Health Insurance Companies See Big Rate Increases for 2016 - NYTimes

[Struggle Toaster]

http://www.nytimes.com/2015/07/04/us/health-insurance-companies-seek-big-rate-increases-for-2016.html?partner=rss&emc=rss&_r=0

Health insurance companies around the country are seeking rate increases of 20 percent to 40 percent or more, saying their new customers under the Affordable Care Act turned out to be sicker than expected.

I know some people here have discussed being under ACA plans for post FIRE life. How does this affect your budgeting? Any currently FIRE'd people using ACA plans?

[taekvideo]

Do insurance companies ever NOT have big rate increases?

[Cougar]

they love obamacare. with all the coverages that you have to pay for now and now that the entire country must have insurance, it was like they hit the lottery when obamacare passed.

i wish i had been smart enough to anticipate that, if so; i would've bought a whole lot of healthcare stock.

[johnny847]

Part of me thinks that they are making this stuff up. Instead what they are doing is raising the rates to a level where people are paying on average the same amount of money out of pocket before and after ACA subsidies came into play.

Pure speculation on my part though.

[forummm]

I think the increases are probably mostly legitimate. The ACA requires the insurers to spend at least 85% (or 80% depending on the category of plan) of premium dollars on actual health care. So in theory doubling the premiums doesn't do the insurer any good because they would have to write a huge check at the end of the year to each policy holder for overcharging. And I have heard that *certain insurers* miscalculated in *certain markets* and did lose money last year. And the incentive was for insurers to make their rates a bit too low in the first year because they had no idea what the competitors would charge and there was the risk pool reinsurance fund that compensated insurers who charged too little by taking some money away from insurers that charged too much (making sure one company didn't get penalized by having all the sick people join it while all the healthy people joined another). So you would expect premiums to rise once insurers saw what actually was happening in those markets.

However, if you can only "keep" at most 15% of the premium dollars for salaries, profits, and other business expenses, you want that 15% to be of a pretty high number. So in markets where there's no competition (and many of the insurers are in markets where there is really no competition going on--rural states and rural counties in particular), there's very little incentive to control costs of care. You would make *much more money* by letting the cost of care get really high. I don't know how that would play out or if anyone is doing that yet. But it's a potential weakness of the system.

[jorjor]

Part of me thinks that they are making this stuff up. Instead what they are doing is raising the rates to a level where people are paying on average the same amount of money out of pocket before and after ACA subsidies came into play.

Pure speculation on my part though.

They are not. Morbidity/sickness was higher on Exchanges for a variety of reasons. Plenty of insurers lost money in 2014 and paid out more in claims than they received in premiums (before even counting administration costs). Couple that with reductions in payments via the transitional reinsurance program (which had previously been passed onto the consumer via lower rates), and you'll get high increases.

Health insurance markets are very commoditized. Insurers may tout things like customer service that set them apart, but on the whole consumers show very little loyalty (not necessarily a bad thing) and overwhelmingly tend to purchase based on the lowest price. In addition, insurers don't just get to throw out whatever rate they feel like without justification. Rates are filed months in advance and scrutinized by authorities in the state (some states more than others) and there are often several rounds of justifying those rates. This is especially true for high rate increases. Finally, the ACA requires that a percentage of premium revenue must go toward paying claims and providing care (80% in the individual market). If that doesn't happen, then money must get returned to policyholders the form of rebates. Artificially increasing rates without delivering the care would just mean that the money leaves later in a more expensive and politically damaging manner.

Add to that the high political pressure to keep rates low, and it would be very difficult to pull-off a "nudge-nudge wink-wink" agreement that everyone just raise rates without reason. It would require buy-in or at least a blind eye from parties that would benefit from doing otherwise. You're free to believe that's going on, but it would be quite the conspiracy.

[johnny847]

Part of me thinks that they are making this stuff up. Instead what they are doing is raising the rates to a level where people are paying on average the same amount of money out of pocket before and after ACA subsidies came into play.

Pure speculation on my part though.

They are not. Morbidity/sickness was higher on Exchanges for a variety of reasons. Plenty of insurers lost money in 2014 and paid out more in claims than they received in premiums (before even counting administration costs). Couple that with reductions in payments via the transitional reinsurance program (which had previously been passed onto the consumer via lower rates), and you'll get high increases.

Health insurance markets are very commoditized. Insurers may tout things like customer service that set them apart, but on the whole consumers show very little loyalty (not necessarily a bad thing) and overwhelmingly tend to purchase based on the lowest price. In addition, insurers don't just get to throw out whatever rate they feel like without justification. Rates are filed months in advance and scrutinized by authorities in the state (some states more than others) and there are often several rounds of justifying those rates. This is especially true for high rate increases. Finally, the ACA requires that a percentage of premium revenue must go toward paying claims and providing care (80% in the individual market). If that doesn't happen, then money must get returned to policyholders the form of rebates. Artificially increasing rates without delivering the care would just mean that the money leaves later in a more expensive and politically damaging manner.

Add to that the high political pressure to keep rates low, and it would be very difficult to pull-off a "nudge-nudge wink-wink" agreement that everyone just raise rates without reason. It would require buy-in or at least a blind eye from parties that would benefit from doing otherwise. You're free to believe that's going on, but it would be quite the conspiracy.

Again, like I said, pure speculation on my part. In all honesty I didn't care to look into the matter because I don't buy health insurance from the marketplace so I don't qualify for ACA rates. I get health insurance from my school (which my school very heavily subsidizes).

[jorjor]

I don't see this increase affecting a FIRE'd person's budget so long as s/he's getting subsidies.  Subsidies cap how much you have to pay as a percentage of your income:



Say right now a FIRE'd 40 year old single Mustachian is living on $13,000/yr (110% FPL).  I searched HealthCare.gov for my area and he can get a Silver plan, which gets both the premium subsidies and cost-sharing subsidies, for $22/mo.  The actual premium is $245/mo, so taxpayers are picking up the extra $223/mo.  Now let's say that premium gets hammered with a 40% increase.  It goes from $245/mo to $343/mo.  Our FIRE'd guy is still living on $13,000/yr, so his max premium is still 2% of his income, $22/mo.  (Both the living expenses and FPL will be adjusted for inflation each year.)  He pays his $22/mo and the taxpayers now pick up the remaining $321/mo.

