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Hoosier
03-26-2010, 05:03 PM
So now that this new health care bill is the law of the land, what impact do you think it will have on health insurance companies? Are they just going to change how they do business, or is it going to put a lot of them under?

Ken Newcomb
03-26-2010, 05:10 PM
Stock in Insurance should show at least a short term increase. Everyone is required to buy it and after that they become the money collector for the gov.

YardleyLabs
03-26-2010, 05:18 PM
It will depend on what happens with enrollments. High cost patients are not the fear of insurance companies. Systematic adverse selection is. If people begin to game the system by going without coverage until they need care, the entire process fails. The solution is increased penalties for non-participation, which the health bills phase in over time. An advantage of the open enrollment process s that it prevents insurance companies from skimming the cream to get the lowest cost customers. However, we may see some launching major advertising campaigns to try to attract younger enrollees.

M&K's Retrievers
03-26-2010, 08:37 PM
It will depend on what happens with enrollments. High cost patients are not the fear of insurance companies. Systematic adverse selection is. If people begin to game the system by going without coverage until they need care, the entire process fails. The solution is increased penalties for non-participation, which the health bills phase in over time. An advantage of the open enrollment process s that it prevents insurance companies from skimming the cream to get the lowest cost customers. However, we may see some launching major advertising campaigns to try to attract younger enrollees.

To quote Homer "Doh!". You have a single payor system. You just don't know it yet.

Hoosier
03-26-2010, 09:59 PM
OK, now that the law requires us to buy health insurance, which one of you liberals that thought it was a good idea, is gonna walk around the hood telling all the thugs that don't buy it that they have to or else. Better get started, I'm sure there will be millions of doors to knock on. Oh and good luck with that.

luvmylabs23139
03-26-2010, 10:18 PM
OK, now that the law requires us to buy health insurance, which one of you liberals that thought it was a good idea, is gonna walk around the hood telling all the thugs that don't buy it that they have to or else. Better get started, I'm sure there will be millions of doors to knock on. Oh and good luck with that.

The thugs in the hood don't have to buy anything. We are paying their way thru the expansion of medicaid:rolleyes:
Share the wealth and all you know! :confused:

Gerry Clinchy
03-27-2010, 08:31 AM
However, we may see some launching major advertising campaigns to try to attract younger enrollees.

While I don't like the legislation, this idea would be a good one for insurance companies. Perhaps it is one they should have used sooner :-)

Now that there will be a penalty for non-participation ... and I think that's supposed to end up being 2.5% of income. If faced with a penalty for which one receives no benefits in return, I would pay that amount for "something" rather than nothing.

Since ALL new policies will be required to have maternity benefit, etc. will there be ANY coverage that can be purchased for the penalty amount? For a young person earning $50,000/year, 2.5% of income is $1250. If the CBO is correct in estimating that annual premiums will increase by $2300 to $2500 ... I'd guess that the penalty is going to be significantly less than the cost of coverage, so that young person would "game" the system.

OTOH, if insurors had the ability to offer the young/healthy person just catastrophic coverage with some co-pays and strip out the maternity (if appropriate), then there would be incentive for those people to participate ... and the actuarial soundness of the overhal needs something more than the $1250 to sustain. Then give that young, healthy person a Schedule A deduction for the amount in excess of the "penalty amount". Unless the incentives to participate are greater than the penalties for not participating, what jerk would participate until they absolutely have to?

The only way to make this work is to make the penalty at least equal to the cost of participating.

I know that Michelle Bachman is not very popular on this forum, but she made an intelligent statement in an interview yesterday ... she said that we will witness many amendments to this bill in the coming couple of years to "fix" the mistakes that were made in putting it together.

I believe she is correct. This penalty thing is one of those "mistakes". (penalty not equal to incentive). They could have simply made the penalty equal to the premium for the cost of a policy for that individual. This has been the problem with this bill, a mish-mash with several poorly structured pieces. It should have been done better from the outset. By the time they are through "fixing" it, it will look like the IRS Tax Code. (Is there anyone on this forum who understands those tens of thousands of pages? or even read them?)

