Skip to main content

Michael Olenick over at nakedcapitalism.com decided to aggregate all the insurance plans being offered to him on the Exchanes, and the results are disturbing.

He really shouldn't have needed to do this in the first place; all this information should be easily accessible. The fact that it isn't is a huge red flag. Here's Olenick discussing this issue:

Transparency when buying healthcare insurance was seen as a raison d’etre of the insurance exchanges. Healthcare.gov fails miserably. I could neither export nor print the plans or plan information. I could not even view them all on one page: there is no option to change the number displayed on a page, a standard website feature. Intuitively I could see the plans looked terrible but, without the ability to analyze them as a whole, I didn’t realize how terrible. Finally I decided it was worth the time to throw open the blinds on this fiasco and type it all into a spreadsheet. Political partisans cherry-pick scenarios to support their narrative but, in much the same way that a picture quickly conveys a story, data itself defeats spin doctors.
Now, bronze, silver, gold, and platinum plans are supposed to pay out 60, 70, 80, and 90% of costs respectively. But digging into the data, Olenick found a much different story:
Healthy baby delivery is projected to cost $7,540 in my area. Bronze plans, which are supposed to pay 60% of out-of-pocket healthcare expenses, cover only 27% leaving families to pay $5,516 of $7,540. Silver, gold, and platinum plans are supposed to pay 60%, 80%, and 90% respectively but pay 47%, 64%, and 85%.

Type II diabetes is projected to cost $5,400 per year to treat. Plans pay 47%, 62%, 78%, and 94% on average, for bronze, silver, gold, and platinum, of the cost. Although the bronze plans average better for diabetes seven bronze plans pay less than $100 towards the $5,400 yearly expense.

Using this relatively large real-world sample we see there is only one category – Type II diabetes insured by a platinum plan – that is projected to pay out at the mandatory actuarial level. At 27% bronze plan payouts for routine births are abysmal, especially considering deliveries are one of the primary conditions the subsidized bronze plans should cover. If a family put aside $500 per month they’d leave the hospital with a $1,540 bill. Instead, by buying insurance, they start out with a $5,516 bill. Maternity coverage is not useful if it never pays.

This is a massive problem, but a predictable one. Insurance companies make their money by leeching as many of your premium dollars as they can. It is their reason for being. There was no rational reason to assume they'd change just because we smiled at them and asked them to nicely.

Yes, there are supposed to be limits on insurance profit margins under the ACA, but this data shows the companies aren't worried about them. After all, why gouge the consumer like this if you're just going to have to send them a check at the end of the year? Either they anticipate not being audited (not a bad assumption, given the state of regulation in this country) or they've figured out how to game the system (again, not surprising). Yves over at naked capitalism points out they could just buy some medical device companies and overcharge themselves since the law puts no limits on that side of the cost equation. Or they could displace as much of their profit onto the spending side of the 80/20 spending/overhead ratio as they can; advertising becomes "patient education" for example.

Either way, Olenick's data proves what many on the left were saying: reform of the system is impossible if you leave for-profit-insurers in place.

NOTE: Yes this my first diary. No I am not a right wing troll. I care about health care reform, I just recognize that the ACA ain't it. And I'm worried that unless we wake up to that fact, and soon, we'll lose our chance to really fix the problem. We should start pushing for single payer as a replacement to this gamed system and its broken website.

EMAIL TO A FRIEND X
Your Email has been sent.
You must add at least one tag to this diary before publishing it.

Add keywords that describe this diary. Separate multiple keywords with commas.
Tagging tips - Search For Tags - Browse For Tags

?

More Tagging tips:

A tag is a way to search for this diary. If someone is searching for "Barack Obama," is this a diary they'd be trying to find?

Use a person's full name, without any title. Senator Obama may become President Obama, and Michelle Obama might run for office.

If your diary covers an election or elected official, use election tags, which are generally the state abbreviation followed by the office. CA-01 is the first district House seat. CA-Sen covers both senate races. NY-GOV covers the New York governor's race.

Tags do not compound: that is, "education reform" is a completely different tag from "education". A tag like "reform" alone is probably not meaningful.

Consider if one or more of these tags fits your diary: Civil Rights, Community, Congress, Culture, Economy, Education, Elections, Energy, Environment, Health Care, International, Labor, Law, Media, Meta, National Security, Science, Transportation, or White House. If your diary is specific to a state, consider adding the state (California, Texas, etc). Keep in mind, though, that there are many wonderful and important diaries that don't fit in any of these tags. Don't worry if yours doesn't.