For the FIRE'd Mustachian getting subsidies, this increase may not change the budget at all.  It might push people up to their cap if they aren't there already, but that cap will help keep the budget under control.

True, but there is a mechanism for increasing the caps as medical inflation increases. If premiums rise at a rate higher than general inflation or GDP growth, then the percentages go up. For example, those percentages above were for 2014, but are already out-of-date due to indexing. The indexing hasn't made a huge difference yet, because GDP growth as pretty high recently. It will make a much bigger deal starting in 2019 when extra indexing comes into play. This is all done to ensure that subsidies aren't growing at a higher rate than the rest of the economy, and that the government isn't stuck with a higher and higher subsidy bill.

The result is that more of the premium is paid by the consumer, or that some feel "priced out" and decide not to purchase coverage at all.

Assuming they don't change anything before then, of course.

[Trimatty471]

Again?

[Cressida]

Everybody: "seek", not "see." Of course the insurance companies are requesting rate hikes. Whether the state governments grant them will be an entirely separate question.

Finally, the ACA requires that a percentage of premium revenue must go toward paying claims and providing care (80% in the individual market). If that doesn't happen, then money must get returned to policyholders the form of rebates. Artificially increasing rates without delivering the care would just mean that the money leaves later in a more expensive and politically damaging manner.

Yes. I'm in the middle of medical loss ratio reporting for my employer right now, and let me tell you, health insurers DO NOT want to pay those rebates. Easiest way to avoid it is keeping premiums as low as possible.

[Struggle Toaster]

Guh -- I can't believe I did that (typo'ed seek!!). Not sure if I just have a pessimistic subconscious or what :) Thanks for the catch, sorry all for any extra scare that came along with it

[DaMa]

There are a lot of factors in health insurance rate increases.  For the ACA plans (1) the initial rates had estimated costs that were purposely low so companies could grab market share. (2) Higher costs are inevitable as the plans are in an adverse selection death spiral.

[forummm]

There are a lot of factors in health insurance rate increases.  For the ACA plans (1) the initial rates had estimated costs that were purposely low so companies could grab market share.

Yes, as I mentioned above, this is one of the factors.

(2) Higher costs are inevitable as the plans are in an adverse selection death spiral.

No, not even close. More and more people are signing up. And as the tax ("individual responsibility payment") for not having coverage keeps growing (next year the greater of 2.5% of income over the filing limit or $695 per adult plus $347 per kid), even more people will sign up.

[Telecaster]

There are a lot of factors in health insurance rate increases.  For the ACA plans (1) the initial rates had estimated costs that were purposely low so companies could grab market share. (2) Higher costs are inevitable as the plans are in an adverse selection death spiral.

Don't be absurd.  Most (all?) markets are seeing an increase in the number of insurers.   There is no evidence, at all, of a death spiral. 

[wtjbatman]

Thanks... well you know

[sol]

However, if you can only "keep" at most 15% of the premium dollars for salaries, profits, and other business expenses, you want that 15% to be of a pretty high number.

While I appreciate your analysis, forummm, I think you're missing a key part of the puzzle. 

Health insurance providers and health care providers are not wholly independent businesses.  In this case, the easy way for health care providers to continue making ever larger profits is to just increase the reported cost of the care they provide.  Insurance companies can justify higher premiums if their "costs" as billed by providers go up.  So doctors and hospitals charge more, insurance companies get to claim their expenditures on care went up, everyone continues to make crazy mad proifts, and premiums shoot up to pay for it. 

The only thing that 15% cap does is limit the ratio of how much of the total profits the insurers get to keep.  They still want to jack up premiums (and "costs") as high as possible.  Everyone wins, except the consumer.

This is why the price controls in the ACA are so vital, and why I was so unhappy to see the Republicans fighting tooth and nail to limit the government's ability to negotiate rates, for example on prescription drugs.  They stripped it out of the bill in the first place.  They've fought it again every time Obama tries to put it back in.  It's almost like they're deliberately trying to sabotage the law, by refusing to fix the parts that need fixing.

Without price controls on care, premiums will continue to rise.  The 15/85 split between insurers and providers is better than nothing, but it certainly doesn't guarantee that consumers won't get gouged.

[arebelspy]

How is that different that what he said in the part you quoted?

[Cressida]

However, if you can only "keep" at most 15% of the premium dollars for salaries, profits, and other business expenses, you want that 15% to be of a pretty high number.

While I appreciate your analysis, forummm, I think you're missing a key part of the puzzle. 

Health insurance providers and health care providers are not wholly independent businesses.  In this case, the easy way for health care providers to continue making ever larger profits is to just increase the reported cost of the care they provide.  Insurance companies can justify higher premiums if their "costs" as billed by providers go up.  So doctors and hospitals charge more, insurance companies get to claim their expenditures on care went up, everyone continues to make crazy mad proifts, and premiums shoot up to pay for it. 

The only thing that 15% cap does is limit the ratio of how much of the total profits the insurers get to keep.  They still want to jack up premiums (and "costs") as high as possible.  Everyone wins, except the consumer.

This is why the price controls in the ACA are so vital, and why I was so unhappy to see the Republicans fighting tooth and nail to limit the government's ability to negotiate rates, for example on prescription drugs.  They stripped it out of the bill in the first place.  They've fought it again every time Obama tries to put it back in.  It's almost like they're deliberately trying to sabotage the law, by refusing to fix the parts that need fixing.

Without price controls on care, premiums will continue to rise.  The 15/85 split between insurers and providers is better than nothing, but it certainly doesn't guarantee that consumers won't get gouged.

