Laszewski, Back From Summer Vacation, Still Predicts Obamacare Train Wreck
If I have one complaint about the summer of 2014, it was the absence of health insurance expert Bob Laszewski from his blog since July 31. Well, he came back last Sunday, and the summer break did not temper his criticism of Obamacare.
Obamacare supporters have applauded announcements of relatively moderate rate increases for 2015. Laszewski points out that the name of the game for insurers is market share. The risk-mitigation mechanisms that Obamacare erected (about which I recently testified at a Congressional committee hearing) largely immunize insurers from losses for three years, so premiums do not really indicate how much Obamacare is costing. Here’s Laszewski:
I’ve actually had reports of actuarial consultants going around to the plans that failed to gain substantial market share suggesting they lower their rates in order to grab market share because they have nothing to lose with the now unlimited (the administration took the lid on payments off this summer) Obamacare reinsurance program covering their losses.
As for a new Kaiser Family Foundation report claiming that the Silver plan in many cities would have lower Obamacare premiums in 2015 than 2014:
The new 2015 Silver baseline plan my have a lower premium than the 2014 Silver baseline plan. But that is almost always because the insurance company that held that slot in 2014, and almost always got the largest share of business, significantly increased their rates for 2015.
Then another insurance company, who didn’t write much business and likely now eager to increase market share, decreased their rates and has become the 2015 baseline plan. The second company was able to decrease their rates without much fear because the Obamacare “3Rs” reinsurance scheme virtually protects them from any material losses.
So, this headline about the baseline plans decreasing their rates in so many markets is more about the carriers who sold the most in the first year increasing their rates while the plans that sold very little business, and able to fall back on the Obamacare reinsurance scheme, cut their rates in a no lose attempt to gain business.
This is why I’ve argued, in a new NCPA Issue Brief, that Congress needs to get this so-called insurer bailout under control, eliminate (or at least limit) taxpayers’ liability, and let Obamacare premiums rise to reflect the true cost of Obamacare.
You are so right Dr. Graham. It is goofy to base the tax credits on the baseline Silver plan and then informed consumers simply enroll into the HSA Bronze plan with higher tax credits which produces more in Silver plan credit than the cost of the Bronze plan premium, resulting in no-cost health insurance for way too may people, even though the Obama Administration couldn’t point out that simple fact, too insane. But, they used Richard Simmons so that explains it all.
What should make everybody upset here is that the unused Silver plan credit is forfeited instead of deposited into the insured’s tax-free HSA, this drives me crazy.
It’s the same across the nation, tax-free HSA discrimination!
Ron:
I see where you are going with the high deductible bronze plan being cheaper than the second lowest cost silver plan, so the credits should be higher.
Is that indeed the case, or do the subsidies cap out at an even lower level than the second lowest cost silver plan, if the selected plan is actually cheaper.
I understand that if someone does not choose a silver plan, they lose any cost-sharing reductions they may be eligible for.
What kind of deductibles are we looking at, generally, with silver as compared to bronze plans, everything else being equal.
Don Levit
Don I just sent an email to Lucas running for Congress here in Tampa Bay. I will use the examples I emailed him. The City of St. Petersburg for employee family health insurance, here is a piece of my email to him.
The city is paying $1,423.11/month – the employee is paying $474.37/month = total $1,897.48/month
Of course this is crazy because a 50-year-old couple with 2 children earning $50K can get the HSA Bronse plan after tax credits for $81/month and the city’s cost of premium would drop to ZERO.
It’s this way in every city, county, state, and business in America! You need to be in DC.
The Deductible Don is HSA $6,000.
If you have not heard, Group Health Insurance is DEAD. Sell your stock if you have any.
Dr Graham, Devon – look how crazy the world is. From the example above, a couple with two children earning $50,000 and the cost after tax credits in the different age groups:
30-year-old parents $135/month
40-year-old parents $123/month
50-year-old parents $81/month
60-year-old parents $4/month
Crazy huh? The young pay more! Welcome to America.
