Health Care thoughts: Big Business Reacts to Reform
by Tom aka Rusty Rustbelt
Health Care: Big Business Reacts to Reform
The National Business Group on Health ** has issued the results of a poll on the reaction of larger employers to PPACA (Obamacare or the Act).
A few highlights:
The group expects employer health care costs to increase by 9% in 2011.
Employers are dropping limits on spending limits in compliance with the Act.
Employers are shifting costs to employees to encourage more careful spending.
Sixty-three percent of employers expect to shift more premium costs to employees next year.
Some of the first deadlines for plan changes arrive in September 2010.
Small business is a whole ‘nother deal. More later.
** The NBGH is an association of larger employers, mostly business, but as diverse as the federal government, the American Cancer Society, the University of California and the United Methodist Church. http://www.businessgrouphealth.org/
Just another unanticipated consequence of one of the more poorly written laws in recent history. Remember it was all about bending the trend down?!???
What has amazed me more so than the actual guts was the horrid politics of the law. Why? Why were the benefits back loaded? How can a constituency be built when the bennies are so back loaded???? Pelosi, Reid and the Obama team are just political incompetents if you judge by this bill.
That might just explain their current polling.
What does Bruce Bartlet see?
Take a read, some good news for Medicare.
I agree with CoRev that the so-called healthcare reform bill was a horrible piece of legislation, but let’s not lose sight of the fact that healtchare costs have been outpacing inflation for quite some time. What do the cost data show for prior years? Is a 9% annual increase anything new? I don’t believe so.
If my memory is correct, the real cause of this increase is continued rent-seeking by the health insurance companies, not the crappy law.
To be fair, no one thought the cost curve would be bend this quickly.
As to Bartlett’s piece, wild optimism.
More on complexity later.
The optimists are the Medicare trustees, opposite the SS trustees who are all doom and gloom, can we say why?
Yes, there is wild optimism from the USG look at the trillions wasted for interminable war and fictitious means of warfare.
Here is a tale: I am a retired reserve. Those between doing training and reaching 60 are in a gray area, no work, no pay no benefits, except going to commissary and BX.
In these trying times the military retirees’ health care system TRICARE is being made available for these reservists to help those in need.
It turns out about equal to COBRA. nearly $400/month single and $1000 family. Because: it is a small actuarial pool, nominally 40-59 year olds. And they are a pretty risky isolated group.
The problem with health insurance is rents that can be collected from isolated risky groups and rent is profit, not benefit.
So, be wildly pessimistic the rentier win all the time, the solution is one huge societal risk group.
“Provider consolidation is driving up health care costs,” said Enthoven. “We need effective antitrust enforcement, and we haven’t had that for some time.”
I hope the voters will demand accountability from our elected officials. The country had been locked in bipartisan politics for way too long. The politicians, government workers had been under the radar screen, they had been very busy getting their salaries raises, lifelong pension benifits.
I hope the voters won’t simply vote in a republican administration from frustration/disappointment with the current democrate administration. I think what we really need is to vote in educators(teachers), doctors, nurses, engineers, scientists, business leaders whom actually worked for a living. I am really tired of arm-chair economists, legislative savvy lawyers running this country. Choose people with ability not based on political ideals…
This rag-tag healthcare is a prime example. Most healthcare providers wanted meaningful reform. 1)Insurance portability- open up competition across state line (just look at the health insurance for our congress members) 2)Tort reform- just look at for example obstetric coverage for west virginia, neurosurgery coverage for missisippi, got have more reasonable malpractice reform/compensation for patients and doctors alike 3)Streamline of regulatory agencies. There are multiple overlying Federal, State, County, City, and quasi private/public regulatory agencies all trying to regulate health care, it creates so much unnecessary paperwork, overhead cost to hospitals. It is almost impossible to comply with conflicting regulations. 4)Congress did not engage or talk to the people in healthcare, our elected officials just simply lawyered, and legislated this monster bill.
Unfortunately, almost all the people I worked with in Health Care industry knows this is going to go up. No one talked with the actual health providers when congress passed the bill.
One year ago I was writing about how your average private family doctors have to deal with both uninsured person and the insurance company. Your typical doctors office will have 20-30% non-payment of bills. This is not a healthy way to sustain a business. But again healthcare is not a typical business. Most physcians just write it off and do it as a public trust/service.
Now the healthcare bill has passed. The insurance companies for being forced to provide coverage for people that won’t pay/can’t pay for their previosly. (This is a complete mess, the uninsured isn’t really being covered) They just dropped the compensation rate to physicians and raises premium from paying members. This also happened with medicare too! The government takes money that provided coverage for the seniors and gave it to the uninsured.
The net result. Your traditional family doctors have a dilemma, either stop taking care of medicare/uninsured patients or goes out of business. What do you think is going to happen?
Hey get the picture; Docs are on the Butter side, these days it is the guns that get the dough.
If your Docs thought they were going to get rich off the old, poor and the sick, that has never been a business model, even in the great society.
They would need a BIG lobby to kick the war machine lobby aside.
The war machine cannot give up an aircraft carrier to pay your Docs. Nor will congress raise users’ fees to cover corporate welfare.
Your Docs are paying office staff to do insurance and other accountings which did not exist when there were Family Docs.
20-30% uncollectables, looks like time to pick a chapter………..
Family Docs used to make house calls, and take chickens.
They are gone.
So what happens when these business Docs stop taking patients who need care?
They are not Docs.
When they are gone who will get all nostalgic for the almost forgotten Doc who used to show up in a Porsche because his wife took the Mercedes SUV?
There is lots of easy money being a mechanical engineer on the F-35, a two year job becomes life work, and you really only have to tell the auditors how bad the government guys are telling you what they need.
Get into warfare.
A little snark, but not that much.
Guns is beating Butter, so maybe an MD is not a ticket any more.