The way you've formulated this, it sounds as if you're pinning most of the blame for cost increases on the providers rather than the insurers. Is this an accurate interpretation? (not a gotcha question, genuinely curious; I do work for a health insurer but it's a strange beast and I might elaborate further depending on the way the conversation goes.)

[sol]

How is that different that what he said in the part you quoted?

I was mostly responding to the earlier portion about the cost increases being "legitimate" but the 15% quote was the relevant example I wanted to talk about.  My bad for choosing poorly.

To be clear, I don't think the cost increases are legitimate.  I think they're the same sort of profiteering behavior we've seen out of the health care industry for my entire life.  This isn't a free market, they get to charge pretty much whatever they want to because the alternative is death or disfigurement.

If you break your arm, a hospital needs to provide you about an hour's worth of care.  Xrays, a cast, some pain meds, and instructions on how to take it easy.  How much should this hour of care costs?  I'll be generous and give the doctor $100/hour, or the equivalent of $200k/year.  The receptionist gets 15 minutes to check you in, and the nurse gets 30 minutes to supervise what the doctor does.  Plus 30% overhead for the hospital.  I could maybe see the total cost of the care they provide reaching $300.  Maybe.

Back here in the shitty world we actually live in, you get charged more than that just for the Xray.  The total bill for this simple injury is likely to be well over $2,000, but they could just as well say $5,000 or $20,000 for that one hour of care, and people would happily pay it.  The hospital will bill the insurance company $20,000, the insurance company will gladly pay it and jack up the premiums at taxpayer expense.  This whole system is just a transfer of wealth from taxpayers to health insurance/care companies.  It has nothing to do with the value of what they actually do.

The way you've formulated this, it sounds as if you're pinning most of the blame for cost increases on the providers rather than the insurers. Is this an accurate interpretation?

I was trying to say that I have no faith these two industries will not collude, to the detriment of consumers.  If insurers are capped at taking 15% of their total premiums for themselves, then they need to figure out how to raise premiums while still paying out 85%, and the obvious way to do this is to pay more for care.  It's a perverse incentive in which the people who are ostensibly negotiating the rates on your behalf are instead rewarded for screwing you over.

The providers are surely complicit in this scheme.  They know they need to charge twice as much for care.  They could try to offer twice a much care, like ordering extra tests and requiring overnight stays for minor problems, but why would they incur all of that overhead when they can instead just double all of the prices on their existing menu?  Without any oversight of what this care costs, what's to stop them from charging $20k for a broken arm?

We have a couple of big hospitals here in town.  They were the only places putting up new buildings in the depths of the recession, because their cashflow situation is incredible.  Turns out "non-profit" means you get to spend all of your profits on paying your staff or enlarging your facilities, instead of paying out dividends to your shareholders.  It's a twisted racket.

Not that I'm blaming the ACA, btw.  The old system of employer-sponsored health care was just as bad, if not worse.

Health care will never be a free market.  It cannot operate efficiently under the rules of the free market.  It needs to be regulated and controlled if we want it to care for everyone equally.

[milesdividendmd]

Even before the ACA, market rates were very much set by Medicare.

The hospital can charge whatever they want, but Medicare will only pay predetermined Medicare rates.

Likewise, private insurance will pay some multiple of the Medicare rates, like 1.25 Medicare, or 0.75 Medicare depending on the market.

There is only one true way to reign in health care inflation: to ration care, which is both necessary and unpalatable.

Of secondary importance is

1.  Diminishing insurance company profits from the health care system.

2.  Diminishing pharmacy/device company profits.

3.  Decrease be beurocratic waste.

4.  Decrease health care workers salaries. (Small potatoes.)

[forummm]

I (including in the posts already here) agree with Sol that there isn't that much cost control in the law. And that it is sorely needed. Certainly the Republicans have been in 100% kamikaze mode re the ACA since day 1 (almost 7 years now). But the Democrats are also captured by industry. The fundamental problem is money in politics. All the bribes and threats campaign contributions and independent expenditures force politicians to do as their corporate puppetmasters supporters dictate. The only way to really get change on the important public policy issues that matter is to get money out of politics. That probably requires a constitutional amendment.

Until that day, both parties will continue to legally prohibit Medicare from negotiating drug prices, continue to ensure that private insurers make a lot of money, continue to ensure that medical device manufacturers make a lot of money, and that there will be an effective ban on research that shows whether this new and very expensive drug/device works any better than an old and cheap drug/device.

Healthcare is 16% of GDP. That's 1 out of every 6 dollars spent in the economy. The problem is that about half of that is wasted through it being unnecessary, overpriced, inefficiently delivered, etc. But all that wasted money is someone's income. And they will fight like hell to keep it, using those wasted healthcare dollars to pay for the bribes and political coercion campaign contribution, independent expenditures, and lobbying.

The evidence disagrees with Miles somewhat. While we do provide too much care to many people we also provide too little care to many other people. In reality, the primary difference between the US and other industrialized nations is the cost of the service itself. An MRI in Japan is $50 total. Not the co-pay. Total. If you go to Canada or France and have a medical issue, you have to pay out of pocket. The bill will be tiny. The differences are many, and do relate to some of Miles' points. In no particular order: we have a ton of money going to overhead (private insurance is 15-20% while Medicare-style systems are 3%); we pay twice as much for identical drugs as Japan, France, Germany, UK, etc, because they negotiate; we pay for drugs and devices and surgeries that don't actually improve people's health--and actually worsen it in many cases, especially at the end of life; we pay almost all our providers more than other countries do, and some providers *much* more, but we also make them pay much more for their medical education and training--Miles is right that this is a smaller contributor but still meaningful; our policy is to force-feed the entire population with corn syrup (subsidized by tax dollars), processed foods (subsidized by tax dollars), and other things that are *the* primary cause of diabetes, obesity, and other health conditions that also lead to cancers, cardiovascular disease, and other expensive and quality of life diminishing factors; we pay for providers to do more services/rx more drugs and to do stuff when people get sick, but we generally don't pay them to keep people healthy in the first place.

