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-   -   Health Plans Up Significantly in 2014 (http://www.early-retirement.org/forums/f38/health-plans-up-significantly-in-2014-a-65788.html)

Hermit 03-22-2013 02:12 PM

Health Plans Up Significantly in 2014
 
An article in today's Wall Street Journal said individual health plans could go up as much as 116% at the extreme with 40% to 50% more the norm.

Health Insurers Warn on Premiums - WSJ.com

The article talks about what the large insurance companies are telling their brokers.

If your income is too high for assistance, this could hurt.

timo2 03-22-2013 02:22 PM

That's an excellent alarmist piece based on third hand conversations. It's sad what has happened to the WSJ. I used to subscribe, but the in-depth reporting is not what it used to be.

mickj 03-22-2013 02:29 PM

too bad it is true though

Mulligan 03-22-2013 02:38 PM

Quote:

Originally Posted by timo2
That's an excellent alarmist piece based on third hand conversations. It's sad what has happened to the WSJ. I used to subscribe, but the in-depth reporting is not what it used to be.

It is certainly conjecture at this point, but I have been noticing more than one of these types of articles. Of course the subsidized individuals won't notice, but the ones paying full freight would. This is just my opinion/concern, but it makes perfect since that the unhealthy ones will jump on this immediately, while the others may be slow to join. I am on a grandfathered individual plan, and I am sure any healthy person already on one of these will not be joining the exchange if they can help it. I have read several articles that are worrying that the influx of healthy and/or young people isn't going to come to help balance the cost out. I guess we will find out in the coming year. One thing is for sure, I hope I am not dragged into the exchange.

timo2 03-22-2013 03:13 PM

Quote:

Originally Posted by Mulligan (Post 1298973)
It is certainly conjecture at this point, but I have been noticing more than one of these types of articles. Of course the subsidized individuals won't notice, but the ones paying full freight would. This is just my opinion/concern, but it makes perfect since that the unhealthy ones will jump on this immediately, while the others may be slow to join. I am on a grandfathered individual plan, and I am sure any healthy person already on one of these will not be joining the exchange if they can help it. I have read several articles that are worrying that the influx of healthy and/or young people isn't going to come to help balance the cost out. I guess we will find out in the coming year. One thing is for sure, I hope I am not dragged into the exchange.

I won't have to use an exchange either. What concerns me, since I prefer the private industry approach, is that the companies will misbehave and create a clamor for a government approach to counter them. It's that 'killing the goose that lays the golden eggs' thing

pb4uski 03-22-2013 03:21 PM

Quote:

Originally Posted by timo2 (Post 1298988)
I won't have to use an exchange either. What concerns me, since I prefer the private industry approach, is that the companies will misbehave and create a clamor for a government approach to counter them. It's that 'killing the goose that lays the golden eggs' thing

I would think that the benefits ratio test would prevent any misbehavior. What would be gained by overstating premiums if it would 1) make you less competitive for 2014 and 2) if you overcharge you'll just need to refund the excess in 2015?

timo2 03-22-2013 03:33 PM

Quote:

Originally Posted by pb4uski (Post 1298994)
I would think that the benefits ratio test would prevent any misbehavior. What would be gained by overstating premiums if it would 1) make you less competitive for 2014 and 2) if you overcharge you'll just need to refund the excess in 2015?


So maybe it is an unfounded fear. won't be the last time for me either :blush:.

But I do know two things 1) perception is reality 2) Alarmists are always right, it just depends on which one of the thousands of alarmists that is. So if people get the wrong perception from the right alarmist (what are the odds?)...OK I'll stop.

walkinwood 03-22-2013 03:49 PM

There are so many inexpensive but severely limited plans in the individual health insurance market today. Maybe when these go away next year, the average cost will increase.

Every article is so blatantly lopsided in its coverage that it is hard to know what to believe. I decided not to worry about this until about October & then we'll all have a better idea of what's going to happen next year.

brewer12345 03-22-2013 03:59 PM

Quote:

Originally Posted by walkinwood (Post 1299006)
There are so many inexpensive but severely limited plans in the individual health insurance market today. Maybe when these go away next year, the average cost will increase.

Every article is so blatantly lopsided in its coverage that it is hard to know what to believe. I decided not to worry about this until about October & then we'll all have a better idea of what's going to happen next year.