Another interesting comment ... we'll see if it comes true. John Deere also announced that this bill would cost them $150 million. The prediction is that this will cause more layoffs in the US, and jobs moving to other countries. (Same prediction for Caterpillar). If this is accurate, and if there are similar results in other large employers, the economic mess will make today's unemployment situation look like a walk in the park.

YardleyLabs
03-27-2010, 08:44 AM
I will agree that there will many amendments as the program evolves, just as there were with social security and medicare. Complex programs are lke that. The original provisions of HR 3200 contained much stiffer penalties for failure to purchase/provide coverage. The Ultimate 2-3% penalty for individuals is roughly equivalent to what people with employer sponsored health insurance pay for their coverage. Once subsidies are in full force, it is also pretty close to the cost that would be faced by lower income participants after the effect of subsidies is considered. The real difference in the law as adopted is that the penalties on employers have been reduced from 8% of salaries to a much lower number (it increases over time). I think many businesses will announce cut backs in benefits over time and say things like "It's cheaper to pay the penalty than to pay for benefits." Those that say this are blowing smoke. The fact is that it is cheaper now not to provide benefits and there is no penalty. Amazingly, most companies provide benefits anyway and the number that do so has been declining in the face of competitive pressures over time. Over the next 20 years I expect that all American businesses will stop providing health care benefits simply to preserve their competitive position in a world where no other country places this burden on the private sector. If this program provides cover for that, it will have done a favor to our business economy. Having employer financed health benefits has been a bad thing on balance, not a good one.

dixidawg
03-27-2010, 08:58 AM
If this program provides cover for that, it will have done a favor to our business economy. Having employer financed health benefits has been a bad thing on balance, not a good one.

Jeff,

That all depends on the increased tax burden placed on the businesses. It also assumes that government is more efficient in providing these benefits, which may be a VERY big stretch. Time will tell, but to make a blanket assumption that the total healthcare burden will be lessened by having the gov't run it is still very much open to debate. I really have a hard time believing the gov't is or can be very efficient in anything it does, especially with something of this scale.

YardleyLabs
03-27-2010, 10:08 AM
Jeff,

That all depends on the increased tax burden placed on the businesses. It also assumes that government is more efficient in providing these benefits, which may be a VERY big stretch. Time will tell, but to make a blanket assumption that the total healthcare burden will be lessened by having the gov't run it is still very much open to debate. I really have a hard time believing the gov't is or can be very efficient in anything it does, especially with something of this scale.
What would government's role be in providing benefits? I don't believe that there is any interest in having the government become more active as a direct provider of medical services. Where the government currently provides claim payment services (Medicare through State governments and Medicare through the Federal government), private third party payer companies provide almost all services. There are no Federal bureaucrats processing medical claims now. There are a few states the process Medicaid claims directly, but very few. Businesses now generally pay for health insurance coverage. I see nothing very distorting if they are asked to pay an equivalent level of taxes instead. However, these should not be payroll taxes since those discourage employment. Having said that there is nothing wrong with charging them such taxes, I should also add that I do not really believe in corporate taxation. I believe all taxes should be based on personal income and property. However, I do not see that happening in this country in the foreseeable future. As people, we have proven over and over again that we want the benefits of an active government but we never want to see the bill.

Gerry Clinchy
03-27-2010, 01:11 PM
I think many businesses will announce cut backs in benefits over time and say things like "It's cheaper to pay the penalty than to pay for benefits." Those that say this are blowing smoke.

Sending jobs to other countries is a reality. I can think of only two reasons to do that: to control labor cost or seek out a better tax environment.


The Ultimate 2-3% penalty for individuals is roughly equivalent to what people with employer sponsored health insurance pay for their coverage. Once subsidies are in full force, it is also pretty close to the cost that would be faced by lower income participants after the effect of subsidies is considered.

We can't really assess this until we see whether the CBO is right about the cost of coverage increasing by $2300 to $2500 per year. It may not help those employees of smaller companies not required to provide health coverage.


Over the next 20 years I expect that all American businesses will stop providing health care benefits simply to preserve their competitive position in a world where no other country places this burden on the private sector.

Under this bill, the employers are required to provide coverage (if they have "X" # of employees or more; or have average payroll of "X"). Does this mean that you anticipate that this will be changed, i.e. the requirement & attendant penalty will be removed? I guess they just had to say that everyone could keep their present coverage so that they could get a bill passed?