The physician will become employees of a hospital based integrated delivery system and shift the financial risk to the system.
Pax said: “Congress did not engage or talk to the people in healthcare, our elected officials just simply lawyered, and legislated this monster bill.” But they did talk to the many interest groups! They just ignored the messages for politics. Winning was more important than qualtiy.
Look, the Dems walked a knife’s edge of politics to get this bill passed. Too many Congressional votes were against the detailed provisions. So, they passed a politically expedient bill, one that they could get by the various negative votes, to get anything passed. Result? A monster of legislative mistakes.
I am convinced they thought that it could/would be fixed after being passed. I still believe that, but they have so overplayed their hand, that those voters against the bill are more prone to call for repeal than fixing it.
If repealed it will not be reintroduced until the economy improves, but by that time there will be many other pressing/more pressing needs.
Nov. 2010 will be a tipping point to fiscal conservatism. Getting this country’s finances under control will dominate for the next several election cycles, and any major new spending measures will be an anethma in that environment.
Both party’s candidates will be forced to embrace fiscal conservatism, or they will be replaced.
ilsm the Medicare Trustees ARE the Social Security Trustees plus the Medicare Administrator. That is 6 out of 7.
Now both Medicare and Social Security have separate ‘Office of the Chief Actuary’ but in practice the Medicare ship accepts the demographic numbers coming out of the SS shop. And if anything the Medicare Actuary (Foster?) is more pessimistic than Social Security Chief Actuary Goss.
In any event in this matter the Medicare Report seems to be fairly closely tracking CBO estimates, I don’t really see any dueling opinions here.
Pax, as you can tell from my comment I think there is little doubt that voters will hold those elected responsible for bad/costly legisltation.
A malpractice claims management system implemented in Michigan that mandates full disclosure of medical errors accompanied by a monetary offer to the patient has resulted in a reduced claims rate, fewer lawsuits, faster time to resolution of claims, and lower costs, according to a study in the Aug. 17 issue of the Annals of Internal Medicine.
Health care insurance as a commodity is more complicated than it sounds in a statement to create more competition across state lines…notice the 9000 options cartoon. There is sizeable literature on this viewpoint of healthcare as a commodity, and I would think that a race to the best state to incorporate probably would not be to the best advantage to me as a customer, given experience in the arena…the asymmetry in knowledge is not only medical, but in even understanding the options. A ‘savings’ in premiums will not match need for services, even if the couple thousand a year is the only difference, which can be one or two prescriptions away, or a couple diagnostic tests, a couple overnights inhospital difference in charges depending on billing or the time of day/night admitted to ER and outpatient billing versus when actually admitted on the clock to inhospital care, eventhough you might be actually in the inhospital room.
9% is a projection of increase in costs, and I believe in this area increases have been at least 7% a year consistently over the last decade. I also think that the competing interests in our system will make for messy changes no matter how it is done…how can you reduce real costs even by holding “costs” constant and not have it be messy…?
How can a customer control costs on his/her own as an individual in a manner to affect overall costs…a thousand points of light so to speak? Since when have voluntary cost mesaures been effective in such a market for any of the players?
Hmmm…my edit button is gone. Please ignore grammar mistakes.
CBO scored the Republican plans whose centerpieces were insurance portability and tort reform. The latter got a really shitty score with almost all benefits flowing to doctors in the form of lower malpractice premiums and to the IRS in the form of taxation on those no-longer tax exempt dollars that were going to those premiums. The savings that actually flowed to the system at large were miniscule, it was good news for Jaguar dealers, not so hot for anyone else.
As to insurance portability the actual legislation introduced would have led to an inexorable rush to the bottom in terms of standards, something I blogged about at the time:
No one was able to identify any meaningful savings there either. Except for insurance companies who could shop for the jurisdiction with the lowest compliance costs and sell all their plans from there. For example Boehner deliberately wrote the legislation in ways that would allow US insurers to technically offshore their operations to the N. Marianas or the American Virgin Islands, if you like your corporations and banks run from the Cayman Islands, you are going to love your insurance being regulated by the Insurance Commissioner of Guam.
The actual text of the Boehner amendement to HR3962 can be seen here:
And frankly the claim that no one listened to providers is pure hogwash, if anything too much deference was given to the status quo and too little to the actual patients. The hospital and doctors had plenty of input.
given that health insurance companies have among the lowest net margins of any industry group in the US, i’m not sure it’s their rent seeking where we ought to be placing blame for cost hikes. besides, it is the cost of proceedures that you are talking about, not insurance. health insurance cos have to respond to proceedure costs, they do not control them.
i suspect the real reason for such medical cost increases in an artifact of the insurance system itself. ask yourself: what other major purchase do you make without ever asking the price? an MRI can cost thousnads. would you buy a huge flatscreen TV and home theater and not ask the price?
because the insured have so little incentive to price shop or even care about price or the relative value of a proceedure because they face so little marginal cost, of course prices are spiralling up. those reccomending actions (doctors) and those making consumption choices (patients) have almost no incentive at all the rein in costs. doctors likely have the opposite.
once you pay your insurance, it’s like having paid a big entry fee to a buffet. no one, having paid, fills up on bread and avaoid the cracked crab to save the restaraunt money.
insurance is the same way.
cash pay elective proceedures are not experiencing this same price spiral. in many cases, their prices are actually dropping. (consider lasik)
the health insirance companies are caught in a vice here – usage and prices are going up and they have little ability to expose their pateins to price signals to moderate behavior. so what can they do? if they hold prices steady, they have to cut services ro they will go out of business. if the keep services at the same level, they have to raise prices. these guys have sub 3% net margins. there is no room for them to take a hit and stay solvent. it’s a worse business than making sneakers.
If you read this you will notice many statements about health insurance AND medicare together, but examples provided were SOLELY for Medicare participation opt in or out. Not so honest a discussion.
