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“Not So Fast!”: “The Sky Is Falling,” Says Anonymous Chicken

I’m sure many of you saw a certain headline from The Hill today: “O-Care premiums to skyrocket.” At first I thought the source was The Drudge Report.

If you actually read the accompanying article by Elise Viebeck, the rather alarming assertion is mostly a collection of blind quotes from “health industry officials.” Yes, one former Cigna executive went on the record to say his “gut” tells him premiums could go up, which is of course very convincing. Otherwise the closest Viebeck gets to attribution is an “insurance official who hails from a populous swing state.”

In an updated version of the article, Viebeck does quote by name two experts–who deny the whole premise of her story.

And the “premiums to skyrocket” claim directly contradicts a variety of on-the-record assessments by health insurance executives–e.g., Aetna CEO Mark Bertolini, Wellpoint president Joe Swedish, and Cigna CEO David Cordani–that the Obamacare premium structure is working out relatively well. And the most reliable independent study, from the Kaiser Family Foundation, concluded that the much-feared “death spiral” of premiums that Viebeck seems to be predicting as a reality for much of the country is very unlikely to occur.

Particularly in its revised form, Viebeck’s piece has a number of “to be sure” qualifiers that undermine the headline. But it’s the headline that will get big coverage today–to be sure–maybe on Drudge Report itself. And it’s pretty clear which political constituency is driving the “story.”

 

By: Ed Kilgore, Contributing Writer, Washington Monthly Political Animal, March 20, 2014

March 22, 2014 Posted by | Affordable Care Act, Health Insurance Premiums | , , , , , , | Leave a comment

“Another Anti-Obamacare Headline”: Beware The Great Health Insurance Scam Of 2014

The anti-Obamacare world is atwitter over comments made last week by Aetna CEO, Mark Bertolini, who predicts that some insurance markets will “go up as much as much as 100 percent” when Obamacare takes hold in 2014—with the average increases running between 25 percent and 50 percent in the small group and individual segments of the business.

Mr. Bertolini has dubbed this phenomenon “premium shock”.

To be sure, this is a great headline for those who remain committed to defeating the Affordable Care Act with nothing better to suggest in its place. However, the facts reveal that Bertolini’s comments—while just maybe true for a very few participants buying coverage on the exchanges in the individual markets—are completely misleading with respect to the individual markets and likely completely untrue as applied to the small group market.

So, how is Mr. Bertolini arriving at his dire predictions?

Apparently, it’s all about (a) the new tax placed on health insurance company sales, (b) the community rating requirements that now prohibit older participants in a health insurance pool to be charged more than 3 times what is paid by younger members and (c) the new minimum standard of benefits that will need to be provided to those who purchase health coverage on the exchanges.

Pretty scary, yes?

The problem with Mr. Bertolini’s prediction is that it is completely and utterly at odds with not only the Congressional Budget Office (“CBO”) projections but with American Health Insurance Plans (AHIP) —the very lobbying organization that represents Aetna and was an active and hugely important supporter of Obamacare.

In 2009, the CBO projected that the Affordable Care Act will have little impact on small and large group policies. This is notable given the expectation that, by 2016, the small group market will represent 13 percent of the total insurance market while large groups will provide coverage for a full 70 percent of Americans with health insurance coverage. Do the math and you find that, according to the CBO, 83 percent of all covered Americans will experience little to no change in premium rates beyond normal increases that would occur had Obamacare never become the law of the land.

As for the individual markets, which will comprise 17 percent of the overall insurance market in 2016, premium rates are predicted to rise about 10 to 13 percent by 2016—considerably lower than the doubling Mr. Bertolini has suggested will take place in 2014.

What’s more, approximately half of those gaining coverage in the individual market will qualify for the government subsidies, thereby reducing the price of their insurance premiums below where they currently exist.

Of course, it is not uncommon for people to discount CBO projections and proclaim them to be biased when the projections fail to meet a desired political narrative.

So, let’s see what Aetna’s own trade association, AHIP, has to say.

A review of the AHIP website reveals that the sales tax imposed on the health insurance companies—and sure to be passed along to consumers—will account for a premium increase averaging 1.9 percent to 2.3 percent by 2014 and 2.8 percent to 3.7 percent by 2023.

Now, you may object to this potential increase—but it is a long way from the increases Mr. Bertolini is predicting.