Where the government currently provides claim payment services (Medicare through State governments and Medicare through the Federal government), private third party payer companies provide almost all services.

At this point the govt provides a subsidy (Medicare or Medicaid), and then provides the claim service. At this point the Medicare coverage is designed by the govt. Where it falls short, the participant then acquires additional coverage at their own expense.

When the provisions of "basic" coverage are ultimately precisely delineated, then individuals will know whether and to what extent they will want/need to add additional coverage to fill any gaps. But they will have to be careful about getting into the "luxury" plan category (which, as I understand it are NOT indexed; so if costs for coverage increase, more people will find themselves in "luxury" plans?).

There will also now be a provision for govt regulating the increases that private insurors propose. How long before private insurors decide to get out of the business, and just provide the "gap" coverages as they do with Medicare? Without control of the costs of the services themselves, insuring the costs of those services inevitably has to increase as the costs of the services increase.

While the govt has no present intention to employ the doctors and own the hospital facilities, by controlling the reimbursement schedules, I feel it is inevitable that there will eventually be rules such as exist in UK and Scandanavian countries whereby treatments are allocated on a cost v. benefit basis.


There are no Federal bureaucrats processing medical claims now.

So, the private insurors could ultimately simply become claims processing subcontractors. Thus, not all their employees will have to seek out jobs with the Federal govt :-) OTOH, Federal employees do not have to belong to Soc Security; they get a better deal.

YardleyLabs
03-27-2010, 01:55 PM
Sending jobs to other countries is a reality. I can think of only two reasons to do that: to control labor cost or seek out a better tax environment.
That is exactly what is happening now and a major driving force is the cost of health benefits being paid for US based employees.




...

While the govt has no present intention to employ the doctors and own the hospital facilities, by controlling the reimbursement schedules, I feel it is inevitable that there will eventually be rules such as exist in UK and Scandanavian countries whereby treatments are allocated on a cost v. benefit basis.

I'm not really familiar with the Scandanavian systems. The UK and Canada started out as government budgeted and operated providers from the beginning. I see no impetus for that here. Historically, the hospital system in this country began with a mix of government and charity operaty hospitals. Many of the public hospitals remain -- particularly in NYC, but most closed with the end of the tuberculosis epidemics. Prior to the 1980's there were almost no for profit hospitals and none of those that existed were in the ranks of the nation's best hospitals. That too has shifted over time. I don't see a lot of impetus for the creation of new public hospitals, but I am not sure that it would be a bad thing. y the way, insurance companies now decide what services to approve based on their own cost/benefit assessments. That is why many services require prior approval and approvals are not assured not matter how important your doctor believe the treatment may be. I have two severely arthritic knees. The treatment I receive is based entirely on what my insurance company thinks is appropriate, not my doctor, unless I choose to pay 100% of the cost.



Under this bill, the employers are required to provide coverage (if they have "X" # of employees or more; or have average payroll of "X"). Does this mean that you anticipate that this will be changed, i.e. the requirement & attendant penalty will be removed? I guess they just had to say that everyone could keep their present coverage so that they could get a bill passed?
Employers are required to provide coverage or pay a penalty (tax). Each year, the percentage of our population covered by employer sponsored plans declines as businesses stop proving health benefits or outsource jobs to companies that do not provide benefits. My forecast that employer supplied benefits will essentially disappear over the next 20 years stands with or without the new law. How can American businesses compete effectively in a global market if they are providing benefits that are either not available at all in other countries or are provided by the government. The first jobs to be outsourced to other countries are those for which the benefits are the greatest as a percentage of total compensation. That has been going on for years and is a major reason why job growth has been so slow even when economic growth has been high over the last decade.



So, the private insurors could ultimately simply become claims processing subcontractors. Thus, not all their employees will have to seek out jobs with the Federal govt :-) ...
What do you think they are now? There is very little insurance component to health benefits. It is viewed as a straight transaction management process with a lot of marketing to provide the icing. That is why many true insurance companies don't bother with health benefits now.

M&K's Retrievers
03-27-2010, 02:31 PM
I'm not really familiar with......What??