Ron:
Can you provide us with the amount of subsidies involved here?
I would estimate the subsidy is about 8 times the premium!
After your conversation with Elliott a few weeks ago, I got to thinking: “What if Time and one other insurance company, over time, had the two lowest silver premiums, by a wide margin over any competitor?”
Two things would probably happen:
1. Time and the other insurer would corner Florida’s market.
2. Subsidies will be much lower than typical, thus “lessening the burdens of government.”
Time and the other insurer may even be considered non-profits by reducing the taxpayer subsidies!
Don Levit
Don, both TIME and UHC are coming to the Florida exchange on 11/15/2014. The big dogs.
Tax Credits for the above example:
30-year-old $428/month
40-year-old $485/month
50-year-old $689/month
60-year-old $1,060/month
Lets say you have a 30% federal income tax (Not the highest) plus 15.3% payroll tax equals 45.3% the Feds get on income. Multiply 45.3 X $1,897.48/mo = $859.55/month lost income for the Feds.
Some health plans are $3,200/month like Miami-Dade County. Everything was getting out of control with employer-based health insurance – it has to go.
Ron:
It does sound like too good of a deal to pass up.
One of the concerns the federal government has is city retirees being dumped on the Exchanges.
Now, you are proposing active city employees!
One of the reasons the employer mandate will go into effect is so that not “too many” people will participate in the Exchanges.
It is expensive for the taxpayers to fund such subsidies, which can amount to 90% of the premium.
Don Levit
Don, the employer has to throw in the towel on over-priced employer-based health insurance because if they SELL insurance to employees the employee can’t go to the exchange and get Federal Credits. When the employees figure it out they are going to attack their employer until he throws in the towel.
Besides, in the above example the employer is paying $1,423.11/month or $17,077.32/year, plus the employee is paying more.
An informed employer would pay $3,000 in penalties to the Feds and not pay $17,077.32 to Blue Cross, the giant MONOPOLY.
Some insurers in California decided to wait out the first year. Other insurers (likely) decided to dive in and see what happens. It remains to be seen whether insurers who decided to wait out the fist year will ever join the parade. Many who jumped in early could decide the party is over and leave.
My fear is that the initial euphoria over the exchange marketplace will slowly erode until insurers and healthy enrollees abandon the exchanges. Then, like a snowball rolling downhill, adverse selection will accelerate until there are no affordable plans available.
It is strategy Devon. The 1st year the sickest and costliest people join right up. There is a lot to think about. TIME is like the cheapest price in California with the best networks but they are not on the exchange in 2014. TIME was not on any exchange in 2014. In 2015 they are on 16 state exchanges and California is not one of them. This is only about 1/3 of the states they are in. So a lot of picking and choosing is going on.
I told Pam last night that it is very interesting that one state that they are on the exchange is NV. That is interesting because in NV their laws make it such that the enrollments can happen all year long with Federal tax credits. Plus, the only competition in NV is a couple itty-bitty players that are really no competition at all. So any broke person in Vegas you can say, “Hey, you want some no-cost health insurance?”
I was told that the intention here is to take over the individual health insurance market in the United States now that employer-based insurance has all but ended. They realize that to do this the public is very price sensitive so their strategy is to provide what the consumer demands. That’s the way things are suppose to work in free and open markets. We will just have to wait a minute and see how this all unfolds.
The auto-re-enroll is an idea thought up by a moron in the political arm of the White House. It really had only one purpose- the allow the administration to simply add to the 8 million number it declared in April rather than restart the count on enrollments. I think there is a great fear that the second year enrollment number might actually decline if they are forced to start a new count- people who signed up last year, but ended up not paying are very unlikely to sign up a second time.
http://www.forbes.com/sites/johngoodman/2014/09/09/health-savings-accounts-are-for-the-poor-and-the-sick/
My comment to John Goodman’s Forbes Article that came out 1 hour ago: John Goodman is kinda crazy!
