Insurance companies get insurance too
Well, well, well. Another case of needing to pass the bill to find out what nuggets were hidden in its deep recesses:
If an exchange plan’s performance varies in either direction by more than 3 percent, it either collects a subsidy from federal taxpayers via the Department of Health and Human Services to recoup part (50 to 80 percent) of further losses, or it has to kick back a similar share of the excess profit.
Ideally, the money kicked back by profitable health plans can cover the subsidies for plans that lose. But unlike with the other two R’s, there is no legal requirement that the numbers balance or limit on what can be paid.
So imagine that we do enter a “death spiral” situation in which a large number of exchange health plans lose big and very few turn sizable profits…taxpayers potentially face a multi-billion dollar bailout of health insurers for losses outside the corridor.
Insurers are therefore safe. Politicians who back Obamacare may not be. If insurers’ costs do rise to the level that they require a taxpayer bailout, they will also be announcing massive hikes to their insurance premiums for calendar 2015.
This news may not get the widespread publicity it deserves unless the death spiral begins. But if it does, watch out.
It’s understandable that insurance companies wouldn’t want to go into this untried, untested experiment without this sort of assurance that they wouldn’t lose their shirts. Obama had to give it to them because he needed them aboard once he knew that neither single payer nor a public option could pass. And so this unstable alliance was born.
The Leftist alliance is full of stories like this.
Nation of Islam and FGM stands shoulder to shoulder with the ACLU, CAIR, feminism, pro abortion profits, and homosexual activists.
When you look at their ideology for their self organized hierarchies, most of it is mutually incompatible.
But that’s what makes the LEftist alliance different. Evil could never get its foot past a certain point because cooperation between two kinds evil wasn’t feasible. Until now.
I was thinking this may not be a terrible thing, aside from the ridiculous Ayn Rand novel cliché aspects of it. It means we haven’t totally burned the boats…yet. If a number of insurance companies went bankrupt, new ones could restart I suppose, but it would severely disrupt the insurance industry and not for the better. I think it will eventually turn into an oligopoly of utility-like companies controlled by the Federal government, but it’s not quite there yet.
The question is: if the insurance companies go bankrupt, will the administration bail them out?
If they want single-payer, I’d imagine the answer will be “no.”
…which is what you get for trusting a socialist.
These are predictable consequences of “community rating” and adverse selection. The devil is NOT in the details, it is in the concept.
Now we will have a bunch of both sides of the Ruling Class running around, waving their arms, to fix the unfixable. The result will be ugly and it will be bad for us all, because the premises are wrong.
Most people have no idea how the insurance companies operate… i have yet to meet a person who does other than my coworkers when i worked generating rates and rules for on demand printing for ISO (insurance services offices) – when they had trade center address…
ISO used to generate rates, but then that was pushed out and they went from non profit monopoly, to a profit company, and instead of generating rates, they appied rules given by companies to then give the rates back.
that is. ISO aggregates all the inforamtion and then generates actuarial info.. that info is designed to tell you the break even point… that is, if you charge X you will break even. the rules are amounts to be applied that then compute the overhead and profit that is approved by the state and federal government.
in the game you laid out neo
they can compute a good answer
but here is the rub
why should they? just error very wide and get MORE than if your accurate… do you think that the idjits are as smart as people like me who helped do actuarial stuff, then went to wall street, and now am in research computing, and will able to compute what these numbers should be?
with what information? 🙂
the only place its agregated is in these beureaus and thats only because of mcgarren furgussen and later laws… (stopped following it when i stopped working for it).
ultimately, its a good move.
as i am research computing, for a medical college and hospital….
funny, my friends tell me i am lucky
i said lucky? nope…
just causei can read the writing on the wall easy
and others cant
doesnt mean choices made years ago
were not choices made
where i am allowed to act
i win
where i am not, i watch them lose…
anyway
back to the game…
this is who is in charge of everyones longevity, fertility, and outcomes
How bad is it?
We’re in a lot of trouble.
The President sees government — and I think it’s because of his lack of experience and maybe community organizing in the past — as this shiny new toy.
For all the disagreements I had with Clinton, Carter and Bush there were always limits… there was that line you just didn’t cross… We cross it seemingly every day. We’re lost in the scandals…
The Jamie Dimon shakedown at Chase… the HHS scandal.. Kathleen Sebelius shaking down the health care industry for money… the IRS… it’s to the point where these scandals in and of themselves would be huge back-breaking scandals [but] are just lost in the scandal fog of this administration…
It’s worse than people know… and I’m not trying to scare you either. – Bodyguard
[any bets as to how this one will get quieted]
Related, regarding Obama’s friends getting breaks and everyone else getting the shaft. Quoting Ace from AOS HQ:
No surprise. The main beneficiary of the ACA is the health insurance industry. Just check out the stock performance of UNH. Up 200% while the the S&P is up 100% over 5 years.
