesses). So the US would have to manage to be the worst country at implementing UHC by probably a wide margin to negate the benefits of UHC for those that strike out on their own.
 

Hayabusa Rider

Admin Emeritus & Elite Member
Jan 26, 2000
50,879
4,210
126
Well the implementation of your current system is horrible, and the economic consequences of private medical insurance ensure that even with a good implementation small business suffers.

I would wager that any currently implemented UHC in the world is better for small business than what the US has (note that I'm not saying for EVERY small business, but rather small business in general especially in terms of encouraging the creation of new small businesses). So the US would have to manage to be the worst country at implementing UHC by probably a wide margin to negate the benefits of UHC for those that strike out on their own.
That Considering the political realities combined with a lack of comprehension of medical realities and the tendency to regulate first and deal with things someday, yes I can believe that we can screw things up nicely. Heaven help us if Congress decides to design bridges.

The government should get people who have a clue as to handle things before charging ahead.
 

sactoking

Diamond Member
Sep 24, 2007
6,763
1,495
136
No deflection needed, once you think rationally and not like a reflexive Obama hater, you should give it a shot.
The little insight that completely escapes you is that insurance companies KNEW they would have to refund any overhead over 20%, so you would expect them to cut their overhead to not have to refund much.
So the big savings is not in the $1.3B they refunded, it's in the overhead they cut to not have to refund more.
Except absolutely none of that is true. There are no "big savings" outside of the refunds because premiums are still going up. Why? Because the ACA creates moral hazard for the insurers to not control claims costs.

Let's say that pre-ACA a health insurer had net direct written premiums of $100,000,000 and a medical loss ratio ("MLR") of 75%. This means that the insurer spent $75,000,000 on medical claims and had $25,000,000 for operational costs and profits. Post-ACA that same health insurer again has net direct written premiums of $100,000,000 and spent $75,000,000 on medical claims for a MLR of 75%. Now however the ACA requires an insurer to have a MLR of 80% or it must refund the excess premiums. The insurer has two options:
1) Given medical claims of $75,000,000 and a mandated MLR of 80% the insurer can retain $93,750,00 of premiums ($75,000,000/0.8) and refund $6,250,000 to the policyholders. The insurer's operating margin is 20% (100%-80%) of $93,750,000, or $18,750,000.
2) Given $100,000,000 of net direct written premiums and a mandated MLR of 80% the insurer can purposely neglect to aggressively control claims costs and let claims balloon to $80,000,000. The insurer's operating margin is 20% of $100,000,000, or $20,000,000.

#1 is how the ACA is supposed to work. But look at the two choices; the insurer can choose to have an operating margin of $18,750,000 or it can be $20,000,000. Which one will they strive for?
 

senseamp

Lifer
Feb 5, 2006
34,747
4,619
126
Well you say you are an engineer. Lets cut your resources and quadruple your workload. Get all your work done with no more time and no drop in quality. Pull it off and the tylenol is free.
OK, I am an engineer. And if my company was spending 2x as much on R&D as its competitors, and came to me and said, hey, you know what, we are spending twice as much, that means the competition is producing 100% more results per buck, but we are only going to ask for 30% more from you. Is that too much to ask? I would say, no that sounds reasonable.
Well, the US is spending 2x as much as other developed countries on health care, we are not resource limited. We are productivity limited, and we can provide good health care for everyone for what we spend, if we decide to.
 

senseamp

Lifer
Feb 5, 2006
34,747
4,619
126
Except absolutely none of that is true. There are no "big savings" outside of the refunds because premiums are still going up. Why? Because the ACA creates moral hazard for the insurers to not control claims costs.

Let's say that pre-ACA a health insurer had net direct written premiums of $100,000,000 and a medical loss ratio ("MLR") of 75%. This means that the insurer spent $75,000,000 on medical claims and had $25,000,000 for operational costs and profits. Post-ACA that same health insurer again has net direct written premiums of $100,000,000 and spent $75,000,000 on medical claims for a MLR of 75%. Now however the ACA requires an insurer to have a MLR of 80% or it must refund the excess premiums. The insurer has two options:
1) Given medical claims of $75,000,000 and a mandated MLR of 80% the insurer can retain $93,750,00 of premiums ($75,000,000/0.8) and refund $6,250,000 to the policyholders. The insurer's operating margin is 20% (100%-80%) of $93,750,000, or $18,750,000.
2) Given $100,000,000 of net direct written premiums and a mandated MLR of 80% the insurer can purposely neglect to aggressively control claims costs and let claims balloon to $80,000,000. The insurer's operating margin is 20% of $100,000,000, or $20,000,000.

#1 is how the ACA is supposed to work. But look at the two choices; the insurer can choose to have an operating margin of $18,750,000 or it can be $20,000,000. Which one will they strive for?
So they have an incentive to pay for a cancer patient's treatment instead of rescinding their coverage?
 

sactoking

Diamond Member
Sep 24, 2007
6,763
1,495
136
So they have an incentive to pay for a cancer patient's treatment instead of rescinding their coverage?
Nope. The insurers have no incentive to cover more treatments but they do have incentive to pay more for the treatments they do cover. Ever received an EOB (Explanation of Benefits) from your insurer where they show what they were billed and what they paid? It usually would look something like this:

Amt Billed: $400
In-Network Contract Amount: $350
Coinsurance: $280
Patient's Responsibility: $70

Now it will say:

Amt Billed: $400
In-Network Contract Amount: $400
Coinsurance: $320
Patient's Responsibility: $80

