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Old 01-08-2011, 11:23 AM   #41
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However, I trust insurance companies even less than I trust government (and I have little trust in government)... and I wouldn't put it past them to propose apocalyptic rate far in excess of their increased costs in order to try to get the people to scream for repeal of the new laws.
Blue Shield also stated that the increased premiums had "almost nothing" to do with the health care bill.

"The company, a member of the Blue Cross Blue Shield Association with 3.3 million members, which announced the move late Thursday, stressed that its decision has "almost nothing to do with the federal health reform law" and that ultimately the law will help slow down health care costs."

"But responding to this most recent increase the company said, "our individual market medical costs are rising rapidly due to higher provider prices, increased utilization, and the fact that healthier people are dropping coverage during a bad economy," the company said."

http://finance.yahoo.com/news/Blue-S...&asset=&ccode=
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Old 01-08-2011, 11:27 AM   #42
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There is certainly truth to the idea that the new laws and their mandates are causing premiums to rise.

However, I trust insurance companies even less than I trust government (and I have little trust in government)... and I wouldn't put it past them to propose apocalyptic rate far in excess of their increased costs in order to try to get the people to scream for repeal of the new laws.
The increases still have to comply with the 80% loss ratio rule now currently in effect, so they can't propose massive rate increases "just because"....and like I said, Blue Shield is non-profit. Maybe people will see now that "massive profits" aren't the problem.
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Old 01-08-2011, 11:30 AM   #43
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the fact that healthier people are dropping coverage during a bad economy
This is a big one, IMO. And it's certainly true that large group and employer-subsidized plans are not nearly seeing the rise that individual plans are. Part of that is the purchasing clout of a large group (the insurers don't want to lose that business so they can't jerk Megacorp around too much) and that people have no incentive to decline massively subsidized care (healthy or not, why would I reject coverage $800/mo coverage when I only pay $120 for it?) -- especially since employer coverage usually means the insureds are, well, employed. So there is no significant adverse selection in the large group employer plans.

Yet this also shows why large groups and universal coverage are much more effective than the dysfunctional individual health insurance market.
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Old 01-08-2011, 11:33 AM   #44
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Yet this also shows why large groups and universal coverage are much more effective than the dysfunctional individual health insurance market.
Easy to say, not easy to pay for. Most of my clients wouldn't have health insurance if they had to pay group insurance rates. If you can't write the check, then you can't write the check!
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Old 01-08-2011, 11:39 AM   #45
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Easy to say, not easy to pay for. Most of my clients wouldn't have health insurance if they had to pay group insurance rates. If you can't write the check, then you can't write the check!
Doesn't change the fact that the market for individual policies is dysfunctional for a variety of reasons.

And I assume most of your clients aren't unemployed, have little income and have chronic health problems. Cherrypicking makes it all sound so easy...
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Old 01-08-2011, 11:48 AM   #46
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Doesn't change the fact that the market for individual policies is dysfunctional for a variety of reasons.

And I assume most of your clients aren't unemployed, have little income and have chronic health problems. Cherrypicking makes it all sound so easy...
Maybe, but that's the nature of the market. You could say the same thing about disability insurance with its strict underwriting. A lot (20%?) of my clients are unemployed and bought individual insurance instead of forking out the $1500+ per month that most of their group plans required for COBRA. More and more of my clients are buying individual because their employers have cut back on subsidies for health insurance or don't have any subsidy for dependents. I have seen more people whose employers were charging $1000+ per month for family rates than ever before.

The bottom line is people that don't have it massively subsidized either through their employer or the government can't afford group rates. When 2014 rolls around, you'll see many of the people insured today simply make the economic decision to drop health insurance instead of paying the $1000+ per month for a family or $400+ per month for an individual.

We just saw Blue Shield of CA and many other companies say there is a big problem with younger, healthier people dropping coverage because of the bad economy. What happens when their rates double or triple? Somehow I don't think raising the price will encourage them to buy...
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Old 01-08-2011, 11:59 AM   #47
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Back to polling data: The new health care law still isn't supported by most Americans: From a Gallup poll this week (as reported by CNN):

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Forty-six percent of those surveyed Tuesday and Wednesday say they want their representative to vote for repeal; 40% want the law to stand.
This is not an isolated case. The Real Clear Politics composite of many polls over the last month indicates 53% of Americans favor repeal of this law.

