Anthem of Maine requests 23% rate increase, state regulators tell them to shove it

[ziggy29]

I'd take it a step further.

If your goal is to maximize profits, then insuring sick people is bad business . . . period.

Not if doing so becomes a requirement to remain in business. Because then, the profit for refusing to do so is *zero* as the regulators put you out of business for doing so.

And that is a problem that will not change under any regulatory scheme.

See above.

 

[samclem]

I don't know why we can't pass a law to make Allstate insure burning houses. I could save a lot on my insurance.

 

[Gone4Good]

Not if doing so becomes a requirement to remain in business.

Requiring a profit seeking enterprise to engage in money losing business is like trying to prevent water from going down hill. The regulation has to be air tight or people will find a way around it or through it or over it. I'm not sure such a regulatory construct exists.

 

[ziggy29]

Requiring a profit seeking enterprise to engage in money losing business is like trying to prevent water from going down hill. The regulation has to be air tight or people will find a way around it or through it or over it. I'm not sure such a regulatory construct exists.

I could be wrong, but it feels like you're intentionally evading my point because it doesn't necessarily lead to the conclusion that government-run single payer is the only possible option.

Group insurance offered through employer groups already *does* insure unhealthy people without underwriting (and without pre-existing condition exclusions if the insured qualifies under HIPAA), and yet it's profitable. How could that be if what you say is correct?

 

[Gone4Good]

I could be wrong, but it feels like you're intentionally evading my point because it doesn't necessarily lead to the conclusion that government-run single payer is the only possible option.

Group insurance offered through employer groups already *does* insure unhealthy people without underwriting (and without pre-existing condition exclusions if the insured qualifies under HIPAA), and yet it's profitable. How could that be if what you say is correct?

They underwrite the group though and price it so it is profitable. It works if your group has enough healthy people, otherwise the group is probably priced out of the market too. That's a big reason why many small businesses can't offer health insurance. The pool isn't big enough.

And once they insure the group, the insurance company doesn't have the option of cleaving off individuals it doesn't like. It is a take it or leave it thing. But that isn't true with individual policies. The individual is the "group". And once the "group" becomes unprofitable, you can expect the insurance company to walk.

The truth is that there isn't a free market solution for a problem that requires profit seeking companies to suffer losses. It just doesn't work.

 

[eridanus]

Why do they stay in Maine if they can't make money there?

Anthem does make money in Maine. They just didn't make any from individual policies in 2009. They made money in previous years from individual policies.

 

[dgoldenz]

Anthem does make money in Maine. They just didn't make any from individual policies in 2009. They made money in previous years from individual policies.

They won't be there for long if the state keeps this up....

YrsToGo - Kaiser Permanente and many of the Blue Cross/Blue Shield companies are non-profit. Guess what? Their premiums are still expensive. If you stripped away every cent of profit, the premiums would still be expensive. If people were all required to buy policies that have no up-front benefits except preventative care, the premiums would be much less expensive. That idea isn't popular because it's the smart thing to do, and we all know the government doesn't do smart things.

 

[Martha]

I don't know what you mean by "no up-front benefits except preventive care." Do you mean the policy won't cover illnesses/accidents?

 

[dgoldenz]

I don't know what you mean by "no up-front benefits except preventive care." Do you mean the policy won't cover illnesses/accidents?

I mean no co-pays for office visits/diagnostics/prescriptions/ER visits/etc. Everything goes towards deductible like they do on a high deductible HSA plan. If people really knew what things cost, they would not utilize so many services. I can't tell you how many people I talk to that had a group plan and are taking Lipitor/Crestor/Advair/Flonase/Prevacid/etc....prescriptions that would normally cost $100-300 per month if you had to pay for them. All of those people are paying $20-30 for each month's supply and would more than likely switch to a generic alternative if they had to pay the full cost. Multiply that by a few million people.

 

[Martha]

OK, thanks for the explanation.

Many insurers require a much higher copay for non-generics, which generally makes a lot of sense. Some even remove them from their formulary. For example, Lipitor is not on my insurer's formulary anymore and it won't cover it at all.

The issue with having preventive care go to deductible is that there is a tradeoff. Sometimes it is most cost effective to get preventive care and chronic care. There is some evidence that high deductibles and no-copay plans discourage people from seeking necessary care and care for chronic conditions, leading to higher cost in the end. But it can discourage unnecessary goods/services.

