Big US insurers to keep parts of health care law

markomalley · #1 Jun 12, '12, 1:45 am

From the AP:

Some of the nation's biggest health insurers will keep some popular parts of President Barack Obama's health care overhaul even if the law fails to survive Supreme Court scrutiny later this month.

UnitedHealth Group, Humana and Aetna all said Monday that they will continue to cover preventive care such as immunizations and screenings without requiring patients to pay a set fee called a co-payment.

They also said they'd still cover adult children up to age 26 through their parents' insurance plans. Additionally, they all pledged to continue to offer a simple process for patients who want to appeal when their health insurance claims have been denied.

Before anybody gets all positive and gushy over this, keep in mind that this is not an act of charity on the part of insurers. Not even close. This is simply a matter of increasing revenue and increasing earnings for their shareholders (not percentage of profit, but actual dollar figures).

All of the increases in coverage that were mandated by Obamacare were not free. Insurance premiums went up...and went up fairly significantly in most cases. The premium hikes that most, if not all, of us saw represented increases in revenue to cover the increases in cost that corresponded to the legal requirements.

And that increase in revenue will result in an increase in profit...not percentage of profit...but actual numbers.

Assume, for a second, that an insurer generates 1 billion dollars to correspond to 950 million dollars in costs (i.e., planning for 5% profit), distributing half of the 50 million in profit (25 million) to a million shareholders as dividends (i.e., $25 per share dividend)...if anticipated costs went up to 1.2 billion, this same insurer would have to increase premiums so that revenues went up to 1.26 billion (i.e., 60 million profit). resulting in an increase in dividends (under the same formula) from $25 per share to $30 per share.

Let's say the Chairman of the Board...who ultimately makes the decision...owns 20% of the shares of this hypothetical insurance company, his dividends go from $5,000,000 to $6,000,000 in that scenario.

Why would he want to take an action that would result in his losing $1,000,000 in dividends?

Bottom line. They're not being nice. They want to hang onto as much of the profit that Obamacare caused them as possible. Nothing wrong with that...but don't assume, for a second, that their move is altruistic.

The last two paragraphs of the article reveal this obliquely:

The provisions that the insurers did keep don't apply to everyone. UnitedHealth and Humana both say the ones they're keeping apply largely to customers who have individual policies or small-group health insurance through their employer.

Big employers that pay their own medical claims and then hire an insurer to administer coverage generally make their own decisions on what to cover, and Laszewski, the consultant, expects them to extend some overhaul provisions as well.

What, eventually, will happen is that some shrewd insurer will attempt to pare back benefits given to small businesses and individuals in an effort to offer lower cost coverage for these people. With the proper marketing, that insurer (those insurers) could end up taking a significant amount of market share from the larger ones like United, Aetna, etc. And, in order to protect market share (and revenue), United, Aetna, etc., will respond by offering their own lower-cost policies...with restricted benefits.

Bottom line is that in a few years, we'll be back to exactly where we were before.

But everybody will make money...except the consumer...the consumer will end up, whether under Obamacare, under single payer, or under the current system, will end up being taken to the cleaners. (I would use a more colorful metaphor, but that would be against CAF rules).

littlenothing · #2 Jun 12, '12, 3:26 am

Bingo! And big companies' premiums will go up, passing that on to employees, who may elect for no coverage. Small companies will not be able to cover employees at all, or will have some expensive but cut rate plan. Then they can all say, "Look at all the uninsured and underinsured Americans! We need Universal Healthcare!"So and the big companies are vying to be the single payor.

**ProVobis** · #3 Jun 12, '12, 5:06 am

This is hardly surprising as the insurance industry was the main driver in the legislative process, forget how your representative in Congress voted. There was never any intent to cover pre-existing conditions without raising premiums, mandate or no mandate. Where's the public option? Where's the expansion of group insurance other than employer-based insurance and Medicare? IMO people were barking up the wrong tree.

Seeker1961 · #4 Jun 12, '12, 6:12 am

This is why I laugh when people talk about the health care legislation as being "socialist". There is not ONE thing that is socialist about it! It's all about making more money for the insurance companies!