+1.

photoguy 03-22-2013 08:00 PM

Quote:

Originally Posted by pb4uski (Post 1298994)
I would think that the benefits ratio test would prevent any misbehavior. What would be gained by overstating premiums if it would 1) make you less competitive for 2014 and 2) if you overcharge you'll just need to refund the excess in 2015?

Although the benefits test seems like a good idea to me, I'm not sure how they will prevent accounting games to reduce the amount of profit on paper.

brewer12345 03-22-2013 08:16 PM

Quote:

Originally Posted by photoguy (Post 1299126)
Although the benefits test seems like a good idea to me, I'm not sure how they will prevent accounting games to reduce the amount of profit on paper.

Insurance companies are highly regulated and the state regulators go over their books all the time, especially when annual rate increases are applied for. I don't think it will be a problem.

Live And Learn 03-22-2013 08:20 PM

Ut oh - the sky is falling again. Watch out for asteroids !

fisherman 03-22-2013 09:11 PM

Isn't the WSJ part of the FOX empire? The slant is very similiar.

photoguy 03-22-2013 09:48 PM

Quote:

Originally Posted by brewer12345 (Post 1299132)
Insurance companies are highly regulated and the state regulators go over their books all the time, especially when annual rate increases are applied for. I don't think it will be a problem.

I hope you are right. I keep thinking of public companies, who financials should be highly reviewed, yet the number of restatements/errors is astounding.

brewer12345 03-22-2013 10:23 PM

Quote:

Originally Posted by photoguy (Post 1299160)
I hope you are right. I keep thinking of public companies, who financials should be highly reviewed, yet the number of restatements/errors is astounding.

Insurance operating companies are required to file quarterly and annual financial statements with state insurance regulators. These books are done according to statutory accounting principles (SAP) rather than GAAP. SAP is very close to liquidation accounting (rather than "going concern" accrual basis found in GAAP) which is very conservative and insurers are not permitted anywhere near as much judgement in arriving at their SAP financials as is the case with GAAP. The statutory finanical statements are very detailed. For example, the insurers must disclose every single investment they have on the books down to the individual CUSIP level. Not to say there have not been cases where fudging happens, but it is harder to do when filing insurance regulatory financial statements. The state regulators can then pore over the details if they have reason to believe an insurer has been playing games.

There are lots of issues with the healthcare insurance market, but this is unlikely to be one of them.

pb4uski 03-23-2013 12:09 AM

Quote:

Originally Posted by photoguy (Post 1299126)
Although the benefits test seems like a good idea to me, I'm not sure how they will prevent accounting games to reduce the amount of profit on paper.

There will be specific definitions of what can and cannot be included in the numerator and the denominator. I know that when I retired the industry and regulators were working out the details. I don't think you concern is valid.

clifp 03-23-2013 06:05 AM

It makes sense that rates should rise.
  • The elimination of lifetime caps
  • Not being able to screen people for pre existing conditions
  • limitations of being able to increase rates based on age
  • Substantially increasing the procedure and benefits (e.g. free contraception.)


All of these increase the cost for an insurance company to provide medical insurance. Now the quality of the product is higher so it certainly makes sense for the cost to be.


How much of an increase in premium we will see I have no idea, but they almost certainly will rise.

MichaelB 03-23-2013 06:24 AM

Quote:

Originally Posted by clifp (Post 1299201)
It makes sense that rates should rise.
  • The elimination of lifetime caps
  • Not being able to screen people for pre existing conditions
  • limitations of being able to increase rates based on age
  • Substantially increasing the procedure and benefits (e.g. free contraception.)


All of these increase the cost for an insurance company to provide medical insurance. Now the quality of the product is higher so it certainly makes sense for the cost to be.


How much of an increase in premium we will see I have no idea, but they almost certainly will rise.

Given that we are spending 17% of GDP already, premiums don't need to increase. Because there is so much cost shifting and cross product subsidization, they do probably need to reallocate.

photoguy 03-23-2013 09:41 AM

brewer/p4b

Thanks for highlighting the difference in accounting standards. That makes sense to me.

Live And Learn 03-23-2013 11:52 AM

Quote:

Originally Posted by brewer12345 (Post 1299164)
Insurance operating companies are required to file quarterly and annual financial statements with state insurance regulators. These books are done according to statutory accounting principles (SAP) rather than GAAP. <snip>
There are lots of issues with the healthcare insurance market, but this is unlikely to be one of them.

Great info ! Thank you for posting this. I'm an accountant and I didn't realize there was a difference in accounting methodologies. I just learned something :)


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