I do favor low copay for generics and for costs to go up from there. I even think that it makes sense to remove some drugs from the insurer's forumulary. Other drugs should have to be justified. Though there are irritations with these rules. Some drugs never seem to get a generic. Insulin for example, it is all branded.

 

[lets-retire]

Instead of completely removing the name brand from the formulary, I think it would be better for the insurance companies to place a clause in their policy stating generics are preferred. Mine has that, and the only time a name brand can be used is when the doctor writes "no substitute" on the prescription. They could go one step farther in requiring proof that a generic works differently than a name brand. That way people can't go in and constantly request a name brand when the generic will work just fine. Many people who have seizures develop problems when going from a generic to a name brand or the other way around. If a person is taking the name brand drug and is having good control switching to the generic often times will result in seizures. The same can happen going from a generic to a name brand, so it isn't anything bad about the generic. They just work differently.

 

[ziggy29]

Instead of completely removing the name brand from the formulary, I think it would be better for the insurance companies to place a clause in their policy stating generics are preferred. Mine has that, and the only time a name brand can be used is when the doctor writes "no substitute" on the prescription. They could go one step farther in requiring proof that a generic works differently than a name brand. That way people can't go in and constantly request a name brand when the generic will work just fine.

My insurance does work that way. Unless there is a medically necessary reason for a name brand (such as a known allergic reaction to inert ingredients in the generic), ours is a "step formulary" which generally requires the use of generics when a drug is first prescribed. If that doesn't work, then the MD can specifically prescribe the name brand. Anyone who wants a name brand otherwise would have to pay the difference between the generic and the name brand out of pocket.

 

[samclem]

They won't be there for long if the state keeps this up....

Maybe Maine will be a testbed. Anthem pulls out and there are no private insurers in Maine, and none can be induced to come in based on the prior actions of the ME legislature. So the legislature institutes a Maine govt run single payer plan for everyone. Everyone gets what they apparently want, and the country gets to see how things go.

 

[dgoldenz]

Maybe Maine will be a testbed. Anthem pulls out and there are no private insurers in Maine, and none can be induced to come in based on the prior actions of the ME legislature. So the legislature institutes a Maine govt run single payer plan for everyone. Everyone gets what they apparently want, and the country gets to see how things go.

They can't have a single payer system if there is no money to pay for anything. The state "public option" is already bankrupt and hasn't taken on a new applicant in about two years because of budget constraints.

 

[Gotadimple]

Actually something similar did happen in 1999 in the state of Washington. Due to legislative mandates affecting the individual health insurance market, the majority of health insurers stopped selling to individuals.

Read this for a better understanding of what happened.

Universal Health Insurance in Washington State: A Grim Prognosis For All of Us

 

[Martha]

We have different markets with mostly different players, the individual and the group market. The individual market is small with people going in and out of the market, from or to employer plans or government plans like medicare. This churning leads to instability and is a problem and why I am very disappointed that we cannot seem to separate insurance from employment. The tax benefit to employers and employees makes it hard to ever justify buying on your own.

The bill makes some things worse. Employers still get a tax break. Instead of helping the individual market with a similar break, the proposal is to limit amount you can deduct to amounts about 10% AGI, rather than the old 7.5%.

 

[brewer12345]

Maybe Maine will be a testbed. Anthem pulls out and there are no private insurers in Maine, and none can be induced to come in based on the prior actions of the ME legislature. So the legislature institutes a Maine govt run single payer plan for everyone. Everyone gets what they apparently want, and the country gets to see how things go.

Actually, when state insurance markets fail, a common tactic in the past has been to force large, solvent players to stay in the bad market and keep writing policies for losses. This happened relatively recently in the MA auto ins market (I owned shares in a company that an exiting player paid millions to be relieved of its policyholders) and the FL homeowners ins market (State Farm and others were not allowed to leave after 2005 and got hammered).

 

[samclem]

Actually, when state insurance markets fail, a common tactic in the past has been to force large, solvent players to stay in the bad market and keep writing policies for losses.

How does the state force the insurance company to stay in the market? The only "stick" that comes to mind is the threat of barring the insurer from any business in the state (life, car, health, home, etc) if they abandon any of insurance lines. That might work with Allstate or State Farm, but Anthem is strictly health insurance.