That is why many true insurance companies don't bother with health benefits now. Most companies don't write health insurance today because State and Federal mandates make it almost impossible to make a profit. Now it will be impossible.

............

kjrice
03-27-2010, 04:16 PM
They will have even more power to deny claims or procedures. My company will decrease benefits and raise costs even more than usual to support this unconstitutional act.

Gerry Clinchy
03-27-2010, 05:54 PM
That is exactly what is happening now and a major driving force is the cost of health benefits being paid for US based employees.


And this legislation does not appear to change that.


By the way, insurance companies now decide what services to approve based on their own cost/benefit assessments. That is why many services require prior approval and approvals are not assured not matter how important your doctor believe the treatment may be.

True. But I don't see where this legislation changes that either. May change some parameters of how the decisions are made, but still won't be in the hands of the doctor & patient.


The first jobs to be outsourced to other countries are those for which the benefits are the greatest as a percentage of total compensation. That has been going on for years and is a major reason why job growth has been so slow even when economic growth has been high over the last decade.


And this legislation changes this situation how? It seems to reinforce what may be a bad concept to begin with by requiring employers to provide health insurance benefits. Remember, I much earlier (on another thread) agreed that individual policies that "travel" with the individual were probably a better solution.


What do you think they are now? There is very little insurance component to health benefits.

Okay, so this legislation doesn't change that either.

Ultimately, however, if the private insurors (since the product they sell is still called *insurance* even if it is a misnomer) can see no benefit to remaining in business ... with the govt telling them what they can charge or not charge for their product ... then, I see the govt ultimately becoming the insuror. Oila ... everyone who wanted single-payer gets their wish. It may take a while, but there doesn't appear to be any other ultimate result.

I am also very much in favor of co-pays. Nearly everyone I can think of could afford $10 for a doctor visit. No more than the cost of 2 stops at McDonalds. Those who really can't afford any co-pay at all are likely already eligible for Medicaid. And even many on Medicaid could probably afford $5 per visit.

YardleyLabs
03-27-2010, 06:15 PM
And this legislation does not appear to change that.
Correct. Only reducing direct corporate responsibility for health costs will change that -- a point I have made before.


True. But I don't see where this legislation changes that either. May change some parameters of how the decisions are made, but still won't be in the hands of the doctor & patient.
It does change the ability of insurance companies to deny services without meeting some basic standards for minimum coverage, avoidance of improper rescissions, elimination of lifetime caps, and requires a minimum level fo due process for rejections,


And this legislation changes this situation how? It seems to reinforce what may be a bad concept to begin with by requiring employers to provide health insurance benefits. Remember, I much earlier (on another thread) agreed that individual policies that "travel" with the individual were probably a better solution.
There is no way to have policies "travel" with the person except in the context of a national program. Effectively you would be forcing either the current employer to accept responsibility for administering a relationship to the old plan, or the prior employer to accept some residual responsibility for the departed employee, or the insurance company to administer and track participation in prior plans continued by prior client employees. This would simply not work. Even COBRA involves substantial administrative effort and cost for the former employer. That's why most are quick to drop people who are even a little bit late with payments. More importantly, however, I agree that this legislation doesn't make it more likely initially to retain jobs ere because it does not reduce employer responsibility. Over time, as employers begin to drop coverage to save money, it will ease the landing for employees.


Okay, so this legislation doesn't change that either.

Ultimately, however, if the private insurors (since the product they sell is still called *insurance* even if it is a misnomer) can see no benefit to remaining in business ... with the govt telling them what they can charge or not charge for their product ... then, I see the govt ultimately becoming the insuror. Oila ... everyone who wanted single-payer gets their wish. It may take a while, but there doesn't appear to be any other ultimate result.

I don't think that there will be any lack of private companies looking to handle health care claims administration. Once exchanges go into effect, the market will be more price sensitive and much more competitive. That may result in some shakeout, but presumably that is a benefit of capitalism, not a weakness.

I am also very much in favor of co-pays. Nearly everyone I can think of could afford $10 for a doctor visit. No more than the cost of 2 stops at McDonalds. Those who really can't afford any co-pay at all are likely already eligible for Medicaid. And even many on Medicaid could probably afford $5 per visit.
Nothing in this bill stops or reduces co-pays, although there are limits on maximum deductibles and maximum total out of pocket liability. Most of the complaints with HR 3200 were that these limits were too high, not too low. Nothing prevents people from buying policies with lower limits (more generous coverage).