Follow the money, folks-that's where all the roads lead.

exnihilo · #5 Jun 12, '12, 8:13 am

Preventative care such as immunizations and screenings. Ha! I don't believe all immunizations are bad. But I am disgusted that they want to immunize babies the moment after they are born against Hepatitis B. That is insane. I have serious doubts that this is preventative medicine for babies. And screenings are just a good way to find more work. There are plenty of mechanics that will happily screen your car to discover a problem for them to fix, like changing fluids that just got changed. It might be sad but I view modern medicine as being about the same.

Quote:

Originally Posted by markomalley

Bottom line. They're not being nice. They want to hang onto as much of the profit that Obamacare caused them as possible. Nothing wrong with that...but don't assume, for a second, that their move is altruistic.

I would say there is nothing wrong with wanting to make money, but there is everything wrong with rent seeking. These insurance companies are never in danger of losing money from government regulations. They only make more money when the government forces you to use them in any way you would not otherwise choose.

**Ridgerunner** · #6 Jun 12, '12, 8:25 am

I'm pretty skeptical about this.

Let's say Obamacare goes down. Insurers will then have only state mandates to deal with. If some miracle occurs, there will be the ability to buy insurance intrastate.

Now, let's say the Aetna agent comes to Company "X"and says "We have all of these wonderful 'well care' things in our policy. Of course, it costs more than, say United of Omaha's policies, but just think of all the neat stuff you and your employees will get."

The employer sees that United's policy is quite a bit cheaper, and the additional Aetna benefits are not all that crucial and that people could easily pay for those things themselves.

So, what does the employer do?

And, if enough employers went with United, Aetna would quickly change as well.

Elizabeth502 · #7 Jun 12, '12, 8:37 am

Thanks for the link, Mark. Heard about this yesterday, read the article today, but didn't see any reference to pre-existing conditions, unless I read too hastily. I.m.o., this is one of the cruellest exclusions which the industry continues to perpetuate. I'm sure many of you know people in your family or social circle who have been financially crippled by treatments and medications required for their survival, and denied when a carrier is switched on them without their intiative (such as when an employer changes providers, or when an insurance company becomes "parented" by a larger one, and the patient is regarded as a brand new subscriber). I definitely know such people and feel angry about this.

As much as I support the Church's passion with regard to "the mandate," I wish that the bishops would spend more time and more publicity regarding a kind of Manifesto of social justice when it comes to health care -- not just what Catholic institutions should justly not have to do, but also what universally is medical justice (humane considerations) for everyone.

What the government should be "mandating" is that insurance companies cannot assign patients to bankruptcy, homelessness, or a premature death based on company greed.

**Ridgerunner** · #8 Jun 12, '12, 10:09 am

Quote:

Originally Posted by Elizabeth502

Thanks for the link, Mark. Heard about this yesterday, read the article today, but didn't see any reference to pre-existing conditions, unless I read too hastily. I.m.o., this is one of the cruellest exclusions which the industry continues to perpetuate. I'm sure many of you know people in your family or social circle who have been financially crippled by treatments and medications required for their survival, and denied when a carrier is switched on them without their intiative (such as when an employer changes providers, or when an insurance company becomes "parented" by a larger one, and the patient is regarded as a brand new subscriber). I definitely know such people and feel angry about this.

As much as I support the Church's passion with regard to "the mandate," I wish that the bishops would spend more time and more publicity regarding a kind of Manifesto of social justice when it comes to health care -- not just what Catholic institutions should justly not have to do, but also what universally is medical justice (humane considerations) for everyone.

What the government should be "mandating" is that insurance companies cannot assign patients to bankruptcy, homelessness, or a premature death based on company greed.

Maybe the bishops will do this, but I have my doubts. I truly think it's more complex than they are likely to properly address, and requires political judgments that are matters of prudential judgment.

Insurance companies, by and large, are profitable, but not hugely so. In addition, though, their profits are not all free to use as management might prefer. They are required by law to keep adequate reserves available for both actuarial loss potential and also for pending individual claims based on estimates of cost. In addition, they have to take account of inflation and likely premium inflows. That's not an easy thing to determine, and they do not willingly set reserves "right on the line" of estimated costs because not all things are truly foreseeable. They would be shut down if their reserves were insufficient for contingencies, and would be directed to raise more capital if their reserves were just exactly sufficient.

