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Insurance rates rise steeply, rationing the solution?

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Insurance rates rise steeply, rationing the solution?

Postby AlexDaGator » Wed Jan 23, 2013 1:45 pm

http://www.forbes.com/sites/realspin/2013/01/22/health-insurance-brokers-prepare-clients-for-obamacare-sticker-shock/

A California insurance broker, who sells health plans to individuals and small businesses, told me that she’s prepping her clients for a sticker shock. Her local carriers are hinting to her that premiums may triple this fall, when the plans unveil how they’ll billet the full brunt of Obamacare’s new regulations and mandates.


What’s gives? President Obama, after all, said he’d prevent these sorts of prices. His new health law gave state regulators the power to block premium increases. It even created a federal agency to oversee insurance rates. But these bureaucrats are spectators to the price hikes. They’re mere wallflowers. Even in the bluest of states.

Their silence is the best evidence of who is culpable for the increases. It’s the policymakers. It’s Obamacare. The President is accepting the premium hikes as an allowable consequence of his healthcare policies.


This lesson was learned by Massachusetts, after it adopted its own skinny version of Obamacare. To meet the law’s costs, insurers hiked premiums. Massachusetts’s regulators blocked the increases. All the plans reported losses the very next quarter.

This simple economic axiom doesn’t mean the higher premiums were tolerated in Massachusetts, or will be embraced by Washington. What Massachusetts did afterwards is a lesson for where the entire nation is heading under Obamacare.

Massachusetts regulators went after the underlying source of spending – peoples’ use of medical services. First and foremost, that meant taking on the providers. Massachusetts moved to regulate the prices that doctors and hospitals could charge and the kind of services that they could offer. Rates are rising nationally because, like Massachusetts, Obamacare guarantees more free medical services while doing nothing to make the market for these things more efficient, or competitive. Like Massachusetts, some form of price controls is the next political chapter.


The prices Washington pays for medical services will gradually fall below the rates where things will be readily supplied. That’s the legacy of Medicaid, and increasingly Medicare as well. Don’t worry, though. The medical services that you’ll have a hard time accessing are mostly the stuff you’ll only need if you get really sick.


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Re: Insurance rates rise steeply, rationing the solution?

Postby gator1946 » Wed Jan 23, 2013 2:37 pm

I am no fan of the new Health Care Law, but triple?? Come on. If my already outrageous premiums were to triple, the doors would close. So would everybody else's.
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Re: Insurance rates rise steeply, rationing the solution?

Postby AugustaGator » Wed Jan 23, 2013 3:26 pm

Insurance companies are going to kill the goose.

Another nail in the coffin to single payer healthcare.

Eliminate those greedy bastards.
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Re: Insurance rates rise steeply, rationing the solution?

Postby AlexDaGator » Wed Jan 23, 2013 3:45 pm

gator1946 wrote:I am no fan of the new Health Care Law, but triple?? Come on. If my already outrageous premiums were to triple, the doors would close. So would everybody else's.



I think that line only applies to a small portion of policies out there. In the next paragraph, the author talks about double digit increases. That's where most of the increases I've seen have fallen, 12%-16% range.

While it is not 300%, a 15% increase is still quite significant.

The point is that the increases are significant enough that something will have to be done to curb them.

Let's say you have people of the same age and health. One rarely goes to the doctor unless it's absolutely necessary. The other goes all the time, for every little thing. If they're both on the same insurance plan, they're both paying the same amount but in effect, the first person is subsidizing the second person. This won't work for long. It's like the "Tragedy of the Commons." The second person is driving up costs by heavy usage.

Say the first guy goes to the doctor twice a year. The second goes 14 times. Total of 16 visits. You either have to cut back on the number of visits, or you have to cut back the cost of the visits. Here are your options:

1. Limit the second person's access to healthcare so he uses less. You get up to 8 covered visits, after that, it's out of your own pocket. Kinda defeats the whole purpose of insurance, no? What happens when somebody uses up all their visits by June and can't afford another? Late diagnosis means early death. Not pretty.

2. Make the visits cheaper so that the cost of 16 visits is the same of what the cost of 10 visits used to be. Whereas before, about half of the visits resulted in x-rays, an MRI or CT scan, or lab work, you cut that down to make the visits cheaper. What else can you do? Doctors won't work for free. Got a mole that's worrying you? We could go ahead and cut it today and do a biopsy (expensive) or we could watch it and see if it changes when you come in for your next check-up in another two years (cheaper). We do a million hip replacement surgeries a year. Too expensive. Let's cut that back to half a million. So, instead of hip replacement surgery, you get on a waiting list for hip replacement surgery. Much cheaper.

