ACA at Risk if large insurers can't make it work?

[jorjor]

This isn't an argument against the ACA, it's an argument against the insurance company's greed. As we've discussed, the per-capita cost of health care has only gone up about 3% in the past 4-5 years yet the premium is going up 12%? If anyhting, the ACA didn't go far enough to control the price that the insurance companies can charge. The only reason you're hearing about it more is because there are more people on the plan. Nobody ever claimed the ACA was perfect, but it's a step in the right direction to fix the real issue.

Do a little research for a change...health insurance companies run profit margins a little over 3% on average.

United reported that it made $10.3 billion in profits on $103 billion revenue in 2014. As far as I can tell, that's more than 3%. In fact, they were doing so well that they reached an all-time high in stock prices January. Anthem also beat profit expectations in 2014. This is all public information and published by the companies themselves. How many of your statements have been shown to be factually incorrect now?

Not sure where you got your figures but for FYE 2014 per the 10K, UnitedHealth reported $130.5M of revenue and $5.6M of Net Income - equates to 4.3% net margin.  Not trying to get into the debate but the facts should be correct.

This is correct. EBIT was $10.3B, for an operating margin of 7.9%. After taxes, net income was 4.3%.

The full number also includes OptumHealth and OptumInsight which do not write insurance, but instead are more like consulting shops and operate on higher margins. The actual insurer segments, UnitedHealthcare and OptumRx (the latter is a Pharmacy Benefit Management operation, I am not sure what portion of their revenues is actual insured business vs simply administration), reported pre-tax operating margins of 5.8% and 3.7%.

[brooklynguy]

But you know...since opting out isn't an option you better believe it I'll be collecting benefits I actually earned and paid for, unlike the people who just want to jump on the early retirement Obamacare subsidy bandwagon and dig their hands deep into their neighbors pocket.

How do you feel about government-subsidization of employer-sponsored health care coverage (which, as it happens, dwarfs government-subsidization of ACA exchange plans by a tremendous margin)?  When employees receive employer-subsidized health insurance as part of their compensation package, they are not taxed on the portion of the coverage paid for by the employer (which is a tax deductible business expense for the employer).  So the government is paying for a portion of that coverage, which means, by your logic, that the employees are stealing from their neighbors.  Moreover, the higher the employee's income / tax bracket, the deeper into his neighbors' pockets he reaches by receiving tax-free employer-provided coverage.  So a person who follows your supported approach of prolonging retirement until attaining "self-sufficiency" with respect to health care is actually just shifting his or her receipt of government subsidies from one form to another, if those extra working years come with employer-sponsored health insurance.

[2lazy2retire]

But you know...since opting out isn't an option you better believe it I'll be collecting benefits I actually earned and paid for, unlike the people who just want to jump on the early retirement Obamacare subsidy bandwagon and dig their hands deep into their neighbors pocket.

How do you feel about government-subsidization of employer-sponsored health care coverage (which, as it happens, dwarfs government-subsidization of ACA exchange plans by a tremendous margin)?  When employees receive employer-subsidized health insurance as part of their compensation package, they are not taxed on the portion of the coverage paid for by the employer (which is a tax deductible business expense for the employer).  So the government is paying for a portion of that coverage, which means, by your logic, that the employees are stealing from their neighbors.  Moreover, the higher the employee's income / tax bracket, the deeper into his neighbors' pockets he reaches by receiving tax-free employer-provided coverage.  So a person who follows your supported approach of prolonging retirement until attaining "self-sufficiency" with respect to health care is actually just shifting his or her receipt of government subsidies from one form to another, if those extra working years come with employer-sponsored health insurance.

This is of course true but it muddies the waters too much for the likes of Sir Frugal, much better to point and shout  "look at those people over there - they are stealing our tax dollars"

[Cathy]

Standards for health care that the provinces must meet are set federally, and a lot of money that goes into health care is federal

To be clear, there are no federal standards for healthcare that provinces "must meet". Such mandatory standards would likely be unconstitutional as usurping provincial plenary power over "Property and Civil Rights in the Province", as described in more detail in my previous post.