Also, the Mass Hospital Association and the Blur Cross conglomerate had plenty of input to the legislation passed.
This won’t be repealed. The only really unpopular item in the bill is the only one actually liked by the health insurers, which is to say the individual mandate, without it they are screwed, and hard. You can bet that AHIP will call off the dogs, or more accurately their lap puppies, in the Republican Party before they get rid of that provision, and most of the others: open enrollment, no post diagnosis rescission, extended eligibility for college age adult children, elimination of lifetime limits etc, that is the ones that add cost, will stick around because of their inherent appeal. Christ the political ads right themselves, I am thinking we can find plenty of tear-jerk stories among the 30 million out of 50 currently uninsured Americans who are projected to get access by 2019. I mean how many Americans are ‘objectively pro-medical bankruptcy’?
The weak points in the bill are largely the result of the process having to be bent to satisfy the demands of Presidents Nelson and Snowe as well as the almost unending series of concessions to the R’s that ultimately bought nothing. In the end allowing the entire legislation to be shaped around Baucus’s Senate Finance Comm version rather than pushing the Kennedy-Dodd HELP version led to a much weaker end product.
In the end calls to ‘repeal the bill’ will end up on the scrap heap just like calls to cancel the rest of the stimulus, in practice the latter means clawback on tax cuts and cancellation of even more infrastructure and staffing grants to states. Not to mention that calls to fix something that is to date not even implemented and whose initial steps don’t even start until Sept 1 is kind of dumb. Its like bitching because as of May 31, 1944 Operation Overlord hadn’t succeeded in overthrowing Hitler’s regime, can’t we at least wait until D-Day to start critiquing the conduct of the campaign?
Has anyone estimated how much costs would have gone up WITHOUT the healthcare bill. That would be a more meaningful statistic.
A link to that “lowest net margins” claim might be helpful. In the past most such links offered here have referenced average profit margins across the entire sector while ignoring the fact that close on half of those private insurers are technically non-profit. Back out Blue Shield and Kaiser Plans and examine the books of the for-profits in isolation and it is amazing what happens to those margins, single digits jump to double digits just like that.
As I noted in an e-mail, my edit button is gone as well. Not that the edit system was all that hot at the best of times, changes that seemed to take would on the next visit just be gone. As the Good Book says: JSK giveth and JSK taketh away. Or something.
Are you suggesting anyone making an honest living can’t run a business? A business is automatically bad? Then who should you get healthcare from? Your federal employees have a much better pay package and pension plan than a family practice doctor.
So responsibility is also bad too, so just ignore the fact a family doctor is already allowing 20-30% loss to provide care to those in need? Are you a human being or a vampire?
I think a balanced system will have both, some will have institutional healthcare, less cost to patient, more efficiency but at cost of personal attention and choice. There’s no perfect system…
State Insurance Commissioners just agreed on the guidelines for Medical Loss Ratios this week.
In my view the cost of health care INSURANCE will be controlled or not going forward depending on how strongly MLR rules are enforced, something I have been on top of since the legislation first emerged from Committee. Something that got picked up here and there around the web.
Given that the ink is not even dry on these MLR rules it is a tad early to be eagerly declaring failure (ala CoRev).
Now MLR rules have no such automatic effect on overall health CARE cost, they essentially remove a lot of the incentive for insurance companies to nickel and dime providers by denying claims and so could raise costs, by that same token they should lower those providers’ costs incurred in appealing those denials. I would think it would all net out as savings but we will have to see.
In news reports over the years I see “8% compounded long term cost growth” quoted often. And it happens irregardless of what the economy does, Great Recession included apparently.
Despite all the anecdotal angst around physicians opting out of Medicare, somehow actual enrollees continue to express pretty high satisfaction ratios. Something that suggests that in the end they are managing to find participating providers.
Who’s Afraid Of Public Insurance?
Health Care Consumers Give Medicare Higher Marks Than Private Plans
A lot of this reminds me of the “Millionaires will just go Galt” arguments in relation to taxes. New York and California impose some of the highest tax burdens in the country and have for decades, but somehow this hasn’t led the Upper East and West Sides of Manhattan seeing whole populations dragging their steamer trunks down to the docks and setting sail for tax havens, or a reverse Dust Bowl migration as people in Bel Air and Pacific Palisades load all their possession on top of their Bentleys for that long trip back to Oklahoma. There are literally 100s of billlions of dollars rolling through Medicare every year, SOMEBODY is going to bend over and pick up those Benjamins.
Probably should add affordable med school to the list so we get more doctors with lower student loans to pay off. Then malpractice insurance can reach something like $80k/ year. Makes we wonder why anyone would want to be a doc, Porsche or no Porsche. Plus after interning and everything they don’t make any money until about age 28.
But cost, complexity and number of procedures is very troubling. Mom just had a $5000 MRI that was completely unnecessary and later confirmed by another doctor that the fact that the first doctor requested it at all was just boneheaded diagnosis of the problem. Know another fellow that just became medicare age and got a hip replacement approved for the cool sum of $60,000. If you are too old, medicare will not approve it because they say the ROI over your remaining actuarial years is inadequate…but still…
“Since when have voluntary cost mesaures been effective in such a market for any of the players?”
It won’t be until we all become very, very good doctors. But there is some minor room for improvement. I think there should be a $4 paperback book sold at walmart checkout counters which covers all the answers to questions you have that right now people make a $100 office visit to hear from a busy doctor. We can always get a little smarter about things.
i think you are overestimating their profits.
the health insurance industry has rallied from the low 3% range last year to 4.8% this year (largely due to price hikes). still, home furnishings provide better margins and auto parts are a full 2% points better. this is not an industry rolling in dough.
a look at the health sector as a whole is illuminating in terms of where the profit is:
drugs, biotech, instruments and supplies. hospitals and insurers fare quite poorly.
in 2009, you saw margins below 1% at molina, healthnet, coventry, and universal american.
humana, magellan, wellcare, and centene dipped below 2%.
look at the guys who do only health:
q2 2010 net margin
healthnet was 1.3%
united health 4.8%
the best guys get to 5% and most are still under 2%.
check it yourself.
i think you will have a difficult time substantiating that double digits net margin claim.
i can’t find any.
as i have provided data for my claim, perhaps you would be so kind as to provide data for yours?