This is rationing and this is where we are headed. It looks a little bit like Canada and a little bit like the VA and it's nothing like what you are used to.

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Re: Insurance rates rise steeply, rationing the solution?

Postby divits888 » Wed Jan 23, 2013 4:01 pm

As with most Acts passed in Washington, you can always count on their name being the exact opposite of what they will provide.... e.g. “The Affordable Healthcare Act”.
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Re: Insurance rates rise steeply, rationing the solution?

Postby URGatorBait » Wed Jan 23, 2013 4:09 pm

divits888 wrote:As with most Acts passed in Washington, you can always count on their name being the exact opposite of what they will provide.... e.g. “The Affordable Healthcare Act”.


Whatever the Government states something will cost. Expect it to cost anywhere from 3-5 times as much as they state, generally speaking.
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Re: Insurance rates rise steeply, rationing the solution?

Postby itsgr82bag8r » Wed Jan 23, 2013 4:15 pm

"The nine most terrifying words in the English language are: 'I'm from the government and I'm here to help.'"


- Ronald Reagan
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Re: Insurance rates rise steeply, rationing the solution?

Postby gator1946 » Wed Jan 23, 2013 4:53 pm

1. Putting triple in the lead kills the authors credibility.
2. "a 15% increase is still quite significant." I hope to God it's just 15%. Our premiums have been going that much for years.

This article just seems like trash. I don't disagree with the point, but its a sloppy article.
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Re: Insurance rates rise steeply, rationing the solution?

Postby AlexDaGator » Wed Jan 23, 2013 5:19 pm

gator1946 wrote:1. Putting triple in the lead kills the authors credibility.
2. "a 15% increase is still quite significant." I hope to God it's just 15%. Our premiums have been going that much for years.

This article just seems like trash. I don't disagree with the point, but its a sloppy article.


Whoa.

I don't think he's kidding about the 300%. I think that's legit for some plans in California so unless I hear differently, he hasn't lost any credibility.

He then says double digits across the country, that's anywhere from 10% to 99%,

Rather a large range.

The low double digits is what I have been seeing and hearing the past couple of years, just like you. Double digits, but on the low side. That's still way too much but it's not unexpected...it's not "sticker shock."

He's talking about something else--much bigger numbers going forward.

I'm saying even 15% annual increases are unsustainable.

What would annual rate increases of just 27% do to you? How about 42%? 67%? That is double digits and that would be sticker shock.

Increases should be no more than a few points above inflation.

Why are they going up so much faster than inflation?

I believe this is what happens when you screw with the market.

Same as higher education.

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Re: Insurance rates rise steeply, rationing the solution?

Postby vulcan_alex » Wed Jan 23, 2013 6:00 pm

Well large companies pay for whatever they use plus something for the insurance company to administer. I was expecting 10% increase this year but got Zero!! Boy was I surprised, but happy.

Now real insurance probably will increase greatly as the healthy pay for the less healthy.
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Re: Insurance rates rise steeply, rationing the solution?

Postby L-Boy » Wed Jan 23, 2013 6:03 pm

Is rationing the solution?

Rationing is already part of the system. Health care is rationed based upon price, who has coverage, who has a job, who doesn't, who qualifies for medicare, medicaid, etc. etc. Insurance companies, medicare, medicaid, etc all have set prices on services, specific requirements for reimbursements, etc.

So will the rationing methodology change? Probably. That isn't necessarily all bad.

If a third party is going to pay for a signifcant portion of the health care, whether it is private insurance companies/employers or the government, you need rationing, otherwise people will consume more than they need.
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Re: Insurance rates rise steeply, rationing the solution?

Postby gator1946 » Wed Jan 23, 2013 6:32 pm

AlexDaGator wrote:
gator1946 wrote:1. Putting triple in the lead kills the authors credibility.
2. "a 15% increase is still quite significant." I hope to God it's just 15%. Our premiums have been going that much for years.

This article just seems like trash. I don't disagree with the point, but its a sloppy article.


Whoa.

I don't think he's kidding about the 300%. I think that's legit for some plans in California so unless I hear differently, he hasn't lost any credibility.