It is true, however, that the federal government transfers money to the provinces from time to time. If a province's healthcare system does not meet certain standards, then, after certain procedural steps are satisfied, the federal Governor in Council "may" reduce those transfers "by an amount that the Governor in Council considers to be appropriate". Canada Health Act, RSC 1985, c C-6 ("Act"), § 15. However, the making of such an order is a purely discretionary decision; the Governor in Council is not required to take any action at all if a province falls below the standards of the Act. On its face, the Act does not create any rights enforceable by persons other than Governor in Council.

Theoretically, if a province's healthcare system has fallen below the standards of the Act and the Governor in Council declines to make an order under Act § 15, a person with standing might be entitled to bring an application for judicial review of the inaction of the Governor in Council under § 18.1(2) of the Federal Courts Act, RSC 1985, c F-7, which authorises the Federal Court to "order a federal board, commission or other tribunal to do any act or thing it has ... unreasonably delayed in doing". However, the courts have traditionally been reluctant to order the Governor in Council to exercise discretionary powers, preferring instead to rely on "a comprehensive system of public and Parliamentary accountability as a substitute for judicial review" if one exists, i.e. the electoral process. Friends of the Earth v. Canada (Governor in Council), 2008 FC 1183 at ¶ 44, aff'd 2009 FCA 297, leave denied 2010 CanLII 14720 (SCC).

For those reasons, if somebody has a complaint with how they are being treated relative to a provincial healthcare system, their only effective legal remedies, as opposed to political remedies, are likely to lie under provincial law. This is also reinforced by the premable to the Act, which recites that "it is not the intention of the Government of Canada that any of the powers, rights, privileges or authorities vested in ... the provinces under the provisions of the Constitution Act, 1867 ... be ... abrogated or derogated from or in any way impaired".

I have read the healthcare laws of every province (although not in detail) and I can confirm that they are significantly different from each other. I do not propose to describe the differences in this post as it would be too much work.

[GuitarStv]

Coolbeans.

[Sibley]

So, I work for one of those greedy insurance companies. My company is not publicly traded, and everything we make is reinvested into the company and the communities we're in. We really do try in that department.

Some facts about us:
1. Yes, our profit margin is limited.
2. Not everything is included in that profit limitation. Depending on what areas a company has branched out to, our total profits may be way higher than the limits. If you saw the dis-aggregated financials you'd be able to do a better calculation.
3. My company has lost a shit ton of money on ACA. This is expected to continue for several reasons.
4. We're covering those loses with our group business, but the most recent audited financials I've seen we lost money overall. So our reserves (also legally mandated, including how much we have to have) are covering losses right now.

Some reasons why we, and other insurance companies, are losing money on ACA:
1. We had to put in place new systems and equipment, hire a bunch of people, get new locations. All so we could offer plans on the market.
2. The first year, the rates we charged were basically wild guesses. Actuaries do this. They're basically professional guessers. The more information they have, the better the guess. We had no information, so the guesses were sometimes really bad.
3. We were hoping for a diverse population of people to sign up. What we got were the really sick people and people who have no idea what to do so we have to handhold them. They cost a lot of money, and without the rest of the population we were hoping for, we can't cover the claims.
4. The government won't let us raise the rates to where they need to be to actually cover claims cost. We're limited. So, depending on how bad our guess was the first year, we're still trying to catch up.

Bottom line, ACA isn't perfect. The health care industry as a whole isn't perfect. ACA was trying to fix some of the problems. It helped some, hurt some, but overall we as a country still have more work to do.

My personal view is probably going to make some people angry. As a culture, we've forgotten how to die. Instead of doctors and patients discussing end of life care, we do everything to try not to die yet. Doctors don't tell you, "sorry, but you're dying of x. There's really nothing we can do to fix it. We can do these things to help keep you comfortable, but you're still going to die." So instead we spend massive amounts of money (truly massive, look at some of the statistics out of Medicare, a huge % of costs happen in the last year or so of a person's life) on people who are dying, and it's a waste. It's a waste because there's nothing we can do, so instead of letting them have whatever quality of life and happiness they can before they die, we make them suffer and live in pain just so maybe they'll live a little longer.