Bruce, in your earlier comment you confirmed my description of a highly political and poorly implemented (back loaded benefits) bill.
Later you claim that I said the bill was a failure. That’s not at all what I said. What I said was the bill was:
“A monster of legislative mistakes.
I am convinced they thought that it could/would be fixed after being passed. I still believe that, but they have so overplayed their hand, that those voters against the bill are more prone to call for repeal than fixing it.”
So get your quotes or references straight.
As to your beliefs in the bill, ho hum. It always was a liberal dream, and the implementation has the potential to sink it.
The next two election cycles are going to be the determinant. Voters aren’t responding to the contents of the bill. They are reacting to having it shoved down their collective throats. Not listening to the voters is the issue . A WORKABLE BILL WAS POSSIBLE IF THEY HAD COMPROMISED, BUT IT WAS EASIER TO BLAME THE REPUBLICANS, WHILE ASSUAGING (buying off) THE DEM “NO” VOTERS. Bad political mistake.
Get it?!? It’s the politics of the bill that was misplayed. The contents don’t matter, except that implementation takes too long to build a constituency.
Thanks for the link, I was thinking more profits than operating margins but even at that you wouldn’t get to double digits. On the other hand you get some pretty startling profit totals in dollar terms.
http://money.cnn.com/magazines/fortune/fortune500/2009/industries/223/index.html for example we get a $2.9 billion profit number for United Health from this 2009 table presumedly taken from 2008 results.
These guys are not just scraping by. I see that six of the top seven companies racked up profits that year ranging from $292 million to that $2.9 billion. Seems like a lot of dough to me.
They’re just processing payments, for goodness sake. United Health takes in $81 billion in premiums. They really should be able to run their entire business on the $3 billion profit. But, allowing 80% claims payments, profits as a percent of expenses are 20%.
Using gross revenue as a denominator makes about as much sense as measuring a banks profit on the gross volume of checks processed.
I read a a paper which mentioned that the law provides for stop-loss insurance at 103% of expected claims for the individual and small markets, but not for large employers.
If this is true, is the Treasury providing the stop-loss funding?
“Just another unanticipated consequence of one of the more poorly written laws in recent history. Remember it was all about bending the trend down?!???”
Come on CoRev. The word “consequence” implies a completed outcome of your stated cause. If that can’t be parsed as ‘failure’ then we might as well stop trying to draw clear implications from anyone’s language.
You clearly state that the outcomes Rusty highlights have some causal relation to the bill and that those outcomes were unanticipated and negative. Spells ‘fail’ to me. As does the four question marks on your “bending the curve”
The politics were played about as good as they could have been given that the stated goal of the opposition right from the beginning was to cause Obama to fail with a strategy of blaming inaction overwhelmingly the result of Republican delay on an ineffective Democratic leadership. That plus some whipped up astro-turf hysteria last year at this time coupled with a campaign of flat out lies about such things as ‘death panels’ aided and abetted by cheerleading by Fox and I am sorry to say CNN blew up a fringe movement into some representation of Real America.
And you are right none of it had anything to do with the content of the bill. And as for being “shoved down their throats”, puh-lease the whole process was allowed to drag out for almost a full year with almost all that time devoted to trying to get some cooperation from Republicans, the House had their work done by mid-July with plenty of Republican amendments considered and voted on in Committees, particular in Energy and Commerce. The overall issue has been discussed in every legislative session for more than five decades, it was a major centerpiece of the 2008 campaign, the whole “can we slow this down a little!” narrative is just profoundly dishonest and worse thoroughly silly in light of the record.
Physician Compensation Up for 3 in 4 Specialties Janice Simmons, for HealthLeaders Media, August 2, 2010
In 2009, 76% of all specialties saw an increase in compensation, with the overall weighted average increase of approximately 3.4%. The primary care specialties’ (excluding hospitalists) average compensation increase was about 3.8%, according to the American Medical Group Association’s (AMGA) 2010 Medical Group Compensation and Financial Survey.
Other medical specialties had on average a 2.4% increase, and surgical specialties had a 3.8% average increase.
Between 2008 and 2009, the specialties reporting the largest increases in compensation were pulmonary disease (10.37%), dermatology (7%), urology (6.36%), family medicine (5.67%), hypertension and nephrology (5.54%), and cardiac and thoracic surgery (5.12%).
“The modest increases seen this year reflect the negative impact of declining reimbursements, competition for specialists, the cost of new technology, and other factors on practice revenues in most parts of the country,” says AMGA President and CEO Donald Fisher, PhD.
For work relative value units (RVUs), the overall weighted average increase from 2009 to 2010 was approximately 0.8%. For the specialties reviewed by AMGA, the average increase in work RVUs was 1.2% from 2009. Primary care remained flat, other medical specialties increased by 2.7%, and surgical specialties increased by 3.0%, on average. The largest work RVU increases occurred in cardiac and thoracic surgery and otolaryngology.
For gross charges, 65% of the specialties experienced an increase from 2009 to 2010. The overall weighted average increase from 2009 was approximately 2.5%. Gross charges for primary care specialties increased by 4.1% on average, while other medical specialties increased by 1.3% and surgical specialties by 5.6%, on average.
The survey noted that many medical groups were still encountering significant financial challenges. While most regions looked healthier than in 2008, margins were still thin. In 2009, for instance, organizations in the Eastern and Western regions were operating at a break-even point.