He then says double digits across the country, that's anywhere from 10% to 99%,

Rather a large range.

The low double digits is what I have been seeing and hearing the past couple of years, just like you. Double digits, but on the low side. That's still way too much but it's not unexpected...it's not "sticker shock."

He's talking about something else--much bigger numbers going forward.

I'm saying even 15% annual increases are unsustainable.

What would annual rate increases of just 27% do to you? How about 42%? 67%? That is double digits and that would be sticker shock.

Increases should be no more than a few points above inflation.

Why are they going up so much faster than inflation?

I believe this is what happens when you screw with the market.

Same as higher education.

Alex.


I don't disagree with you Alex. I just think the lead in is a bit sensationalist and attempt to grab eyeballs. (Somebody is going to take a 300% hit because the insurer doesn't want their business anymore.) It takes away from the basic point that this law as it stands isn't doing a thing to lower costs. It's a mess. I will fall on the floor if my costs don't go up 25% this year. I've got a crew of fairly young low risk guys, and they are going to pay for us old farts.
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Re: Insurance rates rise steeply, rationing the solution?

Postby L-Boy » Wed Jan 23, 2013 7:31 pm

My guess has been that Obamacare will be an awkward first step towards something different but hopefully better. There will be unintended consequences, which could very well include higher than normal premium hikes, which will lead to modifications, etc. etc.
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Re: Insurance rates rise steeply, rationing the solution?

Postby vulcan_alex » Wed Jan 23, 2013 7:58 pm

L-Boy wrote:My guess has been that Obamacare will be an awkward first step towards something different but hopefully better. There will be unintended consequences, which could very well include higher than normal premium hikes, which will lead to modifications, etc. etc.


Well we have plenty of hoping and guessing. Nothing better will come until and unless we focus on costs and use. Spreading the costs differently will never reduce them, and insurance is not health care. Simple!! But difficult to impossible to do.
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Re: Insurance rates rise steeply, rationing the solution?

Postby Hoosier Gator » Wed Jan 23, 2013 10:41 pm

Where I work premiums went up from 30 - 70% depending on which plan you had. It was not a good year. I question the impact allowing children up to 25 years to stay on their parent's insurance. It increased the cost (how much?) but there was no increase in revenue.
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Re: Insurance rates rise steeply, rationing the solution?

Postby gator1946 » Wed Jan 23, 2013 11:39 pm

L-Boy wrote:My guess has been that Obamacare will be an awkward first step towards something different but hopefully better. There will be unintended consequences, which could very well include higher than normal premium hikes, which will lead to modifications, etc. etc.


My guess is this will be a complete mess, and congress will screw up the "fixes" two or three times before the thing is tolerable.



Maybe two or three times is optimistic.
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Re: Insurance rates rise steeply, rationing the solution?

Postby gatorhar » Thu Jan 24, 2013 10:44 am

The insurance companies have a better racquet going than bookies. They win no matter the outcome. This is like being forced to place a bet up front on all 12 regular season Gator games but you only have a play on 3 of those games. The other 9 games you are not even permitted a play yet you still have to place the bet. Then imagine on one of the games you actually have a play and actually get to collect, the bookie tells you well since the Gators didn’t perform up to the my standards, I’m only going to pay you a portion of what you are owed.

The insurance companies can’t loose. They manipulate the price on the front end in advance and if they don’t like the outcome of the game they screw the consumer and/or health care provider.

So insurance companies are getting 30 million new customers. Funded by: Additional taxes on employees $63/year, taxes on those making over $200,000/year, taxes on certain investments, those being required to purchase insurance for the first time that can afford it, and businesses of a certain size which now must offer insurance. (I may be leaving other new sources paying into the pie out, please feel free to add).

So for discussion 300 million Americans either paying premiums, solely or employer assisted or through government help all going to insurance companies. Yet 300 million Americans will not use the service. Don’t know about you but I don’t run to doctors if I can help it. I do everything in my power to stay healthy. No one wants to get sick. So insurance companies like my bookie analogy are collecting on millions of Americans each month who never use the service. Yet they have the audacity to raise premiums almost every year even before the AHCA and now try to blame it on the AHCA. This is a scam.