And we have Nebraska’s Ben Nelson to thank for this disaster. Ben’s background is insurance and most of his campaign money was from it.
OBAMAcare is going to be the most despised government program in American history.
But they’ll just “fix it” in committee, the Harlem Globetrotters and the Washington Generals will put on another fake game to fool the chumps.
It is, however, very important to keep calling it OBAMAcare, not “the ACA.” They’re really hoping that we switch to the latter, you know, because the Left’s tactics are all about “branding.”
So if insurance companies colluded independently to fix pricing, they’d be prosecuted by the federal government, but now the government has made it law encouraging :
1. Collusion to avoid mutual destruction or
2. Widespread corruption- failure and incompetence are rewarded with taxpayer cash, leading to a death spiral, where the well run companies see no benefit in doing well, and trend toward dependency or,
3. Ever increasing prices in the absence of competition.
I’m no economist, but this list is pretty easy to expand upon.
Obama has outsourced socialism to private companies – that’s maybe more expensive than direct socialism. At least with government stooges there’s only common money wasting. Hand over government subsidies to a few clever and unscrupulous businessmen, and you’re talking about some guys who can burn through money in a hurry. This law seems to invite incompetence and mismanagement in order to assure fairness and low costs.
IF low cost was really the intent, I don’t see how they could have done anything dumber than put this perk into the law.
IF on the other hand it was designed to drive up costs and collapse the whole system, it’s a lock to succeed
southpaw Says:
November 6th, 2013 at 7:43 pm
The correct term for that is fascism. Not “crony capitalism”, which is a euphemism, but fascism.
According to Jonah Goldberg’s Liberal Fascism, it was invented by Mussolini as something like a “new, improved” version of socialism. It gets the big corporations and the super-rich onboard with the State’s agenda, and squeezes out small businesses and the middle class who resist cooperating.
When it comes to the collusion of care providers, the insurance providers, and government this short and true tells the tale: http://market-ticker.org/akcs-www?post=225723
Rickl,
Mussolini called it Corporatism in preference to to the name socialism. Apparently he arrived at the concept in arguments with Lenin who preferred that the state take over businesses directly. The National Socialists of Germany copied Mussolini’s model. The large corporations acted as partners of the state and small businesses were smothered in a blizzard of regulations.
Good link, parker.
Deninger doesn’t tell why the costs have gone up so much and why there is no transparency in costs. It’s cost shifting. All brought about by the Emergency Medical Treatment and Active Labor Act (EMTALA) – an Act of Congress passed in 1986 as part of the Consolidated Omnibus Budget Reconciliation Act … That was when medical costs began to go up and up and up. No one will talk about it though, because, as Deninger points out, people are making big money and none of the usual suspects want the gravy train to end.
It’s possible that the medical/pharma/health insurance complex may suffer if people decide, as Deninger indicates he will, to go Galt on Obamacare. Could very well lead to a death spiral as providers (medical and insurance) try to find people who will buy their products. Under EMTALA the ERs cannot turn you away. It may become the preferred medical provider for many millions of formerly insured but now uninsured citizens who decide to forgo Obamacare.
“The only thing I need to know about Obamacare is that Congress exempted itself and the White House.”
We have to repeat that over and over. Every time one of my lefty friends talks about O-care, I say that. Shuts them right up. Even low information voters and tranzis are beginning to understand. Keep on message!
Funny thing Obama can not only survive but prosper because of the ACA disaster. All he has to do is announce that the problems with the program mandate a year long delay and the ninnies who voted for the bum will laud his humility and his insightful managerial abilities. His poll numbers will certainly rebound, not that they have significantly fallen among likely voters (see Rasmussen). This will also give him a year to spin any failures as somebodies else’s.
In short, logic won’t take out a person’s head what logic did not put there. Obama was elected because people BELIEVED in him. Belief does require rationality.
The question is whether his pathological vanity will allow this level contriteness?
Bob From Virginia, 11:02 pm — ‘Zackly.
“excess profit”
Not a term an American would use.
Pure Marxism.
Isn’t it ironic that many people believed Bush was the starter of American fascism? Including those “Libertarian” fools who were against the Iraq war.
So much of this country is no more than the zombie cannonfodder of the LA.
If you cannot reach the puppet masters because all of the tools stand in your way… then get rid of the tools first.
The proper name for what is happening is fascism. That is correct.
Now we have the same dilemma the Italians and the Germans had.
I never dreamed it could happen in America. But it has. Now what do we do?
Now what do we do?
Show that it doesn’t work, and will make voters’ lives worse. At this point, that shouldn’t be hard as the number of losers under Obamacare keep multiplying, while the winners are conspicuously absent.
Also, keep hitting the “Obama lied” meme (which is absolutely true), as it undermines his credibility even with his own base.
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