Many of the losses seen in 2009 were supplemented by other non?clinical revenue sources and funding from health systems with which groups are associated, Fisher said. Most of the medical groups represented in the survey were part of larger organized systems of care that have made investments in technology, operations, and other care processes, he added.
The 2010 AMGA Medical Group Compensation and Financial Survey was sent to more than 2,700 medical groups. Survey responses were received from 248 groups, representing more than 49,700 physicians and 121 specialties.
” A WORKABLE BILL WAS POSSIBLE IF THEY HAD COMPROMISED, BUT IT WAS EASIER TO BLAME THE REPUBLICANS”
The bills were compromised over and over at the demands of Republicans both in the House Tri-Committee Bill and Senate HELP. And in Senate Finance Baucus went so far as to convene a working group that originally had seven members, four of them Republicans along with two Conservadems and a moderate while freezing progressives out of the negotiation for months, including I might add the Chairman of the Health Sub-Committee of SFC, what more did you expect Reid and Caucus to do in the way of compromise? Not to mention that the final result was a significant disappointment to progressives, see a Public Option in it anywhere?
Meanwhile all Republicans had was the Hatch proposal for Tort Reform, which as it turned out got a colossally terrible score and did nothing to bend the price curve, plus the Boehner Amendment which scored as doing almost zero to increase coverage or cut cost, all discussed here in real time. Did you just miss the discussion?
Republicans never had any intention of compromising, the closest they got was Enzi’s demand that any compromise worked out by the Gang of Six had to be ratified without any amendments by a pre-committment by the Speaker and the President, in effect demanding individual veto power over the entire process. That ain’t my idea of compromise or democracy for that matter.
Some things just seem to slide down the Memory Hole for some people, it is like the events of the past year just didn’t happen.
Exactly the same for the next couple or three years, since nothing meaningful kicks in yet. After that is anyone’s guess.
” they essentially remove a lot of the incentive for insurance companies to nickel and dime providers by denying claims”
You trust providers much more than I do. I think they bill like the defense industry(price it as high as they think they can get away with), and whether we had single payer, medicare, or private insurance receiving the bills, someone has to provide the role of buying agent. Since we can’t easily get quotes from many vendors before the fact, insurance companies dispute high/unnecessary/unapproved billing charges after the fact.
bruce- it’s a big industry, and one that requires significant capital. to say the the absolute numbers are quite large does not actually mean that much. it has to be taken in the context of what is needed to create it.
sure, $2.9bn may sound like a lot of money, but it’s still less than 5% of revenue (and this is one of the best and most profitable companies in the space). so, a 5% price cut would eliminate all their profit. absent investment returns on premium portfolios, many would not be profiatable as it is.
if the whole profit of the whole health insurance industry was taken out, it would not even offset one year of the cost increases in health costs we have seen in the last 20 years. there is just not a material amount of money being made relative to the overall US healthcare budget. this seems like blood from a turnip.
it’s always tempting to accuse them of profiteering and being the source of cost hikes, but the fact is that their margins have been in decline for some time until last year they got so low that a big round of price hikes and benefits reduction went through industry wide. probably even fewer people like their health carrier than their cable company, but the latter is the more aggressive profiteer.
it’s a bit more complex than processing payments. a debit card co processes payments. a health insurer takes in premiums and then pays for your care. if you pay $3000 in premiums then need open heart surgery, they lose a lot of money on you. premiums are not a pass through. the liabilty you may pose them can easily run into millions of dollars. it’s nothing like processing a check. if you write a check for more than is in your account, your bank is not on the hook for the remainder. your health insurer is.
and how can premiums not be revenue? it’s money paid to the company for a service. how is that not revenue by any conventional definition? if i pay for netflix, my monthly fee is revenue. if i watch so many movies that they lose money on me, not my problem. this is just like health insurance and nothing like say, mastercard or visa doing payment processing. they take no risk. netflix and a health insurer do.
i don’t have the numbers, so i’m just speculating here, but based on anecdotal evidence, i’d be willing to bet that the annual cost to the healthcare industry from malpractice insurance and malpractice claims and court costs dramatically exceeds the profits of the entire health insurance industry. that seems a riper area for reform, particularly around the size of awards. the US pretty much stands alone in the unlimted size of such payments and big awards for pain, suffereing, and deterence (punitive damages). most of the rest of the world uses a pure provable damages standard.
Can you explain “stop loss” in this context? If it refers to some sort of re-insurance I don’t recall any such provision by Treasury.
From a paper entitled “Will Employers Undermine Health Care Reform by Dumping Sick Employees?”
Or go to Benefits Link.com 8-13-10 in the “News” section.
On page 10, “PPACA also reinsures in both the individual and small grouip markets against the risk that their medical costs will be greater than 103% of expectations.”
The footnote cites PPACA section 1342.
I was surprised at this part of the law. I did not check the PPACA to confirm.
Are you suggesting anyone making an honest living can’t run a business? No. Where do you get that?
A business is automatically bad? No, however, making super money on sicknesss and aged is somewhat inhumane.
Then who should you get healthcare from? The VA being a vet thank you. Otherwise, if i had no assets medicaid. Do you deserve the fruits of science and the nation more than someone else?
Your federal employees have a much better pay package and pension plan than a family practice doctor. I am retired GS 15, check the scale pretty near the top. I never made nor lived like any Dr I knew, I was married to a nurse for 20 odd years. Yeah my retired insurance is great, an example of the benefits and power of big risk pools.
So responsibility is also bad too, so just ignore the fact a family doctor is already allowing 20-30% loss to provide care to those in need? Where do you get that figure, and it if so bad how come aside from school I know hardly anyone leaving Doctordom.