This isn't easy to quantify of course, because it's not always easy to determine at what point someone should be allowed to die. Some cases would be pretty obvious of course, but plenty of others would not be. I think the only way to do this with intelligence and compassion would be one-on-one, the doctor and patient. But doctors have to be trained how to do this first. And it would take some cultural changes overall to make it work.

/edited for typos

[smalllife]

+1 on the learning to die.  There has been at least one other thread on this, but I do find that extremely relevant when it comes to the ACA, healthcare costs, etc.

(mostly just posting to follow but didn't want it to be a completely worthless post!)

[SirFrugal]

This isn't an argument against the ACA, it's an argument against the insurance company's greed. As we've discussed, the per-capita cost of health care has only gone up about 3% in the past 4-5 years yet the premium is going up 12%? If anyhting, the ACA didn't go far enough to control the price that the insurance companies can charge. The only reason you're hearing about it more is because there are more people on the plan. Nobody ever claimed the ACA was perfect, but it's a step in the right direction to fix the real issue.

Do a little research for a change...health insurance companies run profit margins a little over 3% on average.

United reported that it made $10.3 billion in profits on $103 billion revenue in 2014. As far as I can tell, that's more than 3%. In fact, they were doing so well that they reached an all-time high in stock prices January. Anthem also beat profit expectations in 2014. This is all public information and published by the companies themselves. How many of your statements have been shown to be factually incorrect now?

You are correct on one thing, it is public information.

http://finance.yahoo.com/q/ks?s=UNH+Key+Statistics

Profit margin for United, 4.16%.  What did I say...the average profit margin for health insurance companies is a little over 3%.  Some are going to be a little higher, some a little lower.

[Frs1661]

Here is an interesting podcast on disincentivizing costly and futile end of life care: http://freakonomics.com/2015/08/27/are-you-ready-for-a-glorious-sunset-a-new-freakonomics-radio-episode/

Basically the proposal is to pay terminally ill patients who choose palliative care over costly treatments that add small amounts of generally low quality life half of the money they are saving the insurance system. That way they can go on a final adventure, and/or leave a legacy to their families, while reducing the cost of health care overall.

I think it's a great idea.

Sent from my Nexus 4 using Tapatalk

[SirFrugal]

But you know...since opting out isn't an option you better believe it I'll be collecting benefits I actually earned and paid for, unlike the people who just want to jump on the early retirement Obamacare subsidy bandwagon and dig their hands deep into their neighbors pocket.

How do you feel about government-subsidization of employer-sponsored health care coverage (which, as it happens, dwarfs government-subsidization of ACA exchange plans by a tremendous margin)?  When employees receive employer-subsidized health insurance as part of their compensation package, they are not taxed on the portion of the coverage paid for by the employer (which is a tax deductible business expense for the employer).  So the government is paying for a portion of that coverage, which means, by your logic, that the employees are stealing from their neighbors.  Moreover, the higher the employee's income / tax bracket, the deeper into his neighbors' pockets he reaches by receiving tax-free employer-provided coverage.  So a person who follows your supported approach of prolonging retirement until attaining "self-sufficiency" with respect to health care is actually just shifting his or her receipt of government subsidies from one form to another, if those extra working years come with employer-sponsored health insurance.

This is of course true but it muddies the waters too much for the likes of Sir Frugal, much better to point and shout  "look at those people over there - they are stealing our tax dollars"

Why would I worry about some guy paying 8,000 dollars into the system instead of 9,000 when you got people that can retire early and become -5,000 for the system?

One of those systems incentivizes working, the other incentivizes being a parasite.

[nereo]

Why would I worry about some guy paying 8,000 dollars into the system instead of 9,000 when you got people that can retire early and become -5,000 for the system?

One of those systems incentivizes working, the other incentivizes being a parasite.

I've got to say, I find your statements about being a parasite to be both condescending and erroneous.  As several other posters have attempted to explain, this isn't some complex loophole that only a select few can wiggle through, nor is it morally dishonest.  Literally anyone can use it with work choices.

