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Health insurance policy with $100 bills.
It's the heart of right-wing conventional wisdom: Obamacare is going make insurance premiums for everybody skyrocket. The Wall Street Journal calls it "ObamaCare health-insurance sticker shock." The CEO of Aetna said "somebody has to pay for" insuring all Americans. Fox News trumpeted rising premiums for everyone.

As usual lately, conventional wisdom is having a big fail. Actually, according to a new report from the Obama administration, double-digit premium rate increases are falling. Dramatically. The researchers looked at 15 states that make requests for rate increases by insurers public, and saw rate increases plummet, at least in the individual plan market.

Since 2010, there has been a decline in the proportion of rate filings in which the requested increase is at or above the Affordable Care Act threshold of 10 percent.  In 2010, 75 percent of rate filings requested increases of 10 percent or more, a proportion that dropped to 34 percent in 2012 (See Figure 1).
Here's Figure 1, because it's that impressive:
Chart showing rapid decline in rate increases for health insurance premiums since 2010.
The researchers, and the administration, credit the Affordable Care Act and the "increased scrutiny that rate increases of 10 percent or more now receive." Because under Obamacare, insurance companies are required to provide public justification for rate increases of more than 10 percent. It's also possible that this years-long debate has heightened media attention in health insurers. Massive rate increases get media attention. It's bad PR for insurers, and could lose them customers when insurance marketplaces are opened up in 2014.

These 15 states represent about a third of the entire individual market, making the findings pretty significant. However, the researches didn't see the same drop in rate increases on the group plan side of the market, where rate increases are more stable. This study does, though, reinforce similar findings from the Kaiser Family Foundation last fall. KFF concluded that the greater scrutiny on rate increases under Obamacare could account for reduced premium increases.

[Via.]

Originally posted to Joan McCarter on Fri Feb 22, 2013 at 02:21 PM PST.

Also republished by Daily Kos.

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Comment Preferences

  •  I've just started seeing new commercials (21+ / 0-)

    With a VERY SERIOUS woman's voice, intoning all the RW talking points about (dum dum DUMMMMMMMMM) OBAMACARE, and how it's going to raise your insurance rates, taxes, end your Medicare coverage, etc. HOW WILL YOU SURVIVE?? At the end, the voice tells you the only way to avoid the upcoming Obama-calypse is to buy the book they're selling, 'How To Survive Obamacare', for $19.95.

    It's always good to make a buck lying to and scaring old people about their health coverage, I guess. Oh and these commercials have been airing on MSNBC, too.

    Bqhatevwr, dude. Srsly. Bqhatevwr.

    by Fordmandalay on Fri Feb 22, 2013 at 02:30:45 PM PST

    •  What do "old people" have to do with (3+ / 0-)
      Recommended by:
      Dube, ladybug53, allie123

      health care costs relative to Obamacare?  Except for states that refuse Medicaid expansion, which will prohibit major numbers of seniors from access to subsidized nursing home care, I can't see how Obamacare will affect costs associated with Medicare.

      As for taxes, new taxes in Obamacare are:

       - 3.8% surtax on investment income for individuals earning over $200K/year ($250K for families) - in effect now

       - 0.9% hike of the Medicare tax for self-employed individuals earning over $200K/year ($250K for families)- in effect now

       - Individual mandate excise tax: 1% of AGI (2014), 2% of AGI (2015), 2.5% AGI (2016+) for those who refuse to buy insurance coverage - effective Jan., 2014

       - 40% excise tax on "cadillac" insurance plans - effective Jan. 1, 2018

       - Business mandate tax of $2000 per full-time employee on businesses that do not offer health insurance (applies to businesses of 50 or more full-time employees) - effective Jan. 1, 2018

      - 10% excise tax on indoor tanning salons - in effect now

      All other taxes in Obamacare apply to insurance and pharmaceutical companies and medical device manufacturers.  There is also a penalty rate increase from 10% to 20% on withdrawl amounts from HSA's for non-medical uses.  Limitations on some payments from HSA's and FSA's for non-prescription drugs also apply.  These taxes and limitations not already in effect are to be phased in over the next 5 years.