Gerry Clinchy
03-27-2010, 09:26 PM
Correct. Only reducing direct corporate responsibility for health costs will change that -- a point I have made before.


And this legislation doesn't do so. It just places a larger responsibility on corporations; with larger costs. Thus, making for a worse economic situation.


It does change the ability of insurance companies to deny services without meeting some basic standards for minimum coverage, avoidance of improper rescissions, elimination of lifetime caps, and requires a minimum level fo due process for rejections,

And if people believe that this will mean that everyone will get the treatments they & their doctors believe they should get in a timely fashion ... I've got this waterfront property in Arizona ... It may take a while before those effects become visible.


There is no way to have policies "travel" with the person except in the context of a national program.

Maybe not across state lines ... but state exchanges could be used for that purpose.


Over time, as employers begin to drop coverage to save money, it will ease the landing for employees.


First, Jeff, you have said they would have already done so; that this law will not be an encouragement to do it more. But, more important, this law will not allow employers to drop coverages ... if they are over 50 (I think) employees. No easing of a landing that is not allowed to occur. Until, that is, this mish-mash becomes unsustainable, and single-payer becomes a necessity.


I don't think that there will be any lack of private companies looking to handle health care claims administration.

Absolutely agree. Why would they not be happy to get paid for doing something they already know how to do?


Once exchanges go into effect, the market will be more price sensitive and much more competitive.

Depends on how much profit margin there is to "play with". There appear to be differing opinions on that. With the mandates of this law for basic coverages and disallowance of part of the actuarial basis for insuring, that could well impact those profit margins. There will have to be a balance of enough young/healthy participants to offset the pre-existing condition participants (and the costliness of those presently uninsurable conditions).


Nothing in this bill stops or reduces co-pays, although there are limits on maximum deductibles and maximum total out of pocket liability.

I was unclear. I did not mean to imply that this bill would preclude co-pays, but was simply stating a position I hold.

YardleyLabs
03-28-2010, 07:03 AM
...
First, Jeff, you have said they would have already done so; that this law will not be an encouragement to do it more. But, more important, this law will not allow employers to drop coverages ... if they are over 50 (I think) employees. No easing of a landing that is not allowed to occur. Until, that is, this mish-mash becomes unsustainable, and single-payer becomes a necessity.
..
The law allows employers to drop coverage. It simply places a price tag on how much they will need to pay if they do drop coverage. The penalties paid would then help finance the cost of Federal subsidies as employees then purchase replacement coverage through the exchanges. In theory, I would have preferred a bill that simply created a national health insurance program and terminated tax deductibility for employer sponsored health plans. However, that would have been to radical politically and administratively and would fail. By creating national coverage as has been done with this law, there is now a safety net for employees of companies that terminate coverage, making such a decision easier for both.

Leddyman
03-28-2010, 07:43 AM
The mandate is unconstitutional. It taxes people who are not participating in any commerce. This is why it is unconstitutional. Those of you who think it is not unconstitutional are wrong. There is no precedent for a tax on people who are just standing around.

There is a tax on income. Check. activity occurs, it is taxed.

There is a tax on property. check. activity. (you own property, you sell property tax goes away)

Mandate for insurance. A tax for which no activity has occurred. That is not a tax it is a fine for non-participation in commerce. The constitution is violated under such a rule. There is no way around it.

Gerry Clinchy
03-28-2010, 07:47 AM
The law allows employers to drop coverage. It simply places a price tag on how much they will need to pay if they do drop coverage.

If there is a penalty for an action, that is not equal to "allowing" that action. The penalty is meant to discourage an action.

If the cost of health coverage exceeds the penalty, the employer will drop coverage and pay the penalty. However, if the penalty is then raised to continue to discourage the dropping, then employers pay an ever higher price for providing it.

Remember, you and I are agreeing that employers providing health insurance is not the best answer. The issue we are discussing is whether this law makes the situation any better. I don't think it does. It perpetuates the status quo on this issue.