To the individual taxes are never, ever divided up equally for anyone.  That's what living in an organized society is all about.
Childless couples pay for schools they'll never use and law abiding citizens pay the salaries of public defenders and judges they will (hope) to never see.  Personally, I drive about 1/4 the miles of the national average but a large portion of my taxes go to pay for roads and bridges I rarely drive across.  I may personally prefer that we spend more revenue on mass-transit systems, but I don't call my colleague a 'parasite' because she drives over 40k/year commuting between cities.

Finally, taxes and laws are not set in stone.  Laws can be changes and tax revenues can be adjusted based on the will of the masses and their elected officials. 
Please take it down a notch.  Name calling doesn't foster discussion, only discourse.

[protostache]

This isn't an argument against the ACA, it's an argument against the insurance company's greed. As we've discussed, the per-capita cost of health care has only gone up about 3% in the past 4-5 years yet the premium is going up 12%? If anyhting, the ACA didn't go far enough to control the price that the insurance companies can charge. The only reason you're hearing about it more is because there are more people on the plan. Nobody ever claimed the ACA was perfect, but it's a step in the right direction to fix the real issue.

Do a little research for a change...health insurance companies run profit margins a little over 3% on average.

United reported that it made $10.3 billion in profits on $103 billion revenue in 2014. As far as I can tell, that's more than 3%. In fact, they were doing so well that they reached an all-time high in stock prices January. Anthem also beat profit expectations in 2014. This is all public information and published by the companies themselves. How many of your statements have been shown to be factually incorrect now?

You are correct on one thing, it is public information.

http://finance.yahoo.com/q/ks?s=UNH+Key+Statistics

Profit margin for United, 4.16%.  What did I say...the average profit margin for health insurance companies is a little over 3%.  Some are going to be a little higher, some a little lower.

The thing about Yahoo's data is that it just isn't very good and "profit margin" is not a particularly useful metric because it's net of taxes. Morningstar's data shows that UNH has a slightly lower operating margin in the last twelve months compared to last year (7.7% vs 7.9%), and yet they still found the money to pay a higher dividend and buy back 17 million shares. Not exactly a struggling company. If you dig into their 10Q you'll see they have a significant headwind because the US dollar is so strong right now, which tilts things back toward them being more profitable than last year on a constant currency basis. Their quarterlies don't break out constant currency like a lot of other companies so it's harder to see.

Fun factoid from their 10Q: apparently their pension fund has $350 million invested in venture capital funds.

[MidWestLove]

"+1 on the learning to die.  There has been at least one other thread on this, but I do find that extremely relevant when it comes to the ACA, healthcare costs, etc.
"

+1 to the above, we (Americans) prefer to live in delusions of our immortality and expect/demand "everything" to be done to avoid death , at all costs. We also lost the meaning what the  word "everything" or "at all costs" actually means, which are not light words to use...

as for $0.02 for ACA, experience as an employee of large , very profitable, financial services company
- reduction is the number of plans offered (from 4 to 2 and now to only one plan available, high deductible HSA)
- reduction in plans benefits (we were 'Cadillac plan' before)
- direct conversations with employees that company is considering pulling out of insurance altogether, "we may give you a subsidy to which you will buy your own plans"
- statements that the cost of insurance to the company went up 25% between negotiating cycles and that employee has no ability to absorb it without crowding out other benefits (pay, salary, getting rid of people ,etc.)
- explosion of 'pay for health', company will incentivize healthy behavior (and therefore penalize unhealthy one , i.e. your weight going up from measurement to measurement , typically annual). Right now it is mostly hidden, the costs are going up (in deductible and out of the pocket maximums), but you can "earn" optional contribution to your HSA if you agree to do blood tests, weigh check-ins, and give company confirmations of 'healthy activities'. 
 

[CanuckExpat]

...
As a result, Canada does not actually have a national healthcare system. Every province has its own healthcare system, authorised by provincial law. ...
I am aware that most Canadians think of their healthcare system as being a national program and this post is not intended to criticise them for thinking that. I simply enjoy constitutional theory and maybe some other readers do too.

THanks for this post Cathy.  It was a shock to me to learn that there were differences among the various provinces when I moved from Newfoundland to Quebec.

Also important to note that each province may opt out at their discretion (no provinces currently do). The Federal government can not mandate participation by the provinces.