      "In this world of sin and sorrow there is always something to be thankful for; as for me, I rejoice that I am not a Republican." - H. L. Mencken

      by SueDe on Sat Feb 23, 2013 at 01:18:56 PM PST

      [ Parent ]

  •  Three words, I don't know why the ACA's (31+ / 0-)

    opponents are incapable of Googling them:

    Medical Loss Ratio

    The insurance companies can't just raise rates willy nilly unless those rates stay within the medical loss ratio requirements, otherwise they have to issue refund checks.  It's called arithmetic.  It's very simple and everyone who keeps screaming about how rates are going to sky rocket has to ignore it in order to keep making their silly assertion.

    Anyone who tells you that Obamacare does nothing to control costs is lying or wrong out of ignorance.  

    Picture a bright blue ball just spinnin' spinnin' free. It's dizzy with possibility.

    by lockewasright on Fri Feb 22, 2013 at 02:56:38 PM PST

    •  locke - the math doesn't stop at loss ratios (9+ / 0-)

      If we have fixed the health insurance companies gross profit (revenues - payments to providers), and they want to increase actual dollar profits, isn't their incentive to pay providers more, charge higher premiums, and keep the higher dollar amount of gross margin? Haven't the insurance companies lost the incentive to keep payments to providers lower?

      "let's talk about that"

      by VClib on Fri Feb 22, 2013 at 04:05:33 PM PST

      [ Parent ]

      •  Seldom can one skip percentages & absolute numbers (4+ / 0-)
        Recommended by:
        splashoil, cocinero, Dube, ladybug53

        together when figuring out real dollars. 10% of $200 is more than 15% of $100.

        I expect that's where the game will be played: the medical costs will go up -- why would either the providers or the insurance people complain? -- so without charges being limited the money keeps rolling out of our pockets and into the Health Care industry's. Regardless of Medical Loss Ratio.

        (And if I'm not mistaken, even that is decided ultimately by regulators, who can say "hmmm, yes that is a medical cost, not administrative" and "so how well do careers in your industry pay?")

        We'll see what happens, but given that Dollar is God to the industry, it's a likely bet.


        We live in a nation where doctors destroy health; lawyers, justice; universities, knowledge; governments, freedom; the press, information; religion, morals; and our banks destroy the economy. -- Chris Hedges

        by Jim P on Fri Feb 22, 2013 at 06:35:05 PM PST

        [ Parent ]

        •  Having worked for a Big Blue (3+ / 0-)
          Recommended by:
          Jim P, vigilant meerkat, ladybug53

          in the association and not-for-profit (not non-profit) and there are about 32 such Blues left. I just operate from the premise they do not want to pay anyone. Hospitals, physicians, pharma or cover claims. Nothing. And they truthfully do want you to be healthy on the chance they might have to cover your illness - because they really don't want to cover your illness. If insurers can find justification to raise premiums because hospitals, physicians and RX goes up - they will.

          In the leadup to Obamacare (a positive moniker for me), they spent every available dime on software and equipment. It would boggle your freaking mind. They didn't even blink at wasting a million $. However, they did blink when someone asked them about a wasted million in one small department. Which explains why I have a new job in another state. And also explains why they had to refund 26 big ones in overcharging in the individual market - in one state.

          New job - insurance premiums through the roof. I opted for the high-deductible ($3,000) with $80 a month premiums because the traditional plan would cost over $500 per month (for a single person).

          cheers.

      •  Precisely. (5+ / 0-)

        Every possible incentive to push medical costs sky high. If I were CEO of a "for profit" insurer, I'd push medical costs as high as I could.

        That 20 percent provision is a poison pill for the American people -- not the other way around.



