The Real Reasons Insurers Are Canceling Policies - by Wendell Potter

[Tx4obama]

The Real Reasons Insurers Are Canceling Policies
Wendell Potter, Author, consultant; columnist at Center for Public Integrity and healthinsurance.org

Now that President Obama has said it's OK with him if insurance companies keep their policyholders in health plans that don't meet the standards established by the Affordable Care Act, at least for another year, the big question is whether insurers will take him up on the offer.

The answer: it depends.

Some insurance executives will view the offer as one they can't turn down. Even though Karen Ignagni, president of America's Health Insurance Plans, the industry's big PR and lobbying group, had nothing good to say about Obama's proposal, keep in mind that she doesn't run an insurance company. While industry executives look to her to comment on what politicians do, they make their own decisions when it comes to their companies' bottom lines.

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Full article here: http://www.huffingtonpost.com/wendell-potter/the-real-reasons-insurers_b_4296212.html

[cilla4progress]

1. It's so obvious

How soon we forget.

Of course - the poor wittle insurance companies can't make their obscene profits under O-care.

That and only that is the reason for the cancellations!

[BlueStreak]

2. Well, actually they can

Last edited Tue Nov 19, 2013, 12:19 PM - Edit history (1)

In many markets they are effectively doubling their premiums (or more) by moving customers to ACA-compliant policies. And for a large number of customers, the government is picking up the entire cost of that increase. So they LOVE the ACA in those markets where competition is sparse enough to let them get away with this price gouging.

But by the same token, those who already had purchased non-group insurance are mostly people who don't qualify or subsidies. And they are rightly pissed off about this price gouging thing. So Obama's solution allows the insurance companies to charge ridiculous prices in the cases where the government is picking up the tab and still lets them take money from the people who already had insurance. In my case, they offered that as a "mere" 10% increase. Their offer was to reset my policy's anniversary to December, 2013, so I could renew it one last time, taking me through December, 2014 -- and for that "privilege" I only had to pay a 10% increase in premiums.

Now they don't even have to mess around with that trickery. They can simply renew that non-ACA policy on its regular anniversary date. But I'll still have to pay the extra 10% no doubt.

[geek tragedy]

5. You omit the fact that the insurance companies are forced to take customers

they know they're going to lose money on, i.e. people with pre-existing conditions, older people, etc.

[BlueStreak]

6. The premise of the ACA is

that by putting everyone under insurance, you eliminate the burden shifting, so that should net out to a zero sum. In other words, the insured people are already paying for the uninsured. In the big picture, the costs should not be any higher. Indeed, the total costs should be lower because people would get their conditions checks at the PCP level instead of the ER, which is ten times more expensive.

Certainly it could take several years for the system to re-balance itself. But the big problem is that there are lots of greedy interests at every level of the system. If we eliminated 100% of the unpaid bills tomorrow, hospitals would still try to charge just as much for their services. They would not voluntarily cut the cost of their services, and really, there isn't anything in the ACA that forces that to happen. One can argue that the unseen hand of competition will perform its magic. And I have a some prime Florida swampland available for immediate occupancy.

We do see markets where the exchange is competitive, and the "unseen hand" has a chance of working in those markets. But there is a wide swath of America where the system is completely out of control, and not responsive to the competitive model promised by the ACA.

I think the law is fundamentally flawed for that reason and will not be successful in 2014. Obama can prevent any dismantling of the law in 2014 and 2015. It becomes a question whether by 2015, it will be successful enough to allow a Democrat to succeed Obama.

healthcare.gov is not the problem. There are big structural problems -- the law cannot possibly be successful as it stands, and we have a stand-off. Obama won't allow the law to be taken apart and the Republicans will not allow any fixes. Frankly I think the Republicans will win that game because the problems are huge and won't go away on their own.

These dumb-asses should never have taken the public option off the table. They never got any Republican votes anyway. They should have put the things into the bill that were necessary for it to have a chance of success. It isn't just Obama. We can thank the Blue Dogs as well.

[geek tragedy]

7. The insured aren't paying for the uninsured in many, many cases.

In many cases, the uninsured just go bankrupt, die decades before they should, suffer needlessly, or some combination of all of the above.

At some point, provider costs will have to be addressed. Insurers and providers have an often adversarial relationship, so that will be interesting to watch.