Are you a human being or a vampire? Where does a guy who worked for the nuclear Air Force fit, like me and Buff. We were seriously evil, prepared and would have helped destroy the world, regrettably for a bunch of money grubbing toads worried about uncollectibles from sick people.
I am deeply repentent, I certainly would not kill for this country much less with nukes, and even less likely to have anyone die for it given what I have seen degradedd in the past 10 years.
I am a humane being. You define vampire and human being. I know who I am.
I just don’t get where you get this statement. Provide a link, or facts.
“implementation has the potential to sink it.”
Or am I unclear what you mean by “implementation” or sink or “it”.
In short I discount your assertions as impoverished on fact or authority.
What do you mean?
The numbers for health insurance companies don’t directly express a percent of revenue as the companies also provide claims processing services for large companies who self insure for the actual claims. This is very like what happens with Medicare in that some company does the claims processing but the claims are paid by Medicare. What would be more useful is to quote the (unknown) profit on the pure insurance part of the business.
The malpractice issue varies very much from state to state, If you state has not put in a 250k cap on non economic damages ask your state legislators to do so and if you live in a state with initiative, push one. This has worked in Tx where malpractice rates are down. As to punative damages, you might include a 100% state tax on them, so that the punative damages benefit society as a whole. This does make the damages issue much simpler, economic damages then include medical care costs due to the issue, as well as lost income, but thats all there is.
Bruce you have voiced nearly the complete list of Dem talking points, while completely ignoring the angst felt by the electorate. I was at the Capital for one of the demonstrations against it. How many demonstrations does it take? How many polls? How many rancorous town halls? Before you (and the Dem leadership) realize that this bill was not the version the voters wanted? A healthcare bill was possible, but not that one.
The fact you have to resort to reading between the lines of my comments to make your counter point shows just how weak is your argument. You are arguing against yourself when you do so.
ILSM, your questions are an indication of just how disconnected from political reality you are. Read some conservative articles.
Most of that angst has been ginned up by Dick Armey and Glen Beck.
That most workers under 40 believe they will never get a check isn’t self-validating, nor was the Fifties Red Scare nor some peoples willingness to swallow every statement coming out of Don Senors press shop in Iraq in 2004. Not to put too fine a point on it.
“if you pay $3000 in premiums then need open heart surgery, they lose a lot of money on you. “
And we are supposed to feel HOW about this fact?? Its insurance for chrissakes. Get out of the business if you dont like the way its run, this didnt just happen since the election. I dont feel sorry for PHI companies because the whole model is flawed from the start. The industry is on its last legs and we should be celebrating. I have no personal animosity to any of the CEOs but knowing what we now know we would never in a million years set up our health care financing system this way. Its absurd. Its time for them to fold.
I agree with your earlier comment though that PHIs are NOT responsible for the rising costs of health care, they are just the messenger.
“How many rancorous town halls? Before you (and the Dem leadership) realize that this bill was not the version the voters wanted? “
You say this as if one can conclude that the 50-60% who didint like this version all wanted the same version…………..NOT TRUE!
Tell me did the majority of the people, those that supported the bill AND many who are opposing it want the public option?? YES
You always make it sound like the dems overreached and made the bill too “to the left” in the eyes of the disagreeers. Which is almost as big a lie as anyhthng that comes out of Sarah Palins mouth. If the majority of Americans had been heard you’d really be screaming because it likely would have been single payer.
Bruce, you are out of touch with the voter anger. Armey and Beck? Nope! It was going on and growing long before they actively joined the fray.
Greg, your recollection of polling is a little off. Regardless, they might have gotten single payer had they added some of the other features the voters wanted. But, Dem leadership turned the bill into a political football. They wanted to score over any Congressonal protests, while ignoring the growing anger outside their doors or on the West lawn.
Greg said: “Tell me did the majority of the people, those that supported the bill AND many who are opposing it want the public option?? YES“
But Rasmussen said this: “32% Favor Single-Payer Health Care, 57% Oppose” That was in August of 2009. link is here: http://www.rasmussenreports.com/public_content/politics/current_events/healthcare/august_2009/32_favor_single_payer_health_care_57_oppose
In doing the research to answer your question what I did find was a whole lot of liberal commentary making your claim, but it was not evidenced in the only major poll I could find. Ther could be others, but looking at the nternals of the major polls for the appropriate time frams is just too time consuming to counter what is apparently only a liberal talking point.
Why was it a horrid piece of legislature? Readrs what to know why it was so terrible. You and CoRev leave us short on how such legislature evolved. I am all ears.
Absolutely terrible, insurnace companies must insure “everyone.” No one had to talk to the healthcare industry, insurance companies, etc. becuae they were lobbying heavily in Washington to not do a damn thing or keep the same old same old. 40% of the population uninsured at any one time, that sure makes sense.
Where did you read about the dilemma for medicare?
Yes here: http://www.urban.org/uploadedpdf/411965_failure_to_enact.pdf “The Cost of the Failure to Enact Healthcare Reform for the States.”
I argue with my car radio all the time. Shouting windbags of black noise.
I enjoy the ad hominems. Makes me smile.
I listen to tea baggers, I once in a while listen to propagandists from Heritage, Bookings and Council on Foreign Relations. Tax foundation!!
I parse circular logic and agendas quite well now thank you. I can pick up a lie from all those thrown about.
I cannot stand the idolatry and racism.
You cannt answer any question I ask because you are stuck in the right wing windstorm.
Rasmussen? Rasmussen? RASMUSSEN???
You mean the Rasmussen that is the polling arm of News Corp, that is the parent company of Fox news. The one that just made a million dollar donation to the Republican Gov Assoc, one of the largest corp donations on record? The guys who call themselves fair and balanced? How much did their balanced stance provoke them to give to Democratic Gov Assoc?…………….. ZERO!!
Citing Rasmussen is very telling.