You can add a private note to this diary when hotlisting it:
Are you sure you want to remove this diary from your hotlist?
Are you sure you want to remove your recommendation? You can only recommend a diary once, so you will not be able to re-recommend it afterwards.
Rescue this diary, and add a note:
Are you sure you want to remove this diary from Rescue?
Choose where to republish this diary. The diary will be added to the queue for that group. Publish it from the queue to make it appear.

You must be a member of a group to use this feature.

Add a quick update to your diary without changing the diary itself:
Are you sure you want to remove this diary?
(The diary will be removed from the site and returned to your drafts for further editing.)
(The diary will be removed.)
Are you sure you want to save these changes to the published diary?

Comment Preferences

  •  Grifters gonna grift. n/t (1+ / 0-)
    Recommended by:
    Dr Erich Bloodaxe RN
  •  Thanks for diarying this. I read the article this (3+ / 0-)
    Recommended by:
    jayden, Laughing Vergil, priceman

    morning.  The information in there is pretty devastating.

  •  As I have been saying all along (1+ / 0-)
    Recommended by:
    Clever Handle
    Yes, there are supposed to be limits on insurance profit margins under the ACA, but this data shows the companies aren't worried about them. After all, why gouge the consumer like this if you're just going to have to send them a check at the end of the year?
    They have gamed the system on the back of a napkin.  They are also pushing people off of their current plans and are expecting a windfall from increased premiums with subsidies.  They are going to milk it for all it is worth until it is repealed and then they will pick up the pieces and make it the way they really want it.

    I mean, you wouldn't want the hospital sector to become privatized do you?  They need to be run by charitable non-profits so that they can deduct their writeoffs as charitable contributions (against their massive incomes).

  •  Went through Olenick's spreadsheet in detail (5+ / 0-)
    Recommended by:
    MKinTN, second gen, tofumagoo, maggid, HiBob

    And it certainly is not the "dramatic expose" claimed here. To quote from the cited article:

    The average premium is $916.14; the median is about the same at $923.90. The average deductible is $6,581.82 and the median is $6,000. Thus the average plan requires families that actually plan to use healthcare pay $17,575.54 (total monthly premiums plus deductible) before the plan pays much (or anything, depending on the plan);
    This quote is highly confusing. First, my understanding is that co-pays come "inside" the max out-of-pocket (OOP) so saying "before the plan pays much or anything" is silly: the plan pays EVERY DOLLAR above that number ($17,575.54).

    But that is the catastrophic estimate. If you are a typical family of four, you would be paying the premiums for sure, and the co-pays to the extent you use services - not necessarily to the max.

    Finally, speaking catastrophically, that limit of $17,575.54 is certainly better than going bankrupt because of yearly and lifetime caps.

  •  Think you need to connect the dots a little more: (7+ / 0-)

    The math is the most devastating part of the critique.

    There are 132 plans, a relatively large sample size: 38 are bronze, 46 silver, 33 gold, and 15 platinum. Florida Blue offers 76 plans, Ambetter Health has 27 plans, Cigna has 11 plans, Aetna has six plans, Humana offers five plans, Coventry Health offers four plans, and Molina Health has three plans. Sixty-three plans are HMOs, 17 are PPOs, and 52 are EPOs. The average premium is $916.14; the median is about the same at $923.90. The average deductible is $6,581.82 and the median is $6,000. Thus the average plan requires families that actually plan to use healthcare pay $17,575.54 (total monthly premiums plus deductible) before the plan pays much (or anything, depending on the plan); the median is $16,971.38.

    The average out-of-pocket maximum is $10,854.55; the median is $12,500. Finally the maximum paid per year – the price people with conditions like cancer would be expected to pay for their “affordable” care, with premiums, deductibles, and copays (but not balance-billed and other games) – is $21,848.27 per year; the median is $22.415.96.

    The plans carry average premiums by metal level of $759.14, $910.86, $1,019.28, and $1,103.20 for bronze, silver, gold and platinum respectively. Average deductibles are $10,571, $7,209, $3,633, and $1,040 and average out-of-pocket maximum amounts are $12,600, $12,026, $10,115, and $4,467. Total out-of-pocket annual costs for people who rely on the plans – the sick people the ACA was meant to help – are $21,710, $22,956, $22,346, and $17,705 (if you’re sick, buy platinum, assuming that you can afford anything).  