We are also making a presumption that if employers did not have to pay for health insurance benefits, they would be reducing costs to be more competitive in the world market. However, if workers "demanded" higher wages to pay for their benefits purchased individually, (i.e. unions bargain for higher wages rather than benefits), the reduction in labor costs might not materialize after all.

One factor in that is that we, as Americans, have become used to a certain standard of living, and are unwilling to compromise that. Had the "system" for health insurance paid by employers not been so ingrained for so many years, it might be different. Those of us who are self-employed (Realtors are independent contractors), have always had compensation separate from "benefits" and have accepted that as our reality.

YardleyLabs
03-28-2010, 09:23 AM
If there is a penalty for an action, that is not equal to "allowing" that action. The penalty is meant to discourage an action.

If the cost of health coverage exceeds the penalty, the employer will drop coverage and pay the penalty. However, if the penalty is then raised to continue to discourage the dropping, then employers pay an ever higher price for providing it.

Remember, you and I are agreeing that employers providing health insurance is not the best answer. The issue we are discussing is whether this law makes the situation any better. I don't think it does. It perpetuates the status quo on this issue.

We are also making a presumption that if employers did not have to pay for health insurance benefits, they would be reducing costs to be more competitive in the world market. However, if workers "demanded" higher wages to pay for their benefits purchased individually, (i.e. unions bargain for higher wages rather than benefits), the reduction in labor costs might not materialize after all.

One factor in that is that we, as Americans, have become used to a certain standard of living, and are unwilling to compromise that. Had the "system" for health insurance paid by employers not been so ingrained for so many years, it might be different. Those of us who are self-employed (Realtors are independent contractors), have always had compensation separate from "benefits" and have accepted that as our reality.
I think it's a question of trends. A fundamental problem in the current set up is that employers pay the bulk (average 70%) of costs for health care and this cost has been increasing at 3-4 times the rate of inflation. From an employer's perspective, labor costs have been skyrocketing. From an employee's perspective, wages have been relatively flat while they have seen health care benefits become more expensive and/or less generous. They have associated this more with employer greed than with increases in health care costs.

My own personal experience with this was with my own company. When I acquired the company in 1996, they were (illegally) offering health benefits at no charge to all full time, salaried staff, but not offering benefits at all to full time hourly staff. The average wage for our hourls staff was much higher than the wage for the salaried staff. I offered health benefits to hourly staff in exchange for a salary reduction to cover about half the cost. Not on person out of 100 staff accepted. Instead, to achieve legal compliance, I offered health benefits to everyone where I paid 70% of the cost of coverage for the employee and the employee paid the remaining cost for themselves and paid the full cost for dependents. I gave salaried staff an immediate salary increase that was actually slightly more than the cost of the premiums I was no longer paying. 80% of the salaried staff immediately dropped their insurance coverage rather than pay the premium themselves even though they had been given the money to make the payment. There were many complaints about the loss of benefits, but almost everyone preferred the cash.

From this experience, I believe that people who are required to pay for their own benefits will almost always opt for cheaper plans rather than more comprehensive coverage. As they consume medical services, they will bear a higher personal cost as a result and will be less willing to pay high prices. That economic force will help reduce costs more than any government mandates or insurance company procedures ever could. This can backfire if the services that are avoided are those needed to prevent more serious illness. It is also important that a place does not create the illusion of savings by ending coverage for services that are absolutely essential. Thus there is nothing to suggest that consumers are consuming "too much" when it comes to life saving care or care for major illnesses and injuries. Having policies that avoid paying for these unusual but very expensive procedures creates no real savings since the care will need to be provided anyway.

The structure of basic benefits under the new law reflects these principles for harnessing economic decision making in a creative way. It excludes maximum lifetime limits and imposes a relatively high, but manageable out of pocket spending limit, thereby avoiding illusory savings. It provides full coverage for designated preventative services to avoid cost barriers to care that will help reduce future costs of illness. It then allows significant, but not prohibitive deductibles and co-pays for other services to discourage unnecessary use. While benefits are subsidized by a mix if employer and government subsidies, the covered individuals retain a large enough financial responsibility that they will be encouraged to pressure for lower costs.

There will undoubtedly be a number of changes to the program over time. Hopefully, however, it will ease the transition to non-employer based health care and improved personal responsibility for health care costs while preserving access to essential services.