THAT Rasmussen was the ONLY major poll you could find?……… GEEE wonder why?
Lots of meaningful things kick in Sept 1, in particular things like the High Risk Pools that are supposed to be a bridge to the Exchanges, and most of the insurance reforms in regards to pre-existing conditions and I believe the MLR rules just promulgated and no limits on annual and lifetime coverage.
The main delays are in the Exchange subsidies and the implementation of the individual mandate that goes with that, the goodies are basically front loaded. The question is whether the millions of people who will finally have a near immediate path to coverage previously denied to them by insurance company rules and arbitrary huge rate differentials in area population pools will be outnumbered by people who really would prefer to go uninsured on principle. Because it sure seemed to me that large majorities of those who were fired up over the inequities of the individual mandate were in populations largely covered by a program that is half mandatory (at least in contributions via FICA and income tax) while being only in part voluntary (you don’t HAVE to take Medicare or pay Part B or D premiums, you can die in the street or conversely pay cash).
And the one place that this bill will be felt right away? The insurance companies. They just had new coverage burdens added to them with more specific ones to come as the Acceptable Benefits Package is refined, and the only thing that rescues them is the individual mandate/coupled with subsidies. If they don’t play their cards right they might get stuck with all the reform while being starved of the new revenue, ‘Repeal the Bill’ has real risks for their bottom line, and as noted above you can expect them to call off their lap puppies. At least after the election if Republicans actually take power.
Bullshit. Armey was deeply involved in the first town meetings providing logistical support via FreedomWorks.
Most of the anger before last August was Rick Santelli whipping up anger that black homeowners were screwing over the banks by walking away from loans, that was the subject of that original Tea Party rant on the floor of the Chicago Exchange. People didn’t get angry over HCR until they heard people like Palin ranting about death panels and Republicans claiming that Dems just wanted to take health care away from seniors so they could give it to illegal immigrants.
Man everything DOES just go down the Memory Hole for you. “We have always been at war with Eastasia”. If one thing the history of the last 50+ plus years tells us, is that it is not that hard to whip up fear (or angst if you will) given the right brand of demagoguery. And no body seems to be an easier group to frighten than middle aged white men, oddly the effect is more acute the more comfortable they personally are.
Plus the Rasmussen Poll actually validates Greg’s point. If some 20-30% reject the bill because it doesn’t go far enough, while another 20-30% are among the hard core Republican base who always responds to “their master’s voice” then you can pretty easily get up to majorities or near majorities opposing the BILL while having large majorities supporting the GOAL.
I think the Left and particularly those who make up Jane’s Firepups were very ill served by what was frankly propaganda coming out of PNHP-Physicians for a National Health Plan, the Single Payer Now group that stooped pretty low in pushing the “this is just a huge sellout of the people to the Insurance companies by Obama, Pelosi and read”, like the corrresponding critics coming from the Right it seemed 99% of the folk screaming “READ THE BILL” had not bothered doing it themselves, instead working off PNHB bullet points from the one side or AHIP bullet points on the other, which is why we tried to have a thoroughly text based discussion here at AB.
I predict this bill will be very popular once some facts sink in, like the fact that it eliminated 5/6th of Medicare’s Unfunded Liability over the 75 year actuarial window, right now people are just carrying over talking points set out last fall.
Medicare does the same function for 3% that insurance companies do for 25%.
And then there are the costs on the other side to fight the companies.
Adversarial is no way to run health care.
The above is the consolidated text PPACA and HCERA.
Not having access to the full text of that SSRN article I really can’t say, but the footnote seems to be mixing up the provisions of 1341 which provides for reinsurance for certain specific high risk enrollees in the individual plan market and those of 1342 which provides some cost coverage for companies that document they actually were providing covered care in excess of their targetwhere the feds will cover half of any excess from 103% to 108% and 80% thereafter.
I don’t see how any of that could allow employers to do any dumping, these sections don’t seem to address employer responsibility at all. Though people certainly can check.
And I don’t see anything inherently problematic here. Insurance companies the legitimately underestimated their Medical Losses presumedly would seek rate increases to get them back down to the mandated 85% minimum MLR for the individual market, this would seem to just allow an adjustment mechanism. And the actual reinsurance provisions of 1341 would take care of those cases where an insurance area had an abnormally high ratio of High Risk enrolles (asbestosis perhaps?) Don what do you find problematic here?
Employer responsibility is covered in Sec 1511-1515 and I don’t see an immediate interaction with 1341 or 1342 or any reason why it would advantage the employer to push high risk people out. For one thing it is not clear that employers would or should have access to that kind of medical or insurance information to start with, and second except for what are defined as ‘largest employers’ there wouldn’t seem to be any rating advantages in doings so.
So I would be happy to address the argument is you would summarize how this would work and what the consequences would be, but I don’t have much to work with here.
i’m not making any sort of claim about how we sould feel. i agree, they ought to pay. that’s the contract. figuring out how to price it is what actuarial tables are for. my point was that because the insurer faces a potentially huge loss on any given customer, it’s not simply a pass through of money like a credit card processor. the business process and risk are a great deal more substantial. this was in response to puppy’s comment about it just being a pass through and wanting to reclassify revenues.
“Medicare does the same function for 3% that insurance companies do for 25%”
your going to have to lay out what you are talking about there. apples to apples, i have severe doubts medicare is better run than the private companies. certainly, it gouges providers much more and often pays below cost for proceedures, which is why more and more systems are dropping it, but if it’s better run that the private versions, i’d be shocked. further, if the whole system were medicare, prices would rise. they would not be able to price below cost.
what you are seeing in terms of low expense ratios is just an artifact of government accounting. most off the expenses that would be bourne by a private company are carried elsewhere.
the real costs of medicare on a service for service basis are at least as high as the private sector, but for a lower responsiveness, and much higher fraud rate and again, this is only possible through abuse of market power to underprice.
medicare is just as adversarial as a private insurer. any third party who decides what is and isn’t covered is. go to a single payer country like canada and try to get an expensive kind of chemotherapy. when they tell you no because the ecpected life benefit does not exceed the cost on their actuarial table, see if you think they are adversarial. see how waiting 6 months to see a specialist or to get an MRI sits with you.
the only non adversarial system for health is user pays. any third party payor (including the governement) will always be adversarial. there’s only so much to go around, and it will get allocated somehow. it’s just a question of who makes the choice.