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. . . Blue Shield is non-profit. Maybe people will see now that "massive profits" aren't the problem.
Some BC/BS is non-profit, some isn't. From Wikipedia:
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Prior to the Tax Reform Act of 1986, organizations administering Blue Cross Blue Shield were tax exempt under 501(c)(4) as social welfare plans. However, the Tax Reform Act of 1986 revoked that exemption because the plans sold commercial-type insurance. They became 501(m) organizations, subject to federal taxation but entitled to "special tax benefits"[9] under IRC 833. In 1994, the Blue Cross Blue Shield Association changed to allow its licensees to be for-profit corporations.[5] Some plans[specify] are still considered not-for-profit at the state level.
But I agree that the actual profits are not a significant problem.
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Old 01-08-2011, 12:00 PM   #48
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Some BC/BS is non-profit, some isn't. From Wikipedia:

But I agree that the actual profits are not a significant problem.
Anthem Blue Cross is for-profit in CA. Blue Shield of CA is non-profit. Most states only have one BCBS company, CA has two.
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Old 01-08-2011, 12:02 PM   #49
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Back to polling data: The new health care law still isn't supported by most Americans: From a Gallup poll this week (as reported by CNN):
But to reiterate what was said before, there's no reason why we have to look at this as an "all or nothing" thing. Some of the reforms are more popular than others, and that old saying about baby and bathwater comes to mind.
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Old 01-08-2011, 12:05 PM   #50
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The bottom line is people that don't have it massively subsidized either through their employer or the government can't afford group rates. When 2014 rolls around, you'll see many of the people insured today simply make the economic decision to drop health insurance instead of paying the $1000+ per month for a family or $400+ per month for an individual.

We just saw Blue Shield of CA and many other companies say there is a big problem with younger, healthier people dropping coverage because of the bad economy. What happens when their rates double or triple? Somehow I don't think raising the price will encourage them to buy...
You say this frequently - people won't pay the unsubsidized rates. If they are covered today, those rates are being paid. How can we ever hope to have any type of functional healthcare system when people don't pay the full amount? How can we expect to reform a system if we don't acknowledge the real costs?
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Old 01-08-2011, 12:40 PM   #51
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You say this frequently - people won't pay the unsubsidized rates. If they are covered today, those rates are being paid. How can we ever hope to have any type of functional healthcare system when people don't pay the full amount? How can we expect to reform a system if we don't acknowledge the real costs?
They are covered by paying individual market premiums. If you are paying $400 per month for your family and that rate goes to $1200/month for guaranteed-issue, what do you do? Most people covered under group plans have them massively subsidized by the employer or government. The total costs are distorted because people don't pay the full price of what they get, which encourages overutilization.
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Old 01-08-2011, 12:53 PM   #52
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When I see poll results like this, I can't help but chuckle that the Great American People are going to get the results that they so richly deserve over the next couple decades, as employers continue to cut health care benefits for retirees and current employees. Losing the MegaCorp tax break for providing health insurance will help speed the process along...

A much larger body of under-insured or uncovered people will at least finally put some downward pressure on the cost of health care services. We may see some cost containment, or perhaps changes in the care model to reduce expenses.


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Old 01-09-2011, 08:10 PM   #53
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I was only thinking there is too much cross subsidy right now. Higher rates for small groups and lower rates for large groups. The lower rate encourages over-use and hides the real cost. The higher rate discourages enrollment. The system becomes distorted.

Standard rates for all would be a big step forward.
Okay. I figured there wasn't any cross subsidy, it simply reflected the differences in anti-selection. I guess we'd need a health insurance actuary to tell us what's really going on.
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Old 01-09-2011, 09:39 PM   #54
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Health Care brokers and intermediaries use the reform act as an excuse, but it is certainly not the reason. They were raising their rates before the reform and will probably continue to do so.
Medical costs are increasing, but the rate of increase is slowing. It will shock some to learn that the cost of medical care provided by government insurance (Medicare) is going up a lot faster than the cost of care paid for by private insurers.

From AOL News based on data provided by the US government's Centers fro Medicare and Medicaid Services

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Indeed, as the chart below shows, annual spending increases have been steadily moderating for the past eight years.


And, the data show, these spending increases would have been lower still had the government kept pace with the private sector. Last year, for example, private insurance spending climbed just 1.3 percent. Medicare spending, in contrast, climbed 7.9 percent. On a per-enrollee basis, private insurance spending has climbed at about half the rate of Medicare since 2005.

Over the longer term, government health care spending has climbed faster that private spending in eight of the past 10 years. (See chart below.)




At the same time, premium increases have been steadily moderating over the past several years. According to the Kaiser Family Foundation, premiums for employer-sponsored family coverage climbed just 3 percent in 2010, compared with 13 percent in 2002.
Now, I'm sure some of the lower costs for private insurance is due to burden-shifting to patients. But this would need to be balanced against the large amount of Medicare patient care costs that service providers shift onto those with private insurance.
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