I'll bet companies forced to stay in a market writing money-losing policies give great customer service. "Oh, you're unhappy. You don't like either of the two remaining doctors in our network. That makes us so sad. Why don't you just take your business elsewhere, you whiner!!"

 

[brewer12345]

Insurers have to kowtow before the state ins commissioner. They need permission to enter a state, leave it, wipe their noses, etc. They were not given permission to leave in these cases.

 

[FIRE'd@51]

Insurers have to kowtow before the state ins commissioner. They need permission to enter a state, leave it, wipe their noses, etc. They were not given permission to leave in these cases.

I believe they can stop writing new business at any time. So far as the existing policies go, they have to get state permission to cancel them. If the state doesn't grant permission, the insurance company can still go to court. This is what happened with Mutual of Omaha, when they exited the individual market throughout the US. New York fought them, but the end result was that MOH was allowed to cancel all the policies issued in NY, as well. I know this because I had a MOH policy issued in NY. My wife had one issued by MOH in Virginia, and hers was canceled two years prior to mine.

 

[Zero]

Will someone who has followed the health care reform give me some reassurance? I feel like I have done nothing wrong to deserve a beating but I sense one is coming my way.

Question: Is Medicare going to be significantly impacted either care wise or cost wise? More specifically is this, will the Supplements be really expensive to cover the shortfalls?

 

[FIRE'd@51]

Question: Is Medicare going to be significantly impacted either care wise or cost wise? More specifically is this, will the Supplements be really expensive to cover the shortfalls?

Who really knows? However, for budget purposes, the reform bills are counting on $500 billion in Medicare savings over the next 10 years. The fact that the current bills count on Medicare, the biggest unfunded liability in the country, to help fund 50% of healthcare reform doesn't pass the "smell test" with me. IMO, the sensible thing to do would be use any Medicare savings which actually materialize to shore up Medicare.

With reguard to your specific question, seniors are a large and fast-growing voting block, so it's hard to see politically how any significant Medicare cuts will actually occur. As an example, one of the places where the President and Congress is looking for large Medicare savings are the Medicare Advantage programs, but the Senate has already grandfathered those currently in existence to secure the vote of Florida Senator Bill Nelson in its quest to reach the "magic number" of 60 votes.

With regard to the Supplements, I would expect their premiums to grow in line with Medicare expenditures/enrollee. Remember, the Supplements only cover Medicare-approved procedures. So if Medicare were to stop approving certain procedures, the Supplements would no longer cover them. On the other hand, if Medicare raises deductibles or copays, these may be picked up by the specific supplemental policy you have, and, thus, would add to their costs. For example, if Medicare raised the part B deductible (currently $155) to $1000, any supplemental policy which paid this deductible would likely pass along this increase in its premium.

 

[Gone4Good]

YrsToGo - Kaiser Permanente and many of the Blue Cross/Blue Shield companies are non-profit. Guess what? Their premiums are still expensive. If you stripped away every cent of profit, the premiums would still be expensive.

Yes, my prior posts were imprecise. Swap "private enterprise" for "profit seeking enterprise" and you get closer to my intent.

My point is that health "insurance" isn't like other insurance. With car and home insurance the policy holder never expects to file a claim. Many people don't. And who will and who won't isn't generally predictable. That isn't true with health insurance. Everyone eventually gets sick and everyone eventually dies. Some people have conditions that are the equivalent to a predictable car crash every six months. In those cases and in the cases of the elderly were not really talking about insurance at all. We're talking about subsidization. The private market doesn't do subsidization. Government does.

If people were all required to buy policies that have no up-front benefits except preventative care, the premiums would be much less expensive.

I'd support a system where everyone has some skin in the game. I think 1st dollar insurance is a pretty significant design flaw in our current system. I'm disappointed that none of the health care bills do anything to fix this flaw.

 

[dgoldenz]

I'd support a system where everyone has some skin in the game. I think 1st dollar insurance is a pretty significant design flaw in our current system. I'm disappointed that none of the health care bills do anything to fix this flaw.

Why would they want to fix the easy cost containment flaws? That would be way too rational.

 

[Gone4Good]

Why would they want to fix the easy cost containment flaws?

One answer is those who favor this approach the most decided they'd rather try to stop health care reform at all costs instead of working to make the legislation better.