        Denial is a drug.

        by Pluto on Fri Feb 22, 2013 at 06:48:20 PM PST

        [ Parent ]

    •  So, if they want to make more profit (4+ / 0-)
      Recommended by:
      Pluto, WillR, ladybug53, simple serf

      they'll just approve inflated bills from medical companies.

      Sounds wonderful.

    •  Actually, no. (6+ / 0-)
      Recommended by:
      jsfox, Dube, Bush Bites, ferg, bluesheep, ladybug53

      But not so far.  I was involved in building the IT systems needed for one of the major insurance companies to comply with this.  They paid out some large rebates last year (though only in some markets), and the response has been to adjust premiums down for the coming years. Really

      Inflating the payment of claims would destroy the insurance companies' admin service only (ASO) business, which is what most of their larger clients use--that is, large employers pay the insurance company to provide insurance to their employees, and then the claims are billed back to the employers.  They do this because they (the employers) would rather take the risk on claims than pay the premiums the insurers charge for doing it.

      Anyhow, employers would be REALLY unhappy if their claims costs started skyrocketing.   Likewise, the insurance companies would be REALLY unhappy if they started losing all their ASO business.  And no, the insurance companies are NOT allowed to pay one rate for ASO customers and another on premiums customers.

      Seriously, one of the major efforts of all the insurers for the last four years has been to cut admin costs--partly because of MLR, and partly because lower admin is what they use compete with each other to get employers' business.

      This part of ACA, at least, is working.

      •  Curious, does anything prevent insurers from... (2+ / 0-)
        Recommended by:
        ladybug53, flynnieous

        ...auditing ASO claims less rigorously than claims in the individual market if the client employer desires that?

        I have the feeling, based on only personal anecdotal experience, that insurers that also act as ASOs reject claims from individuals while approving similar claims for some ASO clients.

        In all the years I've been working I've heard of very few cases where a colleague had a reasonable claim denied where requirements such as preapproval were followed and every time, HR got involved and got it fixed (in the interests of employee retention and morale -- even though the company ends up paying the claim).

        Yet, I hear about horror stories where the same insurer rejects claims on individual policies as "medically unnecessary" or similar which I can't imagine ever having rejected on my group plans.

        It seems to me that the company the insurer is acting on behalf of may have some impact on approval - or at least appeal.

        •  You're probably right (0+ / 0-)

          Having an employer advocate for you is likely to have more influence on the insurer than an individual.  With employers, the insurer has more to lose.  An individual leaving for the competition is a much smaller loss than an employer of hundreds or thousands.  It shouldn't make a difference, but leverage counts.

          Please note that not all employer-based insurance is ASO--many companies do pay premiums to have the insurance companies underwrite their health plans.  This is what is known as "group" insurance--it can be premium, ASO, or some combination of the two.

          •  Yes... (0+ / 0-)

            ...I've been a bit surprised by how small (a few thousand employees) some companies that self insure are.

            Interesting. I was unaware of blended situations -- but that makes sense thinking about it a bit. I assume the insurer takes on the "black swan" risks (2% of the employees end up needing liver transplants one year for example) in exchange for a premium while just acting as ASO for the remainder???

            •  You got it (1+ / 0-)
              Recommended by:
              WillR

              There's such a thing as ASO-Cap, where the risk the employer takes on is capped at so much a month or year.  The insurer underwrites the rest.

              This made the MLR-rebate thing even more complicated, because that part of ACA only applies to premium business.

    •  I suggest that you (0+ / 0-)

      google creative accounting.

    •  This is Cynical, but.... (1+ / 0-)
      Recommended by:
      ladybug53

      going from your Medical Loss Ratio statement, I see nothing in there that prevents the Insurance companies from boosting rates as high as they want (i.e. 30% to 50%),  'adjusting'  when the ratio is calculated at the end of the year, sending refund checks in the beginning of next year, and meanwhile blaming the increases on Obamacare.  

      Seems to me like a good way to stir up some hate and resentment toward Obamacare by taking money out of people's pockets.   As a bonus, the insurance companies take the excess premiums, invest it or earn interest while it's collectively sitting around in the insurance company accounts, earning good interest.