Add to that the fact that if an employer's health plan is ERISA-qualified, which most are, the "new" company cannot exclude employees for pre-existing conditions that were covered under the former policy. And, if the plan is ERISA-qualified, the insurer can only exclude a new employee for one year and for that condition only.

So it's not all as cut and dried as some think. Nor is it easy to simply decree that such and such a system is "just" or "unjust" because the ability of individuals and their employers to afford premiums must also be taken into account.

Insurers hire a lot of talent to make determinations like those above; talent the government does not, itself, have. Remember how the congressmen passed Obamacare without reading it? Remember how Pelosi said they would have to pass it in order to know what's in it? Remember too that most "federal" medical plans are actually administered by insurance companies that are hired to do it by the government.

And so, are the U.S. bishops likely to address all of this other than in a very general way, and if they do, is there some reason for us to believe they would be better informed than congress or the insurers?

Bankruptcy is a bad business, both for indivduals and for nations. One would hope that individuals might obtain some greater margin of safety from bankruptcy, but not by measures that would put the whole nation there. But just saying it doesn't provide the answer to the question "how?"

Scott_Lafrance · #9 Jun 12, '12, 12:39 pm

Quote:

Originally Posted by Seeker1961

This is why I laugh when people talk about the health care legislation as being "socialist". There is not ONE thing that is socialist about it! It's all about making more money for the insurance companies!

Follow the money, folks-that's where all the roads lead.

You're right. Its fascist.

Gift from God · #10 Jun 12, '12, 3:09 pm

Quote:

Originally Posted by Scott_Lafrance

You're right. Its fascist.

Seriously? How can it be fascist if there is nothing fascist about it?

JimR-OCDS · #11 Jun 12, '12, 3:23 pm

Quote:

Originally Posted by Seeker1961

This is why I laugh when people talk about the health care legislation as being "socialist". There is not ONE thing that is socialist about it! It's all about making more money for the insurance companies!

Follow the money, folks-that's where all the roads lead.

Which is why Obama should've pushed Nancy Pelosi when the dems were in control, to include the government option, so that if the Insurance Corporations go nuts with premiums, people could go to the government option, which of course would eventually get us into a single payer universal health care system, which we should have all along.

Unfortunately, the democrats removed the government option and we have what we have now.

Jim

Seeker1961 · #12 Jun 12, '12, 3:27 pm

Quote:

Originally Posted by Scott_Lafrance

You're right. Its fascist.

Ok.....I'm not seeing that. All I see is rampant capitalism-more money for the corporations!

Scott_Lafrance · #13 Jun 12, '12, 4:05 pm

Quote:

Originally Posted by Gift from God

Seriously? How can it be fascist if there is nothing fascist about it?

Fascism, as defined by its founder, Benito Mussolini, is also known as corporativism, and is defined as economic tripartism involving negotiations between business, labour, and state interest groups to establish economic policy. The more modern variant of corporate fascism is also known as syndicalism.

Obamacare has all of the earmarks of corporate fascism. Political, corporate, and union control of an industry.

Gift from God · #14 Jun 12, '12, 5:10 pm

Quote:

Originally Posted by Scott_Lafrance

Fascism, as defined by its founder, Benito Mussolini, is also known as corporativism, and is defined as economic tripartism involving negotiations between business, labour, and state interest groups to establish economic policy. The more modern variant of corporate fascism is also known as syndicalism.

Obamacare has all of the earmarks of corporate fascism. Political, corporate, and union control of an industry.

I don't know where you get your news, but you are completely wrong. Private insurance is still thriving and US healthcare is so inferior to what every other developed country has. But Scott, the government also controls mail delivery. Fascism? Since the beginning of the Republic?

Scott_Lafrance · #15 Jun 12, '12, 5:36 pm

Quote:

Originally Posted by Gift from God

I don't know where you get your news, but you are completely wrong. Private insurance is still thriving and US healthcare is so inferior to what every other developed country has. But Scott, the government also controls mail delivery. Fascism? Since the beginning of the Republic?

Actually, the establishment of a postal service is in the Constitution. However, Fedex and UPS are smoking the US Postal Service. So, the private sector outdoes the public sector. Again.

And how is the US healthcare system inferior? I gotta hear this one.