    Even without tricks like balance billing, a person insured under the ACA could easily run up a healthcare bill of $43,696.54 (two calendar years of the maximum out-of-pocket) if they get seriously sick.

    (then there's this note from the comments)

    The median household income in my county is $52,951 and, even with the government kicking in $3,984 year (from the Kaiser calculator), these costs are still going to be an insurmountable burden.

    Read more at http://www.nakedcapitalism.com/...

    So, to connect the dots . . . For a family of three (3) with an annual income of $52,951 (or $105,902 every two year), out of pocket costs for a serious illness that extended into a second year could cost $43,696.54, minus the annual subsidies of $3,984 per year, or $7,968, for a net of $35, 728.54.  

    That's about 33.74% of that families income for those two years.  

    As Olenick notes:  

    Before the ACA they’d end up bankrupt. After the ACA, they’d also end up bankrupt. By any measure this is expensive and lousy insurance, . . .
    >

    We are the first to look up and know, with absolute certainty, that the sword we ourselves have forged, is real.

    by Jbearlaw on Tue Nov 12, 2013 at 12:39:12 PM PST

  •  The actuarial percentages are more complicated (5+ / 0-)
    Recommended by:
    jpmassar, tofumagoo, Jbearlaw, Ian S, priceman

    They are intended to work out in the long run / over the entire population, not for any individual illness or incident. At least that's my understanding. In other words, overall, all the people with Silver plans taken together should end up paying 30% of their expenses and the company 70%. But your individual experience will undoubtedly vary. For many of us, with no significant medical bills, the free preventative services far outweigh the cost of the insurance. For others, with significant medical issues during the year, they will hit the annual cap and everything after that will be 100% covered.

    I agree that shopping in this environment is way more complicated than I or anyone else can cope with, and requires more than a simple spreadsheet -- and a crystal ball on what type of medical problem you're likely to have during the next 15 months, what the treatment for it will cost, what medications you might have to take, etc. etc. etc. It's insane. I gave up and bought the el cheapo bronze plan, and even then had trouble deciding among the three variations.

    But it's not that the insurance companies are lying. It's that the Administration decided to adopt the Heritage Foundation model of having the government subsidize an essentially private (but regulated) market in insurance policies, rather than directly providing coverage through single payer or at least a public option. That was designed to attract GOP support, and get the cooperation of the insurance industry, neither of which happened.

    •  They didn't need to get GOP support (5+ / 0-)

      and they did get the cooperation of insurance companies, which was the real reason for doing it that way in the first place.

      And I doubt the free preventative care the law mandates is going to come anywhere close to making up for the gaps Olenick's data demonstrates. If you have an analysis that says otherwise, please, post it.

    •  No, they didn't need GOP support (5+ / 0-)

      This bill was passed with the message that out of pocket costs would be capped, period.

      These changes came about in the rule-making process. When no one was paying attention but the insurance companies, they got the WH to hire the same insurance company exec who wrote the Senate bill to write rules.

      This will backfire big time on health care reform.

      If cutting Social Security & Medicare benefits for low income seniors is what Democrats do after they win a budget standoff, I'd hate to see what they do after they lose one.

      by Betty Pinson on Tue Nov 12, 2013 at 01:51:01 PM PST

      [ Parent ]

    •  And in between ... (1+ / 0-)
      Recommended by:
      priceman

      ... there will be people paying substantially more than 40% (bronze) or 30% (silver) out of pocket.

      That's how averages work: those under the average have to be balanced by an equal weight above the average.

      Support Lesbian Creative Works with Yuri anime and manga from ALC Publishing

      by BruceMcF on Tue Nov 12, 2013 at 03:44:56 PM PST

      [ Parent ]

  •  Not only this: (6+ / 0-)
    Yves over at naked capitalism points out they could just buy some medical device companies and overcharge themselves since the law puts no limits on that side of the cost equation.
    But what's to stop large insurance companies to either on their own or in conjunction with other insurance companies buy some diagnostic centers, blood work, x-rays, CT scanner, then call those the only in-network places for testing other than if someone is hospitalized?

    -------------

    Additionally, PrimeMail mail order pharmacy is owned and operated by Prime Therapeutics, and several independent Blue Cross and Blue Shield Plans have an ownership interest in Prime Therapeutics.  