If we had a sane single-payer system like any other industrialized country we could cut healthcare costs at least $1 trillion per year. But we won't get there anytime soon unless we get money out of politics.

[Sibley]

I work for a health insurance company, so without divulging anything confidential...

The first year's ACA rates were crapshoots. They were guessing. Some guessed better than others. The ones that charged too much (there were some) lowered the rates or kept them the same the following year. Others raised rates. The guesses are better, but they're still figuring things out. Side bar - good time to be an actuary.

Keep in mind that health costs have risen a lot every year for a long time (decades? can't remember). Feel free to pull out the stats, I'm too lazy. :) Overall, rates are increasing at a slower pace than pre-ACA.

Throw in some stuff that CMS is dictating from on high about how they'll pay providers, and it's making things even more uncertain because CMS is around 50% of the market. If they say they want it done one way, it's going to happen. But it's hard and takes time to shift the culture, and that's basically what they're demanding.

The industry overall is still stabilizing. Some of the provisions of the ACA law are still going into effect, so it's going to take a few more years for a new normal to emerge.

Based on what I've heard, over the next 10+ years I expect both lower costs overall and better primary care. It's much cheaper to prevent than it is to cure, and we're starting a shift towards more preventative care.

[sol]

Likewise, private insurance will pay some multiple of the Medicare rates, like 1.25 Medicare, or 0.75 Medicare depending on the market.

I think a system like this is going to be key to slowing the crazy growth in health care costs.  We need someone who is not contemplating their own death to negotiate the prices, and I vote for that somebody to be a government agency funded with public money.  That would at least introduce some modicum of accountability into the system.

[beltim]

In reality, the primary difference between the US and other industrialized nations is the cost of the service itself. An MRI in Japan is $50 total. Not the co-pay. Total. If you go to Canada or France and have a medical issue, you have to pay out of pocket. The bill will be tiny. The differences are many, and do relate to some of Miles' points. In no particular order: we have a ton of money going to overhead (private insurance is 15-20% while Medicare-style systems are 3%); we pay twice as much for identical drugs as Japan, France, Germany, UK, etc, because they negotiate; we pay for drugs and devices and surgeries that don't actually improve people's health--and actually worsen it in many cases, especially at the end of life; we pay almost all our providers more than other countries do, and some providers *much* more, but we also make them pay much more for their medical education and training--Miles is right that this is a smaller contributor but still meaningful; our policy is to force-feed the entire population with corn syrup (subsidized by tax dollars), processed foods (subsidized by tax dollars), and other things that are *the* primary cause of diabetes, obesity, and other health conditions that also lead to cancers, cardiovascular disease, and other expensive and quality of life diminishing factors; we pay for providers to do more services/rx more drugs and to do stuff when people get sick, but we generally don't pay them to keep people healthy in the first place.

If we had a sane single-payer system like any other industrialized country we could cut healthcare costs at least $1 trillion per year. But we won't get there anytime soon unless we get money out of politics.

I mostly agree with your points but I have a few quibbles.

First, MRIs cost $200, not $50.  This is still much cheaper than the US: http://www.diagnosticimaging.com/articles/japanese-study-touts-low-cost-mri

Second, many industrialized countries have universal healthcare without a single-payer system.  There are many ways to deliver health care, and many effective healthcare systems do not use a single-payer system.

[beltim]

This is old but mostly still useful:
http://truecostblog.com/2009/08/09/countries-with-universal-healthcare-by-date/

[beltim]

And this is a really good article on why costs are higher in the US, and how our bastardized system of health insurance sometimes gives us the worst combination of public and private models: http://www.washingtonpost.com/blogs/wonkblog/wp/2014/01/13/what-liberals-get-wrong-about-single-payer

[Bob W]

It should be pretty clear to most folks by now that the current ACA system will implode in 4-8 years.     Once it was mandated that everyone must purchase insurance we slipped over the precipice.     

So you have a huge section of people now whose premiums overtime have gone from $80 per month for $500 deductible to $900 per month for $3,500 deductible with 30/70 splits.   

It simply cannot continue in this fashion.

[arebelspy]

It should be pretty clear to most folks by now that the current ACA system will implode in 4-8 years.     Once it was mandated that everyone must purchase insurance we slipped over the precipice ... It simply cannot continue in this fashion.

Explain please.

[sol]

It should be pretty clear to most folks by now that the current ACA system will implode in 4-8 years.     Once it was mandated that everyone must purchase insurance we slipped over the precipice ... It simply cannot continue in this fashion.

Explain please.

Regardless of what happens with the ACA, health insurance costs (like college costs) cannot continue to grow so much faster than the rest of the economy forever, or else they become nearly all of GDP all by themselves.  It has to level off (or decrease) eventually.

But I suspect Bob is just prepping again.  Stock up on ammo everyone, Bob has foreseen the end times.

[arebelspy]

Sure, exponential growth is impossible for the same reasons housing can't appreciate faster than inflation long-term, but how does that mean the current ACA system will "implode" in 4-8 years?

[Telecaster]

It should be pretty clear to most folks by now that the current ACA system will implode in 4-8 years.     Once it was mandated that everyone must purchase insurance we slipped over the precipice.     

So you have a huge section of people now whose premiums overtime have gone from $80 per month for $500 deductible to $900 per month for $3,500 deductible with 30/70 splits.   

It is not clear at all to me that is the case.   Did you buy private health insurance prior to the ACA?   Nobody was paying $80/month for a $500 deductible, unless they had a spectacularly crappy policy.   

Usually when people complain about how much their premiums went up, they also were getting much better insurance.     Some people might not be happy with that, but it isn't a sign of impending doom. 