      Free money for them.  Plus they can gin up a lot of hate and ill will toward Obamacare in the interim.

      I hope there is something out there to prevent them from doing this.

      ... the watchword of true patriotism: "Our country - when right to be kept right; when wrong to be put right." - Carl Schurz; Oct. 17, 1899

      by NevDem on Sat Feb 23, 2013 at 12:25:53 PM PST

      [ Parent ]

  •  I had to set the record straight with a coworker (20+ / 0-)

    the other day about this lie!

    Me: When Obamacare is fully implemented, you'll have more choices for more affordable insurance coverage.
    Her: Obamacare has increased my premiums here at work.
    Me: No, your insurance company and the company we work for has increased your insurance premiums prior to the full implementation of Obamacare because neither of them are going to be able to charge you that much. Who told you Obamacare was the reason for your premium increase?
    Her: My ex-husband, and he's a Democrat!
    Me: He's also a lobbyist who is more than likely personally invested in insurance companies and healthcare entities that don't want to see Obamacare implemented because it will affect his and their profit-making capacity.
    Her: Oh.

    •  People seem to have amnesia.... (2+ / 0-)
      Recommended by:
      a2nite, ladybug53

      .....about Pre-Obamacare conditions.

      Doesn't anybody remember the annual double-digit rate increases?

      "Michael Moore, who was filming a movie about corporate welfare called 'Capitalism: A Love Story,' sought and received incentives."

      by Bush Bites on Sat Feb 23, 2013 at 09:57:33 AM PST

      [ Parent ]

      •  However... (1+ / 0-)
        Recommended by:
        ladybug53

        ...it was clear that could not continue across the board for very long, with or without, any controls.

        This is just as it was clear to thinking people that the housing market couldn't "always go up" and couldn't even beat inflation in the long term because it would eventually price itself out of the market (when your house or your insurance costs more than your income, you become homeless or uninsured and the supply then exceeds the demand driving prices down).

    •  Assumes facts not in evidence? (1+ / 0-)
      Recommended by:
      Paper Cup
      Me: When Obamacare is fully implemented, you'll have more choices for more affordable insurance coverage.
      We don't know that yet. This is likely true if insurers choose to aggressively pursue the exchanges with competitive pricing and if currently uninsured low risk individuals choose to buy insurance rather than pay a small tax. Those, however, are still unanswered questions.

      Time will tell. Predicting what will happen involves untested (and, largely, untestable) human emotions and financial risk/benefit tradeoffs made by individuals, insurers, and employers. This is much what is needed to predict what the DJIA will be in five years -- something we are horrible at and which we have a lot of experience at.

      For alternate scenarios, see my post downthread.

      •  Technically, yes, it is an assumption. (0+ / 0-)

        My co-worker and I are in Illinois, so I assume the President's home state (Legislative Majority and Governor = Democrats) will be able to provide more cost-effective insurance alternatives through the exchange.

        In the immortal words of Charles Barkley, "I could be wrong, but I doubt it."

  •  The meme that Obamacare (14+ / 0-)

    caused ins. premiums to go up this year is everywhere. It's a constant refrain. Very hard to put to bed.

    "The scientific nature of the ordinary man is to go on out and do the best you can." John Prine

    by high uintas on Fri Feb 22, 2013 at 03:56:05 PM PST

  •  My rates went up (16+ / 0-)

    But I know it was my company pushing more on the employee's.
    Currently with the new deductibles in place my healthcare benefits are really for a major medical crisis. There is no way you will meet the deductibles through regular visits and maybe a flu spell or two in your family.
    I am a cancer survivor and require many checkups and scans yearly. Even I won't meet the yearly deductible.
    They get you one way or another....
    Sigh...