I apologize, maybe to too strong a language is used. But there is a huge difference between someone that have a guaranteed defined retirement with healthcare benifits versus someone whom doesn’t have one and needs save for their own retirement.
GS 15 payscale is over 100,000 a year. Last time I checked most Family Practice doctors gross between 120,000 to 200,000 a year. (Most FP doctors don’t even start to make that until in their midthirties) That is gross income before taxes, healthcare, student loan payment(average owes 150,000 plus), planning for their own retirement, their own health insurance etc(family of four it’s like 12,000 a year).
If one does the math, whom has a better good retirement package? A GS 15 employee can comfortably retire, most family practice doctors have to keep working… they can’t afford to retire.
What’s wrong with driving a mercedes? What’s wrong with driving a ford?
As for the rustic 1940s, 1950s rural american family practice doctors, they are the ones that can’t retire. Seems like the problem today there is a lot of mistrust of physician because “some” drive a Porche or Mercedes. Why does anyone care? Isn’t the person that’s taking care of you is far more important?
A physician hired by a hospital, insitution will have to abide by it’s rules, regulations.
Most Family Practice Physicians I know didn’t do it for the money, it just not worth it anymore. It’s very discouraging for the doctors that some segment of the society dislike anyone that “makes money…mercedes/porche” and not even focus on what they have accomplished for patient care. To be a physician takes years of dedication, training, not to mention stress from Congress, dealing with people a sense of entitlement.
If you want to make money and retire on time, it’s much better to work for the government.
That was just hilarious. Read conservative articles for facts? Nowadays? Who? Limbaugh? Beck? The RNC? There is no honesty in your claims, CoRev, much like when you write about climate change. Of course your definition of compromise appears to be “Do everything the Republicans and the health care corporations want.”. To claim that there was no compromise is a complete falsehood.
Bruce said: “…then you can pretty easily get up to majorities or near majorities opposing the BILL while having large majorities supporting the GOAL.” so now we’ve gone from supporting “single payer” to supporting the “GOAL.”
Which is it??
Bruce said: “Bullshit. Armey was deeply involved in the first town meetings providing logistical support via FreedomWorks.” You really do need a better source than HuffPo or the other lib blogs/rags.
My first Tea part was in March 09, a few weeks after the Santelli rant, but his rant at best was a catalyst. The left’s denial of the Tea Party movement is more a reaction to a threat from a “grass roots” movement that has grown in weeks.
The Tea Party name was chosen for a reason. It does represent a peaceful movement (a revolution) of the silent MAJORITY. And that fact threatens a liberal minority. Moreover, as you have seen me say here several times, the original tea party led to a revolution, and this very large movement may flash into something else if thwarted. I have never in my life seen nor heard that term more frequently than in the past year+.
Liberals/you can discount it, deny it, and even ignore it, but it is a deeply felt and largely universal. this is an example of how we think:
The Tea Party is not a flash-in-the-pan political movement that will evaporate and disappear. It emanates from the deepest part of men’s and women’s souls and unites them with the highest values and purposes of our nation in an unbreakable bond. Progressive ideology seeks to intercede, to dismiss and break that bond.
What the progressives fail to recognize is the power of the sublime truth within our Constitution and Declaration of Independence, and the power and clarity it awakens in our souls. It is not simply political; it is spiritual. It is not merely academic or historic in nature. It is a living truth, compelling and empowering today. It is knitted into our souls, woven into our lives. This is the progressives’ fatal flaw, their Achilles’ heel: They grossly misunderstand and underestimate the dynamic with which they are dealing.”
From here: http://www.washingtontimes.com/news/2010/aug/13/tea-partys-inception-a-rebirth/
It is these very feelings, thoughts and supporting rhetoric that causes us to rant about losing our constitutional freedoms. Believe us we are well aware of the bipartisan efforts that effect those freedoms, that is why we can claim it is not party specific.
Believe us or not, but believe the MO votes, 71% against and 29% for implementing the healthcare bill. Nov 2010 and then Nov 2012 will make the difference.
Greg, find other major (Pew, Gallup, Quinnipiac) polling sources then we can review the internals and discuss. Otherwise you are just ranting.
Another reason to be skeptical of profit margins as the sole measure of profitabilty
Wellpoint has a return on equity of 22%
Intel has a return on equity of 22.5%
A recent post by Buttonwood at The Economist notes that the historical ROE for financial firms was 7% but it has been 21% recently. Wonder what the historical ROE has for health insurance firms?
Wellpoint has a net profit margin of 7.9%, while Intel’s is 23.1%, but they basically have the same ROE. One big difference in the net profit margins, by the way, is that Wellpoint’s effective tax rate is 36% compared to 23% for Intel, which reflects that Wellpoint does business only in the U.S. Still, they have comparable ROEs.
The real issue that I see is that Wellpoint’s SG&A expense is almost 4 times that of Intel (almost 88% versus just over 22%). This seems like a staggering SG&A expense, but if it helps the company socialize the cost of claims they would otherwise have to pay for, thus increasing their margins, that’s good for the company (and bad for the economy).
Of course part of the issue is a large part of the heath care carriers bill is acting as a claims agent for large employeer self insurers. That business is almost all SG&A, since the actual claims are paid by the self insurer. If they broke out the claims handling business it would make a more apples to apples comparison.