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Thread: Health Care Bill and Insurance Co.

  1. #1
    Senior Member Hoosier's Avatar
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    Default Health Care Bill and Insurance Co.

    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?

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    Senior Member Ken Newcomb's Avatar
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    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.
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    Senior Member YardleyLabs's Avatar
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    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.

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    Senior Member M&K's Retrievers's Avatar
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    Quote Originally Posted by YardleyLabs View Post
    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.
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    Senior Member Hoosier's Avatar
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    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.

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    Senior Member luvmylabs23139's Avatar
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    Quote Originally Posted by Hoosier View Post
    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
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    Senior Member Gerry Clinchy's Avatar
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    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.
    Last edited by Gerry Clinchy; 03-27-2010 at 08:36 AM.
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    Senior Member YardleyLabs's Avatar
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    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.

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    Quote Originally Posted by YardleyLabs View Post
    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.

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    Senior Member YardleyLabs's Avatar
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    Quote Originally Posted by dixidawg View Post
    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.
    Last edited by YardleyLabs; 03-27-2010 at 10:12 AM.

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