  •  It keeps popping up on the "industry news" feed (5+ / 0-)
    Recommended by:
    Pluto, RJDixon74135, cocinero, loftT, ladybug53

    at my work. I keep dropping semi-snarky comments, such as "And premiums never went up before the ACA, did they?"

    It does contain a nugget of truth though: the ACA cuts the number of age bands insurers can use; they may only charge up to 3x as much for age. Naturally the knee-jerk reaction is to jack up rates for young people to one-third the top level, rather than lower the top level. I have to point out that they are getting all the young people into the system so they can afford to charge the elders less than currently. Also, it makes the perfect case for lowering the Medicare age.

    Still, they finally came around to believe they will experience an increase of individual membership. Shocks some of the suits straight down to their teabagger souls.

    (Yes, I work for an insurance company . . . )

    And God said, "Let there be light"; and with a Big Bang, there was light. And God said "Ow! Ow My eyes!" and in a flash God separated light from darkness. "Whew! Now that's better. Now where was I. Oh yea . . ."

    by Pale Jenova on Fri Feb 22, 2013 at 05:55:26 PM PST

    •  The age-band thing is terrifying (9+ / 0-)

      "Only" 3x the premiums is a hell of a lot of money. I'm in that just-below-Medicare band, and expect to be hit hard -- and expect that the House GOP will block the funding for the subsidies.

      I understand that they're trying to create incentives for young healthy people to join the insurance pool. But I predict that a lot of 45-64 year olds are just not going to be able to afford insurance even under the new system.

      And I've been predicting since ACA passed that the number of employers offering coverage will continue to shrink, approaching zero before long. That's OK with me -- I think we'd be far better off separating insurance from jobs -- but it takes away a key component of the President's scheme.

      •  I know. I've seen those premiums. :( (1+ / 0-)
        Recommended by:
        ladybug53

        And God said, "Let there be light"; and with a Big Bang, there was light. And God said "Ow! Ow My eyes!" and in a flash God separated light from darkness. "Whew! Now that's better. Now where was I. Oh yea . . ."

        by Pale Jenova on Sat Feb 23, 2013 at 08:54:16 AM PST

        [ Parent ]

      •  It will move the country (2+ / 0-)
        Recommended by:
        loftT, ladybug53

        It will move the country toward universal healthcare and single payor.  

        •  I hope so. (2+ / 0-)
          Recommended by:
          BroadwayBaby1, ladybug53

          Truly the whole business model of "health insurance" is a ponzi scheme when it gets down to it. Really the costs of medical care is down right scary. I know. I had an abnormal mammogram last year that turned out to be benign calcifications. The total costs for the biopsy and all the prep leading up to it topped $10k my out of pocket was close to $4k. Well after my recent follow up exam it is determined I have to repeat this procedure due to all of the calcifications were not removed. They are microscopic so cannot be seen except under microscope or magnified mammogram. I am so pissed that 1) I have to go through off this again 2) I will be out of pocket more than the $4k this time as my insurance will cover less.

          To think my $400 per month premium would come close to covering anything major is laughable. Which is my thesis for why the model will not work. The actuary model should not be applied to whether a person will get sick or not. Health care should be a right and not a privilege.

        •  Or... (1+ / 0-)
          Recommended by:
          ladybug53

          ...it might make the country very suspicious of government claims that they are going to fix the system and reject further attempts (and rollback/modify some of the PPACA provisions). Time will tell.

  •  Actuarial data (6+ / 0-)

    The young, unemployed have been less likely to get insurance for the past few years and that has skewed the cost of health insurance. That eased a bit with the "keep your kid on your insurance" provision, and will ease a lot of that.

  •  Something needs to happen:( (3+ / 0-)
    Recommended by:
    crose, Paper Cup, ladybug53

    Just got our rate notification today from Blue Cross-MN, a 9% hike for 2013. A coincidence? Our premiums have now risen 33% in 18 months. No rebate either this year. Was a big proponent of the healthcare overhaul, but.........this is killing us!!!