[forummm]

And this is a really good article on why costs are higher in the US, and how our bastardized system of health insurance sometimes gives us the worst combination of public and private models: http://www.washingtonpost.com/blogs/wonkblog/wp/2014/01/13/what-liberals-get-wrong-about-single-payer

Thanks for the links Beltim. They have better (and more accurate) numbers than my foggy recollection about Japanese MRI pricing :)

This interview with a Japanese professor talks more about the MRI and their system.
http://www.pbs.org/wgbh/pages/frontline/sickaroundtheworld/interviews/ikegami.html

It should be pretty clear to most folks by now that the current ACA system will implode in 4-8 years.     Once it was mandated that everyone must purchase insurance we slipped over the precipice.     

So you have a huge section of people now whose premiums overtime have gone from $80 per month for $500 deductible to $900 per month for $3,500 deductible with 30/70 splits.   

It is not clear at all to me that is the case.   Did you buy private health insurance prior to the ACA?   Nobody was paying $80/month for a $500 deductible, unless they had a spectacularly crappy policy.   

Usually when people complain about how much their premiums went up, they also were getting much better insurance.     Some people might not be happy with that, but it isn't a sign of impending doom. 

Also medical costs have gone up at an insane rate. But now people will associate cost increases with Obama and forget that they were going up faster in the pre-ACA days. My dad is a perfect example of the inability of otherwise generally intelligent people to understand complex systems. To this day he still blames Clinton, and in particular the signing of COBRA, for the fact that his individual market health insurance got so expensive in the 90s. For those who don't know, COBRA applies to *group* plans (not individual, like his) and says you can *buy*, at full cost PLUS an administrative charge, for up to 3 years the insurance you were getting through your employer's plan if your employment is terminated. Also COBRA was passed in 1985 and only amended by the Republican Congress in 1996 and signed by Clinton. But people latch onto one thing that someone told them and can't see straight.

[forummm]

[MoneyCat]

If someone has a better plan than the ACA -- a plan that could actually get through Congress -- I'm all ears.  Unfortunately, the USA does not have the will to implement something better, so this is what we're stuck with.

[mm1970]

It should be pretty clear to most folks by now that the current ACA system will implode in 4-8 years.     Once it was mandated that everyone must purchase insurance we slipped over the precipice.     

So you have a huge section of people now whose premiums overtime have gone from $80 per month for $500 deductible to $900 per month for $3,500 deductible with 30/70 splits.   

It simply cannot continue in this fashion.

Well, if it continues to go up like this, maybe.

But if it stays the same?

[protostache]

Anecdotally, we've had a gold-tier PPO ($1500/$3000 deductible, no co-insurance, $7000 out of pocket max) since Sept 2014 and our premium actually went down in January ($804 -> $797). They also bumped the copay for lab tests at the same time, which for us basically makes it a wash, but my point is that our costs did not go up. I expect our premium to stay flat or at most have a few percent increase for 2016, based on what I've seen on their current price sheet.

[Bob W]

Anecdotally, we've had a gold-tier PPO ($1500/$3000 deductible, no co-insurance, $7000 out of pocket max) since Sept 2014 and our premium actually went down in January ($804 -> $797). They also bumped the copay for lab tests at the same time, which for us basically makes it a wash, but my point is that our costs did not go up. I expect our premium to stay flat or at most have a few percent increase for 2016, based on what I've seen on their current price sheet.

Why the ACA will go down in flames?

Anecdotally we had PPO 500 Deduct for $80 per employee in 2000.  It was an 80/20 deal.   Our current plan is around $800 per employee at around 3000 deduct.   So for a piece of shit plan we are paying 10 times as much as we were 15 years ago.   Fast forward 5 years at 20% annual increases and we are looking at around $2,000 per person for an even shittier plan.

The reason the ACA will flame out is A.  No one can afford this shit.   B.  Healthcare sucks anyway  C.  It is mandated and there will be a big swing to voting away the mandate.     Congress is a bunch of fuck wads working for the pharmaceutical and health lobbies so they will hold this together as long as they can.  Eventually people will wise up. 

It is one thing to have $2,000 premiums for shitty care.   It is entirely another to mandate that people participate.   Good care with a reasonable price would be fine,  but shitty care with a high price will not fly.    So it is a combination of high prices,  shitty care and the mandate that will kill the ACA.  (the affordable part belongs in an Onion parody)     I guess naming the bill the HPCCA (High Priced Crappy Care Act)  wouldn't have flown so well. 

It will also dawn on people that it is a wage tax entirely.   People living on welfare do not pay this tax.   Poor people do not pay this tax.   People who earn 2 million dollars per year investment income do not pay this tax.    It is a tax aimed straight at the heart of the middle income working people. 

Other countries have solved this problem long ago ---- it is a real tragedy that our lobbyist owned congress has thrown us under the bus on health. 

 

[protostache]

Why the ACA will go down in flames?

Anecdotally we had PPO 500 Deduct for $80 per employee in 2000.  It was an 80/20 deal.   Our current plan is around $800 per employee at around 3000 deduct.   So for a piece of shit plan we are paying 10 times as much as we were 15 years ago.   Fast forward 5 years at 20% annual increases and we are looking at around $2,000 per person for an even shittier plan.

The reason the ACA will flame out is A.  No one can afford this shit.   B.  Healthcare sucks anyway  C.  It is mandated and there will be a big swing to voting away the mandate.     Congress is a bunch of fuck wads working for the pharmaceutical and health lobbies so they will hold this together as long as they can.  Eventually people will wise up. 

The three legs of ACA are 1) individual mandate, 2) elimination of medical underwriting (pre-existing condition clauses) and 3) subsidies. Take any one of those legs away and suddenly nobody can afford insurance or care because of the death spirals that SCOTUS spent so much time describing.

Maybe that's the recipe for single-payer, though. Put everyone through hell for a few years, watch an awful lot of people needlessly die, and then there might be motivation for people to elect single-issue congresspeople and get Medicare applied to everyone.