    •  What would have stopped them ... (4+ / 0-)

      ... would have been the public option, which by directing their customers to the value for money alternatives (or, if all existing alternatives had been rigged as hidden profit centers, even been able to play the same game but in pursuit of value for money) would have lower cost of service which could be reflected in lower premiums, which would have led to higher market share.

      What "stops" them now is the power of the regulator, and by past experience it is only a matter of time before all of the regulators are sufficiently captured for that to be in fact implemented as a standard practice. Indeed, many of the allowed out of pocket spending that doesn't necessarily count as out of pocket spending for the out of pocket spending cap shows that the regulatory capture has already started.

      Support Lesbian Creative Works with Yuri anime and manga from ALC Publishing

      by BruceMcF on Tue Nov 12, 2013 at 03:54:06 PM PST

      [ Parent ]

  •  Murica... (2+ / 0-)
    Recommended by:
    DRo, crystal eyes

    the land of the leeching corporations.

    Anyone surprised?

  •  Gaming the system is what the ACA is ... (7+ / 0-)

    ... designed for.

    We have an egregiously high priced health care system, because people take what options are available to them when they are grievously ill and worry about the cost later, making for a wonderfully price-inelastic market for sucking money out of people.

    The point of the ACA is to subsidize health insurance companies. Any benefits received along the way are collateral benefit, a possibly necessary but still unfortunate leakage of benefit that in an ideal world would go to insurance company or health care service providing company profits.

    Support Lesbian Creative Works with Yuri anime and manga from ALC Publishing

    by BruceMcF on Tue Nov 12, 2013 at 12:51:40 PM PST

  •  The Good News Is More Americans Are Getting (2+ / 0-)
    Recommended by:
    maggid, Cassiodorus

    healthcare.  The bad news is that we still have private health insurance.  I predict that private health insurance companies are going to eventually go out of business.  What is going to happen is that when that happens the government will go to Medicare for all.  More and more companies are getting out of the healthcare insurance business.  What HHS should do is change the formula of qualifying for Medicaid where more people qualify every year.  Also, the main thing is to get a democratic president in 2016 and get some more liberal judges on the SCOTUS and go back to court and force the states to expand Medicaid.

    "Don't Let Them Catch You With Your Eyes Closed"

    by rssrai on Tue Nov 12, 2013 at 12:56:44 PM PST

    •  Why would insurance companies go out of business? (6+ / 0-)

      They're projected to make huge profits under the law.

      The only scenario I see of them really being in danger of going under is if the actuarial balance of young healthy people to older, sicker people is thrown off. But if that happens the ACA as a whole isn't going to be viable, and will need to be replaced.

      All the website stuff makes me think that scenario is not unlikely. But we should prepare for it by pushing for single payer, not trying to PR the law's problems under the rug.

      •  Yeah, that's the problem with no Public Option (5+ / 0-)

        Without real competition between health plans, ACA allows insurance companies to increase their revenues and profits to astronomical levels.

        It increases their power to buy elections and government at the state and federal level, affording even greater protection for their oligopolies.  

        Our best hope is to restore the Public Option, then move on to Medicare for All.

        If cutting Social Security & Medicare benefits for low income seniors is what Democrats do after they win a budget standoff, I'd hate to see what they do after they lose one.

        by Betty Pinson on Tue Nov 12, 2013 at 01:56:09 PM PST

        [ Parent ]

  •  Am I Missing Something Here? (2+ / 0-)
    Recommended by:
    Jbearlaw, Betty Pinson

    Didn't the ACA include a section that said that 80% of the insurance premiums for any given plan  have to be used for medical expenses?

    Didn't that go into effect last year?

    Didn't people whose plans that used less than 80% of the money from premiums get a refund? (My employer got that refund and rolled it over into next year's plan to increase the employer subsidy for out health insurance.)

    So, what am missing here that I don't have the feeling that insurance companies are going to be able to screw us quite as hard as they have in the past?

    "The Trouble with the rat race is that even if you win, you're still a rat." attributed to Lily Tomlin

    by uniqity on Tue Nov 12, 2013 at 02:29:03 PM PST

    •  That is a different issue. (1+ / 0-)
      Recommended by:
      Jbearlaw

      The 80% thing is about the overall amount of income from all premiums paid vs the amount of money paid out to cover the care provided, in the aggregate.  This serves to focus the economics within a health insurance company on paying benefits, not inflating administrative costs and executive salaries.