  •  Single Payer (7+ / 0-)

    Just a few minutes North of my place over the border Canada has universal health care: everyone is covered with the same standard of care.  Single Payer.  No exchanges, no co-pay, no deductibles, no medical bankruptcy, no Medicaid clawback from your estate.  The cost averages about $3k per year per participant.  Most Provinces do not charge a fee, but B.C. my neighbor does charge $60/mo for a single coverage, $109/mo for a couple, $121/mo for covered family of three or more.  Incomes for households under 30k/year get you subsidized care or free with no income.  The balance comes from taxes.  
    Prescription drugs cost 1/4-1/3 of cost here in WA, but you can't bring them home.  Obama threw Senator Dorgan and the rest of us under the bus.
    Just try and explain the ACA to  Canadian and they will laugh.  You can't fluff our pos up there.  

  •  A lot of employers are forcing employees (4+ / 0-)
    Recommended by:
    Lilredhead, cocinero, wu ming, ladybug53

    Into high deductible plans (like my ex husband's employer). On paper, premiums drop, but the costs for a family who has anyone with a chronic condition skyrocket. We have to pay $4500 out of pocket as a deductible (in addition to premiums) before it will kick in and pay 80%. And drugs do not count toward the deductible. The $5 copay I used to pay for generic adderall for my son is now $120 per month. My other son was on focalin, which worked great and cost me a $35 copay but jumped to $300 under the new plan. I was forced to switch him to adderall, but it is not working very well thus far. My diabetes medication also jumped. Oh, and NJ requires monthly doctor visits to get ADHD prescriptions renewed, which are not preventive care and must be paid 100% until the deductible is met.

    So while our premiums have gone down, our costs have skyrocketed and will far exceed what we used to spend. I have not found Obamacare very beneficial yet, so I really hope a lot of people are being helped by it because that would at least make me feel a bit better. I have been skipping my name brand diabetes medication on occasion as I try to decide whether I should just switch back to generic metformin and live with the daily bathroom issues.

    I was very disappointed to hear what the Obama administration did about the high risk pools, too. I had friends who were counting on them and will no longer qualify. I blame Republicans mostly, for making it hard to get a better bill passed that would truly help people.

    We Won't Let Republicans Replace Medicare with GOP Vouchercare!

    by CatM on Fri Feb 22, 2013 at 10:31:58 PM PST

  •  State exchanges (1+ / 0-)
    Recommended by:
    ladybug53

    Kind of wonder what the insurance rate hikes would have been had the states instituted the exchanges and introduced competition into the equation.  I was a bit miffed when Chris Christie went on the Daily Show and suggested that he might have instituted them had the federal government told him how much it would cost his state to do so.  Wasn't that something his state government should have told him?

  •  I don't know how and I don't know why (3+ / 0-)
    Recommended by:
    DeathDlr73, lgmcp, ladybug53

    I don't know how and I don't know why.  

    My prescription meds are now cheaper in the US than they are at the Canadian pharmacy I've been using for years.  

    The specialists who perform colonoscopies were charging an arm and a leg for their prep solution last year.  This year, they're giving it away to those who say the cost is a financial burden.  

    Something has changed.  Maybe it's Obama's reelection and the realization Obamacare isn't going anywhere.  Regardless, something has changed.  

    Obamacare is far from a perfect system and it needs improvements galore.   But for the consumer, it is changing for the better.  Just keep moving forward.  

  •  No, That Happens Anyway (2+ / 0-)
    Recommended by:
    Whatithink, ladybug53

    As long as we have for-profit health insurance, the rates will continue to go up. There's nothing really to restrain them, especially with consolidation.

    The only way to stop the increases is to nationalize all of them. Publicly-funded healthcare for everyone would fix this problem.