People who earn 2 million dollars per year investment income do not pay this tax.

I don't understand this. You're saying because someone receives $2mil in taxable capital gains but doesn't have any earned income, they get to not pay for health insurance? That might be true, but I'm also sure the number of people in that list is extremely small and also they probably don't care about paying full price for health care.

[forummm]

Anecdotally we had PPO 500 Deduct for $80 per employee in 2000.  It was an 80/20 deal.   Our current plan is around $800 per employee at around 3000 deduct.   So for a piece of shit plan we are paying 10 times as much as we were 15 years ago.   

<snip>

It will also dawn on people that it is a wage tax entirely.   People living on welfare do not pay this tax.   Poor people do not pay this tax.   People who earn 2 million dollars per year investment income do not pay this tax.    It is a tax aimed straight at the heart of the middle income working people.   

Yeah, there's been a ton of medical cost inflation over 15 years. Yes, there needs to be cost control in the industry. But that's outside of the point of the ACA. One could argue that the ACA is actually moving us towards more cost control. First, there was a lot of stuff in the bill to push towards prevention. And 2nd the movement away from fee-for-service and towards a capitation model. PCMHs, ACOs, the free prevention provision, CMMI, etc. All those things are moving to keep people healthier in the first place and have payers care (and be paid for) the outcomes people have instead of just how much stuff they do.

I don't understand what you mean by a tax on workers. If you're under 400% FPL your insurance should be free or subsidized or inexpensive (unless you're <100% FPL in a non-expansion state). And if you make $2 million in investment income, you're paying the Medicare tax the ACA is partially funded by. It was explicitly added to investment income to help pay for the bill.

http://www.irs.gov/Affordable-Care-Act/Affordable-Care-Act-Tax-Provisions

Net Investment Income Tax

A new Net Investment Income Tax went into effect on Jan. 1, 2013. The 3.8 percent Net Investment Income Tax applies to individuals, estates and trusts that have certain investment income above certain threshold amounts. On Nov. 26, 2013, the IRS and the Treasury Department issued final regulations, which provide guidance on the general application of the Net Investment Income Tax and the computation of Net Investment Income. In addition, on Nov. 26, 2013, the IRS and the Treasury Department issued proposed regulations on the computation of net investment income as it relates to certain specific types of property. Comments may be submitted electronically, by mail or hand delivered to the IRS. For additional information on the Net Investment Income Tax, see our questions and answers.

Additional Medicare Tax

A new Additional Medicare Tax went into effect on Jan. 1, 2013. The 0.9 percent Additional Medicare Tax applies to an individual’s wages, Railroad Retirement Tax Act compensation and self-employment income that exceeds a threshold amount based on the individual’s filing status. The threshold amounts are $250,000 for married taxpayers who file jointly, $125,000 for married taxpayers who file separately and $200,000 for all other taxpayers. An employer is responsible for withholding the Additional Medicare Tax from wages or compensation it pays to an employee in excess of $200,000 in a calendar year. On Nov. 26, 2013, the IRS and the Department of the Treasury issued final regulations which provide guidance for employers and individuals relating to the implementation of Additional Medicare Tax, including the requirement to withhold Additional Medicare Tax on certain wages and compensation, the requirement to report Additional Medicare Tax, and the employer process for adjusting underpayments and overpayments of Additional Medicare Tax. In addition, the regulations provide guidance on the employer and individual processes for filing a claim for refund for an overpayment of Additional Medicare Tax. For additional information on the Additional Medicare Tax, see our questions and answers.

[beltim]

People who earn 2 million dollars per year investment income do not pay this tax.

I don't understand this. You're saying because someone receives $2mil in taxable capital gains but doesn't have any earned income, they get to not pay for health insurance? That might be true, but I'm also sure the number of people in that list is extremely small and also they probably don't care about paying full price for health care.

Like most of the rest of his post, Bob get this 100% wrong.  People who only receive investment income do, in fact, have to pay for health insurance or pay a penalty (of up to 2% of income in 2015).

http://laborcenter.berkeley.edu/modified-adjusted-gross-income-under-the-affordable-care-act/

[immocardo]

Why the ACA will go down in flames?

Anecdotally we had PPO 500 Deduct for $80 per employee in 2000.  It was an 80/20 deal.   Our current plan is around $800 per employee at around 3000 deduct.   So for a piece of shit plan we are paying 10 times as much as we were 15 years ago.   Fast forward 5 years at 20% annual increases and we are looking at around $2,000 per person for an even shittier plan.

The reason the ACA will flame out is A.  No one can afford this shit.   B.  Healthcare sucks anyway  C.  It is mandated and there will be a big swing to voting away the mandate.     Congress is a bunch of fuck wads working for the pharmaceutical and health lobbies so they will hold this together as long as they can.  Eventually people will wise up. 

The three legs of ACA are 1) individual mandate, 2) elimination of medical underwriting (pre-existing condition clauses) and 3) subsidies. Take any one of those legs away and suddenly nobody can afford insurance or care because of the death spirals that SCOTUS spent so much time describing.

Maybe that's the recipe for single-payer, though. Put everyone through hell for a few years, watch an awful lot of people needlessly die, and then there might be motivation for people to elect single-issue congresspeople and get Medicare applied to everyone.

People who earn 2 million dollars per year investment income do not pay this tax.

I don't understand this. You're saying because someone receives $2mil in taxable capital gains but doesn't have any earned income, they get to not pay for health insurance? That might be true, but I'm also sure the number of people in that list is extremely small and also they probably don't care about paying full price for health care.

To add a high level TL;DR of the bolded above (which was described much better by the american academy of actuaries)

If subsidies are removed (if king v burwell had gone the other direction): Those receiving subsidies can no longer afford premiums and will exit the pool.  Only the very unhealthy will keep paying due to needing insurance.  Rates go up, more drop out.  Death spiral.

If mandate is removed.  Healthy people have no incentive to stay, they leave, risk isn't diversified.  Premiums go up.  Death spiral.