      Araguato

    •  Bear in mind that pure regulatory approaches ... (2+ / 0-)
      Recommended by:
      Willa Rogers, priceman

      ... tend to lose effectiveness over time as the regulated corporations find work-arounds and there is a growing accretion of loopholes.

      Note the obvious way to get around that cap which gooderservice notes ~ that is to own a service provider that you require your customers to use, that charges rates that delivers additional profits to its owner, the health insurance company.

      Support Lesbian Creative Works with Yuri anime and manga from ALC Publishing

      by BruceMcF on Tue Nov 12, 2013 at 03:59:29 PM PST

      [ Parent ]

      •  The ACA has financial disclosure requirements (0+ / 0-)
        Require disclosure of financial relationships between health entities, including physicians, hospitals, pharmacists, other providers, and manufacturers and distributors of covered drugs, devices, biologicals, and medical supplies. (Report due to Congress April 1, 2013)
        It's going to be hard to get any type of these shenanigans pass regulators or consumer groups.

        Right man, right job and right time

        by Ianb007 on Tue Nov 12, 2013 at 08:18:00 PM PST

        [ Parent ]

        •  Lots of things that would have seemed ... (0+ / 0-)

          ... hard to get past on their face end up getting past. Indeed, a number of regulatory rulings have already been made which would have surprised people at the time that the ACA was passed.

          The way that regulatory capture works is that the industry being regulated is always looking for ways to get loopholes either approved by regulators or passed by legislatures, while public reform movements tend to take their eye off the ball after the big "victory" is won.

          Support Lesbian Creative Works with Yuri anime and manga from ALC Publishing

          by BruceMcF on Wed Nov 13, 2013 at 09:24:33 AM PST

          [ Parent ]

          •  It's basically wack a mole I agree. (0+ / 0-)

            However there is going to be no way to force an insured to use your service. You are required by the ACA to reveal your financial ties to the product and manufacturer and provide alternatives in writing.  It's not a perfect solution but it's highly unlikely insurance companies will be able to game the system into financial utopia undetected, if at all.

            Right man, right job and right time

            by Ianb007 on Wed Nov 13, 2013 at 03:40:07 PM PST

            [ Parent ]

  •  The columnist who did the analysis (2+ / 0-)
    Recommended by:
    Ianb007, VA gentlewoman

    is misunderstanding the actuarial values of the plan levels.

    The "Actuarial Levels" don't apply to any particular policyholder's costs or utilizations..

    They were developed to capture an imaginary set of benefits that is used by a notional policyholder as means of defining general payout percentges among the plan levels.  For any individual policy holder they are meaningless.  

    And they include a component that pays for the "free stuff" that the ACA mandates without cost to all subscribers, including annual doctor visits, preventive care and  screenings and vaccines like the flu shot.

    So comparing the plans' disease and condition-specifc examples and getting cranky about whether they match to actuarial value of the plan's tier is silly.

    Now whether these plans provide good value for their costs is another issue.

    People who have had employer-subsidized insurance have no real idea how pricey medical insurance is, unless they are HR benefit specialists.  And people who have been kept out of the market by pre-existing conditions, cost or availability issues are probably going to be shocked at what even a subsidized plan costs.

    I havebeen paying for individual insurance (and NOT a junk plan) for decades.  I live in a state (NY) with community rating, meaning no medical underwriting to weed out people who are likely to be or are sick. The policies available to me on the exchange are pretty much the same prices that I have been paying (about $700/mo per person in the family) when all costs are factored in.

    That means a couple can expect a bill of about $17,000 per year if they wind up using any medical care beyond a very  minimal level.

    The ACA is about access to inurance, including  a real attempt to provide access using subsidies to make that 17K per couple affordable.  It is not about lowerng the price of insurance.

    Is 17K/year affordable, no, not really unless you are earning say north of $140-150K year.  Heck you can't even deduct that amount from your taxes until your income exceeds $170,000/ year.

    Save your high dudgeon over the cost of insurance and apply it to the cost of medical care, which is the underlying driver of it all.

    Araguato

  •  How come... (2+ / 0-)
    Recommended by:
    Willa Rogers, Clever Handle

    we have a multi-tiered system based on ability to pay?  We should all have platinum coverage.

Subscribe or Donate to support Daily Kos.

Click here for the mobile view of the site