  •  I saw my benefits decreased for less money. (1+ / 0-)
    Recommended by:
    ladybug53

    I have an individual insurance plan with Presbyterian. I have used them off and on throughout the years. This year I had switched from the over rated and padded cost to dependent coverage from my husband's employer to individual coverage. It started with me agreeing to a higher rate than originally quoted due to age and the fact that I was on HRT at the time. Then in December I get a letter that says they are eliminating the PPO coverage for individual plans and to continue with them I had to agree to an HMO plan. The rates were lowered by $50 per month but then my benefits were cut as well. I tried to switch to another carrier in our state only 3 write policies for individuals but was declined.

    Unless I get employee group insurance I am at the mercy of any provider that will take me in my state.

  •  Considering that double-digit annual increases (0+ / 0-)

    have been the norm for a good ten years, it will be remarkable in ANY deacceleration is noted.

    "The extinction of the human race will come from its inability to EMOTIONALLY comprehend the exponential function." -- Edward Teller

    by lgmcp on Sat Feb 23, 2013 at 09:53:26 AM PST

  •  To control health care premiums, (2+ / 0-)
    Recommended by:
    ladybug53, splashoil

    control health care costs.

    "Bitter Pill: Why Medical Bills Are Killing Us" is a long article in Nov. 20 Times. It is a story of greed and outrageous profits in the healthcare industry, both for-profit and non-profit. Providers game the system for insurance companies, and those with individual policies really get screwed. Only Medicare comes out looking responsible. Even Medicare is operating under some congressionally-imposed handicaps that prevent it from controlling costs that way it should.

  •  obamacare is too convenient an excuse (2+ / 0-)
    Recommended by:
    Whatithink, ladybug53

    this year my employer went to much worse coverage than previous years, with much higher co-pays and double the old deductibles, with a huge increase in our premiums.  In the meeting to roll out the changes, several people said "oh, well, at least we can pay these increases by putting more into reimbursement accounts."  But the maximum for that was cut back from $5K to 2500.  That is Obamacare and people don't like it.  There are a few people who can keep their 24-year-olds on our insurance now, but for most of us there's a cost and no benefit.  At least for now

  •  Major impact on rates not yet seen? (0+ / 0-)
    Actually, according to a new report from the Obama administration, double-digit premium rate increases are falling.
    But, none of this reflects the negative impact of the "must issue" requirements (no exclusions or rate increases for preexisting conditions) of the PPACA because they have not yet taken effect. That is the provision that some (myself included) believe may cause premiums to climb for those that are at fairly low risk (i.e., most people).

    There is a possible "death spiral" here that could make the housing meltdown look like a walk in the park on a nice spring day... Since anyone can get insurance at any time and the tax for not having insurance is (esp. initially) small, as rates rise, the healthiest and lowest risk people -- esp. those with few assets to lose in a bankruptcy -- will tend to decide to forgo health insurance and pay the tax instead. If they develop a chronic or permanent problem, they (or their representative if the injury or condition has rendered the patient unable to execute the paperwork) will apply for insurance immediately. By removing low risk individuals from the pool, this will necessitate rate increases for those remaining -- driving yet more of the healthiest out of the market. If this spiral starts, it will be very hard to stop -- increasing the tax for failure to carry insurance to thousands of dollars per family member would probably do it, but that would never pass either house of Congress.

    If the PPACA or some other federal or state laws don't prevent it (which I don't know), insurance companies will likely institute long "processing times" or "queues" for new applications (as in several months) to avoid the worst abuses of the PPACA, but they can't completely avoid abuses.

    Another possibility is that most large insurance companies will just stop writing new individual policies. The more that do that, the less competition there will be. Since the administrative expenses are controlled, the remaining companies won't have carte blanc, but they could simply decide not to spend limited administrative dollars checking claims carefully (instead spending them on advertising for example) which would result in their medical payouts (which they obviously can raise rates to reflect) rising -- which in turn gives them yet more "administrative expenses" they can spend.

    I wonder, also, if the health insurance companies are avoiding rate increases recently because they want to fill their portfolio with low risk customers before "must issue" goes into effect -- at which time they may choose to just stop writing individual policies. The result would be, of course, long term (sans any changes to the PPACA) they would move out of health insurance market -- but for the next ten to twenty years, they would have a low risk customer base that they could offer lower premiums to and still make money as they transitioned their health insurance focus into other, possibly related, areas.