If underwriting comes back and everyone is required to have insurance.  Honestly most likely won't cause death spiral, but those with pre-existing conditions just won't be able to afford insurance.  Healthy people will have cheap insurance and won't need it.

[milesdividendmd]

Anecdotally, we've had a gold-tier PPO ($1500/$3000 deductible, no co-insurance, $7000 out of pocket max) since Sept 2014 and our premium actually went down in January ($804 -> $797). They also bumped the copay for lab tests at the same time, which for us basically makes it a wash, but my point is that our costs did not go up. I expect our premium to stay flat or at most have a few percent increase for 2016, based on what I've seen on their current price sheet.

Why the ACA will go down in flames?

Anecdotally we had PPO 500 Deduct for $80 per employee in 2000.  It was an 80/20 deal.   Our current plan is around $800 per employee at around 3000 deduct.   So for a piece of shit plan we are paying 10 times as much as we were 15 years ago.   Fast forward 5 years at 20% annual increases and we are looking at around $2,000 per person for an even shittier plan.

The reason the ACA will flame out is A.  No one can afford this shit.   B.  Healthcare sucks anyway  C.  It is mandated and there will be a big swing to voting away the mandate.     Congress is a bunch of fuck wads working for the pharmaceutical and health lobbies so they will hold this together as long as they can.  Eventually people will wise up. 

It is one thing to have $2,000 premiums for shitty care.   It is entirely another to mandate that people participate.   Good care with a reasonable price would be fine,  but shitty care with a high price will not fly.    So it is a combination of high prices,  shitty care and the mandate that will kill the ACA.  (the affordable part belongs in an Onion parody)     I guess naming the bill the HPCCA (High Priced Crappy Care Act)  wouldn't have flown so well. 

It will also dawn on people that it is a wage tax entirely.   People living on welfare do not pay this tax.   Poor people do not pay this tax.   People who earn 2 million dollars per year investment income do not pay this tax.    It is a tax aimed straight at the heart of the middle income working people. 

Other countries have solved this problem long ago ---- it is a real tragedy that our lobbyist owned congress has thrown us under the bus on health.

Bob,

We agree on a lot, but our paths diverge here.

Your criticisms are all sound, but your diagnosis is just wrong.

If you want "good" healthcare at a fair price then evidence suggests that what you want is "socialized medicine" or single payer.

So if you are criticizing the ACA on these grounds then the only rational grounds for criticism are that the ACA is not "big government" enough.

Plus healthcare inflation has slowed since the ACA was passed, and the congressional budget office (non partisan) has projected that getting rid of the ACA would increase the deficit.

So you can say a lot of things about the ACA, (no single payer option, sweetheart deals with pharma, too permissive of insurance companies, no rationing of futile care) but saying that it will bankrupt us is simply factually incorrect if you are comparing it to the old system.

Also comparing your health care costs to what they were 15 years ago is nothing more than a criticism of healthcare inflation. The ACA is immaterial, if not helpful in this regard.

[Chuck]

All I know is that my health care plan through my employer was better and cheaper before the ACA. As an otherwise reasonable person, it's very hard to to appreciate nuance when I'm getting kicked in the fucking balls.

[Bob W]

Anecdotally, we've had a gold-tier PPO ($1500/$3000 deductible, no co-insurance, $7000 out of pocket max) since Sept 2014 and our premium actually went down in January ($804 -> $797). They also bumped the copay for lab tests at the same time, which for us basically makes it a wash, but my point is that our costs did not go up. I expect our premium to stay flat or at most have a few percent increase for 2016, based on what I've seen on their current price sheet.

Why the ACA will go down in flames?

Anecdotally we had PPO 500 Deduct for $80 per employee in 2000.  It was an 80/20 deal.   Our current plan is around $800 per employee at around 3000 deduct.   So for a piece of shit plan we are paying 10 times as much as we were 15 years ago.   Fast forward 5 years at 20% annual increases and we are looking at around $2,000 per person for an even shittier plan.

The reason the ACA will flame out is A.  No one can afford this shit.   B.  Healthcare sucks anyway  C.  It is mandated and there will be a big swing to voting away the mandate.     Congress is a bunch of fuck wads working for the pharmaceutical and health lobbies so they will hold this together as long as they can.  Eventually people will wise up. 

It is one thing to have $2,000 premiums for shitty care.   It is entirely another to mandate that people participate.   Good care with a reasonable price would be fine,  but shitty care with a high price will not fly.    So it is a combination of high prices,  shitty care and the mandate that will kill the ACA.  (the affordable part belongs in an Onion parody)     I guess naming the bill the HPCCA (High Priced Crappy Care Act)  wouldn't have flown so well. 

It will also dawn on people that it is a wage tax entirely.   People living on welfare do not pay this tax.   Poor people do not pay this tax.   People who earn 2 million dollars per year investment income do not pay this tax.    It is a tax aimed straight at the heart of the middle income working people. 

Other countries have solved this problem long ago ---- it is a real tragedy that our lobbyist owned congress has thrown us under the bus on health.

Bob,

We agree on a lot, but our paths diverge here.

Your criticisms are all sound, but your diagnosis is just wrong.

If you want "good" healthcare at a fair price then evidence suggests that what you want is "socialized medicine" or single payer.

So if you are criticizing the ACA on these grounds then the only rational grounds for criticism are that the ACA is not "big government" enough.

Plus healthcare inflation has slowed since the ACA was passed, and the congressional budget office (non partisan) has projected that getting rid of the ACA would increase the deficit.

So you can say a lot of things about the ACA, (no single payer option, sweetheart deals with pharma, too permissive of insurance companies, no rationing of futile care) but saying that it will bankrupt us is simply factually incorrect if you are comparing it to the old system.

Also comparing your health care costs to what they were 15 years ago is nothing more than a criticism of healthcare inflation. The ACA is immaterial, if not helpful in this regard.