There are tax-free HSAs in Obamacare – what about the HSA Bronze plan? TIME Insurance is in 43 states and they have HSA coverage in all I believe. TIME had to adapt to Obamacare because it is the law of the land
You know I enrolled the 1st tax-free MSA in the USA in October 1996 with TIME Health Insurance, America’s oldest health insurance company. Of course you wouldn’t know that looking at the history that you presented and talk about Rooney. TRUST me, I had to wait a couple of months before lethargic Golden Rule with Rooney at the helm finally had their product on the streets in December of 1996. I was waiting because Tom Kanoyer wanted to compare TIME with at least one competitor. Forget the fact that TIME is in 43 states and Golden Rule was in, I think, 28 states. Remember 7-Eleven is coast to coast so I knew Golden Rule wouldn’t do. But I waited until the Golden Rule Out-Line-Of-Coverage finally hit the street and just as I expected it was worthless for parents with children. So I circled the dangerous TERMINATION clause on dependents and Faxed it to 7-Eleven in December 1996 and I and TIME had the account and Rooney and Golden Rule lost out and they didn’t even know they were in the race.
The problem with Rooney’s Golden Rule was that children lost their insurance at a majority age regardless of medical history, exactly like Golden Rule has always treated children under Rooney. So I told Tom at 7-Eleven, “The last thing you want to do is tell Franchisees to get Golden Rule then their children get MS or cancer because Golden Rule and Rooney will cancel their health insurance and laugh all the way to the bank.”
Of course TIME had a Dependent Conversion Privilege so if a child get’s crohns at 17, like my oldest son, they can keep it at a majority age – no questions asked. See the difference John? Ya, he just had surgery that cost $250,000 last March and he still on TIME and he is 32 years old now.
I have told you several times and you keep telling the Rooney lie, when will it stop John?
I wrote the 1st tax-free MSA in the USA with TIME. My partner wrote the 1st tax-free MSA in Medicare. So in reality I’m the Father of Health Savings Accounts and Lee is the Grandfather. I hope this clears up your confusion again. Here is what TIME looks like today, most people call them Assurant Health.
“let Obamacare premiums rise to reflect the true cost of Obamacare.”
Yes, and they eventually will because they must. But remember any economist will tell you, never argue from prices.
This is all short-term stuff anyway. As medical costs continue to rise, so will insurance premiums. Either that, or government costs will rise to cover higher subsidies. Either way, taxpayers pay. The whole ACA thing is a house of cards, and it’s only a matter of time before it collapses.
Meanwhile a substantial proportion of the working population makes enough money that they don’t qualify for meaningful federal subsidies, if any at all. They will continue to rely on their employers’ subsidies. Employers will continue to provide subsidies for the same reason they started them in the first place: as an employee benefit to attract employees. So those employees won’t be buying insurance thru the exchanges. Private group insurance isn’t going away – at least not yet.
Employers’ “subsidies”? Employers do not subsidize employees’ health benefits, despite what they and benefits consultants say.
100 percent of employees’ health benefits are paid by employees, whether the book-keeping says the employer pays all or three quarters or two thirds. It is all compensation.
Yes John and with equal truth 100% of the government is paid by employees. And therefore 100% of government “subsidies” in the Exchanges are paid by employees.
I understand and concede this distinction; but I don’t think it changes the argument.
So long as employers – mostly larger employers – continue to pay out some compensation in the form of “subsidies” to employee benefits (btw, not taxable), their employees who are not eligible for tax-funded “subsidies” thru the Exchanges will continue to want those group benefits.
I think this goes a long way toward explaining why the major insurers have been spending so much capital to create the so-called private exchanges . . . which is why I think group insurance is going to be around for a while yet.
I would not say that 100 percent of government is paid by employees, in the same sense. If I join a company, I voluntarily accept the compensation, of which some is cash and some is benefits.
Government taxation is not voluntary.
My point (if I have one) is simply that productive people pay for everything, voluntarily or involuntarily.