    We will see - hopefully my prognostications are incorrect in this arena.

  •  Is the >10% rate rate a useful measure? (0+ / 0-)

    Say an insurer wants to maintain the same amount of profit as before the public notification rule.  

    Previously, he would simply take the expected value for paying out money and then multiply by some factor and then set rates so that on average the population pays more in then he has to pay out.  If new procedures or higher risk associated with significantly higher expected payout are all of a sudden included, simplistically the premiums associated with those things would also go up significantly.

    If the >10% rate hike disincentive works (as apparently it does), then the simplistic premium calculation is not desired.  However, there's another obvious thing that can be done and that's raise everyone's premiums up to 9.9% even if it's not needed as calculated via the old method.

    Simple comparison example

    I've purposely kept the example simple, you can think of those numbers as % if you like or not, it's really not important.  

    Rate increases via Method 1: Rate1 Rate2 Rate3 Rate4 Rate5
                                                  0        0       0        0     15

    Rate increases via Method 2:Rate1 Rate2 Rate3 Rate4 Rate5
                                                  3        3       3        3      3

    The insurer is still getting the same additional money (15) using either method, but method 2 will not trigger the public-rule.  I'm not saying it's being done, but I can see the incentive to do it.  If it is being done, then overall cost increase to the insured population is not captured by that graph.  Instead you would need to show the rate increases for everyone; a nice histogram of say 2% intervals perhaps?  

  •  true (0+ / 0-)

    capitalism, and a for-profit health care system, are what's jacking my premiums through the roof. i have yet to see obamacare make much of a dent in my absurdly high premiums, but it's peripheral to the core problem.

  •  I need the Elevator Speech (1+ / 0-)
    Recommended by:
    Paper Cup

    Much as I like the article, it does not solve a specific problem I have run across.  

    How do I answer an acquaintance who is complaining about how much his monthly premiums for health insurance have bumped up at the first of the year.  This is an independent business person who has to pay for 100% of their premium and a democrat.  He is part of the massive uninvolved except when elections come around.  

    He just knows that the premiums are killing him and that the noise machine is saying its Obamacare's fault.   He's halfway there to believing them.

    In short, I sense that we are loosing the support of the base because of the increase in cost (for whatever reason), without having a corresponding argument as to why it's the Right Wing's fault.

    I profess ignorance of the details of Obamacare, but I need a quick, uncomplicated answer to prevent wavering. The people I'm talking to want to support Obama but find it very, very difficult in the face of doubled monthly premiums.

    I need that elevator speech or talking points.

    ... the watchword of true patriotism: "Our country - when right to be kept right; when wrong to be put right." - Carl Schurz; Oct. 17, 1899

    by NevDem on Sat Feb 23, 2013 at 12:03:14 PM PST

  •  It's good to call out disinformation (0+ / 0-)

    but let's also be realistic; 10% increase per year means premiums double every seven years. That's unsustainalbe. And premiums are only part of the picture - actuarial values are falling as costs are shifted onto the insured. The ACA has many good features, but it is not the end game.

  •  Keeping healthcare is frightening. Aca or not (1+ / 0-)
    Recommended by:
    ladybug53

    I have always had health insurance....until my husband passed away 5 weeks ago I never gave it a second thought,  one or the other of our employers always provided it to us may make benefit but now I live in fear that I will not be able to pay the premiums that are about to become mine alone to pay for....   Have spent lot of time trying to wade through the various options and there are no good ones.  Am someone with "per-existing conditions"  and my only option is cobra continuation and a hope and prayer that the ACA will actually make healthcare affordable for someone like me....

    "You've got to be an optimist to be a Democrat, and a humorist to stay one" - Will Rogers

    by KnotIookin on Sat Feb 23, 2013 at 02:20:36 PM PST

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