.    Well I'm not opposed to successful socialized medicine.   The ACA is not and will not be successful.   It is like throwing gas on medical inflation due to the mandated participation.   It is basic econ 101> increased demand = increased prices.    There is no provision to decrease the rate of inflation and in fact incentives all around to increase costs.      The ACA was not the answer to our health crisis.   There are several international models that have decades of success that would have been easy to replicate but due to lobbyists congress chose the ACA without reading it.   We aren't talking theories but reality.   Prices of insurance continue to go up while coverage declines.    Our path has not been diverted from the high inflation of the past.      Frankly I wish this were not the case,  but wishing does not make it so.   

[protostache]

All I know is that my health care plan through my employer was better and cheaper before the ACA. As an otherwise reasonable person, it's very hard to to appreciate nuance when I'm getting kicked in the fucking balls.

More anecdotes, but when I was employed full time, every year between 2007 and 2012 my health care premiums went up and my benefits went down. In one memorable presentation the company's health insurance broker told the entire company to stop going to the ER so much, right before telling us premiums were going up 10% regardless.

The only reason 2013 and 2014 were better was because the company paid the whole premium. When I got the COBRA paperwork, though, I realized they were just hiding the costs (that plan was eyewatering $1200/mo, no deductible, minimal copay).

Basically, health care inflation has been a thing for decades. Blaming the latest increases on ACA is understandable but mostly incorrect.

[forummm]

All I know is that my health care plan through my employer was better and cheaper before the ACA. As an otherwise reasonable person, it's very hard to to appreciate nuance when I'm getting kicked in the fucking balls.

When I'm getting kicked in the balls, I pay attention to whose leg it is that's driving the action. That's the only way to try to stop it. If I go and beat up the wrong person, the kicking is unlikely to stop.

Well I'm not opposed to successful socialized medicine.   The ACA is not and will not be successful.   

What's does "success" mean? I think goal of the ACA was to ensure the availability of affordable comprehensive coverage for people. And it's done that (unless you're <100% FPL in a non-expansion state, or work for an employer that provides coverage but doesn't pay much/anything into your plan). You may not like having to pay, say, 7% of your income as a premium, and then still have to deal with a deductible to get care, but 7% is affordable. And there's a cap on out-of-pocket expenses. You won't go bankrupt because of health problems anymore. You'll have coverage. Win. Especially for people who want to RE. Huge win.

It is like throwing gas on medical inflation due to the mandated participation.   It is basic econ 101> increased demand = increased prices.    There is no provision to decrease the rate of inflation and in fact incentives all around to increase costs.      The ACA was not the answer to our health crisis.   There are several international models that have decades of success that would have been easy to replicate but due to lobbyists congress chose the ACA without reading it.   We aren't talking theories but reality.   Prices of insurance continue to go up while coverage declines.    Our path has not been diverted from the high inflation of the past.      Frankly I wish this were not the case,  but wishing does not make it so.   

Maybe look at some facts before typing. Right after the ACA was signed, healthcare inflation dropped dramatically. Not proof that it was the ACA that did it. But it dropped dramatically. It's too early to say what things will look like in the long run. But there actually is some cost control in the bill. There's an entire new office, the Center for Medicare and Medicaid Innovation, that is dedicated to cutting costs in those two programs. Already, in just one pilot program, the Pioneer Accountable Care Organization Model working with 600,000 Medicare beneficiaries has savings of almost $400 million dollars over 2 years. They just got started, so that's a pretty significant savings. CMMI also has a State Innovation Models program where 17 states are working to transition 80% of the people in the state away from fee for service (getting paid more by doing more regardless of value) and to value-based payment (paid based on how healthy people get/stay) by 2019. That's HUGE. And there's another provision that kicks in in 2017 that allows states to totally transform their healthcare systems to cut costs and increase quality.

You are right that these are half measures and the real silver bullet is single payer or some other universal coverage system that has worked internationally. But it's an improvement over what we had before.

[MLKnits]

To add a high level TL;DR of the bolded above (which was described much better by the american academy of actuaries)

If subsidies are removed (if king v burwell had gone the other direction): Those receiving subsidies can no longer afford premiums and will exit the pool.  Only the very unhealthy will keep paying due to needing insurance.  Rates go up, more drop out.  Death spiral.

If mandate is removed.  Healthy people have no incentive to stay, they leave, risk isn't diversified.  Premiums go up.  Death spiral.

If underwriting comes back and everyone is required to have insurance.  Honestly most likely won't cause death spiral, but those with pre-existing conditions just won't be able to afford insurance.  Healthy people will have cheap insurance and won't need it.

It's fascinating that you don't think "those with pre-exsting conditions just won't be able to afford insurance" doesn't qualify as a "death spiral" option, since it's the one that, you know, results very concretely in actual human deaths.

Honestly, all of this is why I could never move back to the US from Canada. I'm thrilled the mandates were upheld, but the opposition of American politicians to real universal coverage is just shocking, and their willingness to blatantly lie about other countries' systems does a disservice to the American populace.

[heitzrun]

New premium is 962.00 for 6300 deductible insurance.  We only take home about 4k.  Rent/Mortgage, health insurance, tithe, taxes, food, retirement.  Which one to prioritize. 

[forummm]

New premium is 962.00 for 6300 deductible insurance.  We only take home about 4k.  Rent/Mortgage, health insurance, tithe, taxes, food, retirement.  Which one to prioritize. 

Is that for work-based insurance? If not, it sounds like you would get a big tax credit on the Marketplace.

[arebelspy]

New premium is 962.00 for 6300 deductible insurance.  We only take home about 4k.  Rent/Mortgage, health insurance, tithe, taxes, food, retirement.  Which one to prioritize. 

Is that for work-based insurance? If not, it sounds like you would get a big tax credit on the Marketplace.

4k take home should absolutely be in medicare range, unless you somehow have massive deductions, and no premiums needed.