John, this might be a bigger change than you have yet considered. I say the welfare state is a house of cards and the slightest puff will blow it away.
Also, the TRUTH is like Katrina , it blows the lies away.
You are fooling yourself John. I’m sure the local yocals, Blue Cross in the states, would want to believe you.
But, if you read through this thread carefully, you can see that group health insurance is DEAD, period. I’m just saying, it is what it is.
“But, if you read through this thread carefully, you can see that group health insurance is DEAD, period. I’m just saying, it is what it is.”
You have made your opinion very clear. So have I. We will all observe over time what really happens.
Best to you.
“So in reality I’m the Father of Health Savings Accounts”
Cheese Ron, you clearly know a lot but even I know you’re not the father of health savings accounts. With all dues respect, you seem more like the prodigal son.
I’m just saying that my agent number was attached to the first tax-free MSA/HSA, much like a birth certificate. Also, if I didn’t talk my wife into spending over 1 million dollars on tax-free HSA advertising, in a very important state, politically, Iowa, nobody would have a tax-free HSA today.
Let me take that back. The law said with tax free MSAs, any employer who deposited any amount into the tax-free MSA of an employee could continue to offer tax-free MSAs to new employees, even after the program was shut down. You can rest assured that I hammered that hard way back in the day. It was quite a selling tool.
Read that article from John Goodman and you can see quite clearly we are dealing with someone who has a screw loose. I told Dr Graham what Goodman told me in 1997, it was not good.
Yeah, prodigal son sounds about right. With all due respect of course,
John, I hear you. My wife would agree with you that we wasted way too much money on tax-free MSA/HSA advertising.
We ran the largest agency in the USA for TIME before the MSA which dropped the premiums so low that our status immediately disappeared, never to be regained. Then the ACA immediately dropped our commissions by 70% and blew our marketing model out of the water and we have pretty much shut down totally.
Now the smartest woman on the planet on MSA/HSAs is working in a call center for HSN at just above minimum wage, while Dr. John Goodman lives the good life wasting his TIME on FOX News and at Forbes HOZIN’ everybody that he knows something, which I know for a fact isn’t true.
The undisputed truth is that my beautiful wife is the VOICE of the MSA/HSA in all of our 59 1/2 second radio commercials that go back to the beginning in 1996. It’s crazy but I still have all of those commercials, we call them spots. I have always known this day was coming from the very beginning of the tax-free MSA. Now the spots may make a lot more sense to other people, including my wife someday, if you were to listen today. I wrote them, stuff like:
The MSA is the BRIGHT, WHITE, LIGHT, before the ShockWave of REFORM. I have always known REFORM was coming, it’s a math thing. When I read Goodman’s old stuff it’s worthless today. In contrast, I will play one spot from 2000 to people on the phone that hits the nail directly on the head, it goes like this:
Wake Up, Don’t be lulled by PROPAGANDA, propaganda says that employee health insurance costs less than individual insurance – NOT TRUE – some city and county health plans cost over $1,000 a month! The tax payers SUFFER – STOP WASTING OUR TAX DOLLARS. All employees should have the choice of MSAs and low cost insurance. President Bush wants MSAs for all. If you’re self-employed you can start today – Wake Up and go tax-free with an MSA at http://www.save101.com – The Storm is coming, REFORM is coming. Taxing every dollar saved for retirement is WRONG. Trickle-down saved by citizens in tax-free MSAs is RIGHT. Many families have MSA health insurance for $200 a month, then they GROW their savings in a tax-free MSA. If you’re self-employed you have a choice. If you’re self-employed you can start TODAY – go tax free with an MSA at http://www.save101.com – or call us toll free at 877-Save101 Insurance Processing Corporation – medical underwriting required – Reform has begun at Save101.com
The male voice in the spot has been dead for over 10 years. Now Miami-Dade County is spending $3,243.49/month – STOP WASTING OUR TAX DOLLARS!
Today it’s 844-Save101 – 877 sounds better with Save101.com – oh well – can’t have everything.