While insurance companies may take a hit in year 1 or 2 (I doubt it) when people who haven’t had health care receive some initial health care, by 2016 insurance companies will be flush with money. If you want to secure your future have your broker buy you some insurance stock and just sit back. You will be sitting in Bull Gator seats by 2018.
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Re: Insurance rates rise steeply, rationing the solution?

Postby L-Boy » Thu Jan 24, 2013 11:52 am

gator1946 wrote:
L-Boy wrote:My guess has been that Obamacare will be an awkward first step towards something different but hopefully better. There will be unintended consequences, which could very well include higher than normal premium hikes, which will lead to modifications, etc. etc.


My guess is this will be a complete mess, and congress will screw up the "fixes" two or three times before the thing is tolerable.



Maybe two or three times is optimistic.



The problem is we aren't willing to make hard choices. We want affordable and universal coverage, we don't want any restrictions on going to the doctor (rationing) and we don't what any think that smells like government price controls, and we don't want to spoil drug companies 30% ROE's and M.D.'s top 1% incomes from their entreprenuirial practices, each with every top dollar piece of equipment in every practice.
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Re: Insurance rates rise steeply, rationing the solution?

Postby AlexDaGator » Thu Jan 24, 2013 4:23 pm

L-Boy wrote:Is rationing the solution?

Rationing is already part of the system. Health care is rationed based upon price, who has coverage, who has a job, who doesn't, who qualifies for medicare, medicaid, etc. etc. Insurance companies, medicare, medicaid, etc all have set prices on services, specific requirements for reimbursements, etc.

So will the rationing methodology change? Probably. That isn't necessarily all bad.

If a third party is going to pay for a signifcant portion of the health care, whether it is private insurance companies/employers or the government, you need rationing, otherwise people will consume more than they need.


So, by your logic, everything that costs money is rationed????

C'mon dude.

The cost of something is not rationing.

By your logic, BMWs are rationed too. Rationed based on who can afford one, based on who can qualify for financing for one, based on who can get transportation to a dealership to buy one, based on who can get insurance, and a driver's license...

This is ridiculous.

Of course rich people can afford nicer cars than poor people. That's not "rationing".

Please retire this silly line of argument.

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Re: Insurance rates rise steeply, rationing the solution?

Postby AlexDaGator » Thu Jan 24, 2013 4:38 pm

gatorhar wrote:The insurance companies have a better racquet going than bookies. They win no matter the outcome. This is like being forced to place a bet up front on all 12 regular season Gator games but you only have a play on 3 of those games. The other 9 games you are not even permitted a play yet you still have to place the bet. Then imagine on one of the games you actually have a play and actually get to collect, the bookie tells you well since the Gators didn’t perform up to the my standards, I’m only going to pay you a portion of what you are owed.

The insurance companies can’t loose. They manipulate the price on the front end in advance and if they don’t like the outcome of the game they screw the consumer and/or health care provider.

So insurance companies are getting 30 million new customers. Funded by: Additional taxes on employees $63/year, taxes on those making over $200,000/year, taxes on certain investments, those being required to purchase insurance for the first time that can afford it, and businesses of a certain size which now must offer insurance. (I may be leaving other new sources paying into the pie out, please feel free to add).

So for discussion 300 million Americans either paying premiums, solely or employer assisted or through government help all going to insurance companies. Yet 300 million Americans will not use the service. Don’t know about you but I don’t run to doctors if I can help it. I do everything in my power to stay healthy. No one wants to get sick. So insurance companies like my bookie analogy are collecting on millions of Americans each month who never use the service. Yet they have the audacity to raise premiums almost every year even before the AHCA and now try to blame it on the AHCA. This is a scam.

While insurance companies may take a hit in year 1 or 2 (I doubt it) when people who haven’t had health care receive some initial health care, by 2016 insurance companies will be flush with money. If you want to secure your future have your broker buy you some insurance stock and just sit back. You will be sitting in Bull Gator seats by 2018.


Insurance companies are not charities.

Insurance is a business. It's like a Las Vegas casino. It only works if the odds are stacked in its favor.

There is no such thing as a free lunch.

Insurance is a losing bet for most people. It has to be for the insurance industry to survive. If it was a winning bet for most people, it would go out of business and there would be no insurance.

Everybody pays a little less than they get out of it (on average) in return for peace of mind. Some get more out than they put in, most get less.

If you don't like it, don't buy it. Self-insure. That's what lots of young, healthy folks do.

Oh, that's right. You don't have that freedom any more. You HAVE to have insurance.

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