Any change to a system as both awful and entrenched as ours is going to be painful and flawed.

[BlueStreak]

8. That's simply not true

Unless the providers in turn go bankrupt, and that rarely happens. When a payer goes bankrupt (or otherwise does not pay his bill), that just means that the burden is shifted to the paying customers.

There is no such thing as "the hospital eats the loss". That is pure fantasy.

[geek tragedy]

9. I don't believe I wrote anything suggesting that the hospital eats the loss.

What I wrote is that a lot of time people just wind up not getting the care they need.

[BlueStreak]

10. I apologize for misreading that. Nonetheless, the premise of the ACA

was that we would end the burden shifting and cut the total cost of HC (or at least "bend the curve downward&quot by shifting toward PCP and clinics, prevention, etc. If that premise were true, then the policies after ACA should not cost more than those before ACA -- certainly not two or three times more. That is what most people expected.

This -- not the state of healthcare.gov -- is the thing that has the very real possibility of killing the ACA and killing our electoral chances in 2014 and 2016.

Until now, most fair-minded people were willing to give Obama a chance to see how this played out. But the double whammy of cancellations and huge price increases has a lot of people thinking, "Wow, maybe those Republicans were right all along." And the worst part of that is that the 2014 prices aren't going to get any better. Those prices are locked in for a year -- through the next election.

So here's the real issue. At this point, obviously Obama has decided that it is better for everybody to be complaining about healthcare.gov, even though that site is actually working pretty well. Obama's only escape out of this crisis is based on the fact that there are probably only about two million people who are really screed by the pricing of these policies and he hopes that he can take care of a million of them by coaxing the insurance companies into re-offering pre-ACA policies. If that happens, then he will have maybe 3 million who are getting affordable insurance through ACA against a million who are getting hosed. And then he will have a few million who are getting the expanded Medicaid. His hope is to overwhelm the million who are really screwed with the several million for whom the law is helping.

Basically, he's depending on the MSM to be fair and balanced. How do you like his chances?

[geek tragedy]

11. It was some of both.

There would be some downward pressure on costs, but it would still require shifting costs. In this case, the costs would be shifted to young healthies who don't get sick and who don't incur significant health costs.

The problem quite frankly was that there was never a real debate over this bill--there were going to be many who did better because of it, but there were also going to be those who came out behind, at least immediately (young healthies don't stay young and healthy forever). But, the ACA was perhaps oversold as making healthcare better and cheaper for everyone.

[BlueStreak]

12. Re: the young, I don't see where they are hurt with this bill.

People under 30 have the option for high-deductible accounts (as if $6000 isn't a high deductible). From what I have seen the typical situation is that a 28-year-old might go from $150/mo pre-ACA to $250/mo on the ACA. If they are > 400% poverty line, I just don't see that as a crushing thing. And if they are below 400%, their coverage becomes practically free. In other words, probably 80% of them come out way ahead, and the other 20% aren't really crushed. I suppose there are some exceptions to that, but I think I'm generally in the ballpark on that.

I agree complete with your last paragraph, especially "the ACA was perhaps oversold as making healthcare better and cheaper for everyone." And if the blessings of competition really worked, it probably would have been true almost everywhere. Some of the markets I have looked at are terrific. Loads of great choices, and very fair prices. The problem is that this may cover only 60% of the population and 30% of the geography. I live in a metropolitan area of 1.5 million people and we have no competition at all on the exchange. And I bet that is fairly characteristic of the states where Republicans are in charge. But Dems will get 100% of the blame for that,

[geek tragedy]

13. Pre-ACA, insurers cherry-picked the young healthies and put them into junk plans

that they would likely never try to use, and probably wouldn't be able to use if they did try. They sold these plans cheap with those economics in place.

For most young healthies, there costs will go up (especially without subsidies) because they're (a) paying for real insurance with real coverage and (b) cherry-picking has been dumped in favor of community rating and guaranteed issue.

[Doctor_J]

14. They are guaranteed 20% profit in a 3 trillion dollar industry

Your post is so bizarre as to border on insane

[BlueStreak]

3. They still have privider networks. They never discontinued PPOs

I have no idea what Potter is talking about. The high-deductible policies don't allow you to see any doctor. You still have to stay in network.

[quadrature]

4. ...because they can...

ICs rejoice.

the law changed in 2010.
dump the sick.