On the subject of community rating—where insurance companies will now be prohibited from charging older participants in their health insurance pools as much as 10 times more than what they charge younger members even if the elder participants have no pre-existing health problems—AHIP indicates that limiting the rates for the older participants to only 3 times the rate charged the young will result in some younger insurance customers paying as much as 45 percent more in premium payments while older participants will pay 13 percent less.

No doubt, this is a large part of what Aetna’s Bertolini is relying on when trying to freak out the public.

The problem with Bertolini’s prediction is that even this large percentage increase, should it prove to be actuarially accurate, would not apply in the small and large group markets- it would apply only to a very limited number of people purchasing their health insurance on the exchanges who are (a) very young and (b) not qualified for subsidies.

The number is also misleading in its severity.

According to AHIP, the average premium paid by a 24 year old in the individual marketplace is $1200 a year. Using AHIP’s numbers, the price of making the cost of heath insurance more equitable for a 60 year old will potentially cost that 24 year old, on average, an extra $45 a month.

While I don’t mean to minimize this increase, as I recognize that every dollar counts when one is young and getting started, it is important to keep the actual price tag in perspective and weigh the equities when considering that those at the older age range have been overcharged for many years.

The reality is that the young have been paying unreasonably low premium rates for for a very long time—it being in the health insurance company’s profit interest to bring in as many young and healthy people as possible in the door by charging artificially low rates. The problem is that they make up for it by charging artificially high rates to the older people the insurance company would rather not have in the first place. What the ACA seeks to do is correct this situation so that 60 year olds are not precluded from gaining health insurance coverage by being priced out of the market.

Note that this problem could have been averted for younger Americans had we lowered the Medicare age to 55 however this was not acceptable to the Congressional GOP.

And that brings us to the topic of minimum benefits that must now be including in insurance policies offered on the health care exchanges, another area where large increases can be found in the effort to alarm the public.

According to AHIP, the additional costs attributable to health insurance companies actually having to provide a meaningful benefit ranges for as little as a tenth of a percentage point in Rhode Island to 33 percent in Maine where, apparently, health insurance policies do not provide much in the way of actual coverage. And, again, these numbers apply only to the individual marketplace on the exchange.

Thus, if you are one of the 8.5 percent of Americans who will be buying your coverage on the exchange in the state of Maine (making for a very, very tiny percentage) you may now have to pay more to actually get some health care coverage in exchange for what you pay.

So, what does all this tell us?

Gary Klaxon, Vice President of the Kaiser Family Foundation—one of the few health care think- tanks that just about everyone agrees is completely non-partisan and objective, had this to say about Mr. Bertolini’s predictions:

“That just seems silly. I can’t imagine anything going on in the small-group market that would change the average premium that much. On the individual market, there’s arguments for things changing, but those magnitudes seem high.”

Silly, indeed.

There is, of course, more to this than what the anti-Obamacare folks are choosing to report.

That would be the part where Bertolini noted in his ‘premium shock’ comments that this huge, one-time jump in premium rates to be expected in 2014 also includes increases in costs that would come even without the health care reform law.

Translation—health insurance companies have been trying to raise rates at a ridiculous pace ever since the word ‘Obamacare’ first entered the American lexicon, always seeking to blame these increases on the law even before the law became the law. So, when 2014 arrives, you can be certain that they will do everything in their power to grab as large an increase as they can get away with in order to preserve their profits.

Mr. Bertolini is merely laying the groundwork for that effort as Obamacare has provided the health insurance industry with a wonderful scapegoat, perfectly suited and even more perfectly timed to cover the inescapable truth of health insurance—it is a business model whose time has passed.

The sooner the American public realizes that private health insurance companies no longer work, the sooner we can get busy with the solutions that, while politically uncomfortable, can actually solve the nation’s health care challenges.

In the meantime, if you are a part of a large or small business health insurance group, there is no reason to expect that there should be significant—if any— increases in your premium charges in 2014. If you are an individual who will be shopping for health insurance on the exchanges, the 50 percent of you that will qualify for subsidies should experience premium costs at a lower rate than what you are currently paying, If you are in that other half, you may, indeed, see some increase in your rate—but nowhere near the ‘doubling’ the insurance industry would like you to believe is in your future.

 

By: Rick Ungar, Op-Ed Contributor, Forbes, December 20, 2012

December 21, 2012 Posted by | Health Care | , , , , , , , , | Leave a comment

   

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