They don't want to expand coverage because that is too unpredictable. The insurers want to pay more for existing coverage so they can meet their 80% MLR on the same volume of net direct written premiums. Not only will this drive up the cost of coverage and premiums, but anyone with a coinsurance clause will pay more out of pocket as well.
 

senseamp

Lifer
Feb 5, 2006
34,747
4,619
126
Why don't they have incentive to cover more treatments? They take 20% of the cost of those?
 

sactoking

Diamond Member
Sep 24, 2007
6,763
1,495
136
For the same reason they're not covered before ACA when the margin was (theoretically) limitless: they're not statistically and/or economically viable. Limiting an insurer's MLR margin won't cause them to expand services. If anything, you'll see a contraction of services offered to those which are mandated by law and those which have the greatest profit stability.
 

senseamp

Lifer
Feb 5, 2006
34,747
4,619
126
For the same reason they're not covered before ACA when the margin was (theoretically) limitless: they're not statistically and/or economically viable. Limiting an insurer's MLR margin won't cause them to expand services. If anything, you'll see a contraction of services offered to those which are mandated by law and those which have the greatest profit stability.
You are contradicting yourself. You are saying insurer is better off spending more money, so they can keep more money under the MLR limit. If that was true, they would want to spend more money on expensive treatments to grow their 20% commission.
 

Hayabusa Rider

Admin Emeritus & Elite Member
Jan 26, 2000
50,879
4,210
126
OK, I am an engineer. And if my company was spending 2x as much on R&D as its competitors, and came to me and said, hey, you know what, we are spending twice as much, that means the competition is producing 100% more results per buck, but we are only going to ask for 30% more from you. Is that too much to ask? I would say, no that sounds reasonable.
Well, the US is spending 2x as much as other developed countries on health care, we are not resource limited. We are productivity limited, and we can provide good health care for everyone for what we spend, if we decide to.
Ok, you budget is cut by third, but your costs haven't changed. You are now in the red. Lay off your staff, do the clerical work and the other functions. Do the same volume of your original work and don't make mistakes. Then make bricks without straw.
 

senseamp

Lifer
Feb 5, 2006
34,747
4,619
126
Ok, you budget is cut by third, but your costs haven't changed. You are now in the red. Lay off your staff, do the clerical work and the other functions. Do the same volume of your original work and don't make mistakes. Then make bricks without straw.
If your cost is 2x your competitor for providing same service per person, you need to work on your costs, not serve fewer people.
 

sactoking

Diamond Member
Sep 24, 2007
6,763
1,495
136
You are contradicting yourself. You are saying insurer is better off spending more money, so they can keep more money under the MLR limit. If that was true, they would want to spend more money on expensive treatments to grow their 20% commission.
No, no, no, no, no. They don't want to expand coverage; the items already excluded are not statistically and/or economically viable. For any given policy that covers XYZ for a premium of $100, they want to make sure the treatment of XYZ costs $80. This ensures that they retain the $20 margin.

There is a world of difference between paying more for existing coverage and expanding coverage.
 

senseamp

Lifer
Feb 5, 2006
34,747
4,619
126
No, no, no, no, no. They don't want to expand coverage; the items already excluded are not statistically and/or economically viable. For any given policy that covers XYZ for a premium of $100, they want to make sure the treatment of XYZ costs $80. This ensures that they retain the $20 margin.

There is a world of difference between paying more for existing coverage and expanding coverage.
That makes no sense. They either want to spend more money, or they don't. You are trying to have it both ways. You are claiming insurance companies are going to go out of their way to overpay on treatments, while at the same time damaging their reputation and potentially getting sued by rescinding coverage to save some money. That is just a bunch of baloney.
 

senseamp

Lifer
Feb 5, 2006
34,747
4,619
126
Cut costs? You mean lay people off? Do you know what costs are?
Prevention and treating people before they get really sick, really expensive to treat, and disabled for life. All of that cuts costs. It's not rocket surgery.
 

Fern

Elite Member
Super Moderator
Sep 30, 2003
26,916
172
106
Except absolutely none of that is true. There are no "big savings" outside of the refunds because premiums are still going up. Why? Because the ACA creates moral hazard for the insurers to not control claims costs.

-snip-
Excellent analysis (several of your posts on this issue).

Fern
 

sactoking

Diamond Member
Sep 24, 2007
6,763
1,495
136
That makes no sense. They either want to spend more money, or they don't. You are trying to have it both ways. You are claiming insurance companies are going to go out of their way to overpay on treatments, while at the same time damaging their reputation and potentially getting sued by rescinding coverage to save some money. That is just a bunch of baloney.

I know how they operate.

You have to remember, the MLR calculation fluctuates throughout the year. Policies and the resultant coverages are, for all intents and purposes, static. Claims payments fluctuate. Given the static nature of policy language and approved rate filings the only thing that is flexible and can be manipulated to respond to fluctuating MLR is the claims payment.

The insurers will only "go out of their way to overpay on treatments" if they have to; that is if they're projected to miss their MLR requirement.

I didn't say they'd rescind coverage to save money. I did say that they might eliminate coverage to only the most profitable lines to ensure they hit their MLR. Eliminating coverage does not necessarily involve rescission, it can be accomplished by introducing a new, more limited policy form and ceasing to sell the older form. That happens all the time in insurance.

I've represented AIG and New York Life. I've worked for Zurich. I've sold for State Farm. I've regulated some of the largest health insurers in the nation, like UnitedHealth Group. I know how they work.
 

ASK THE COMMUNITY