Tuesday, May 26, 2015

Insurance Companies Are Still Jackasses

As Kevin Drum reminds us, there's a lot of screaming, crying, and clickbait in FOXtown about health insurance companies saying they need 2016 premium rate increases due to Obamacare regulations of 50% or more.  What insurance companies want and what state insurance regulators will approve, well, those are two drastically different things.

In any case, we've all seen this movie before. Republicans will latch onto it as evidence of how Obamacare is destroying American health care and it will enjoy a nice little run for them. Then, a few months from now, the real rate increases—the ones approved by state and federal authorities—will begin to trickle out. They'll mostly be in single digits, with a few in the low teens. The average for the entire country will end up being something like 4-8 percent. 
So don't panic. Sure, it's possible that the Obamacare shit has finally hit the fan, but probably not. Check back in October before you worry too much about stories like this.

McMegan gets out her calculator (seemingly unencumbered by gastritis this week) and McDisagrees.

Eyeing the Journal's list, the most obvious pattern is that states are converging on a price somewhere well north of $300 a month for a 40-year-old nonsmoker seeking a Silver plan; the states with the biggest rate hikes all had premiums under $250, and are asking to be allowed to go near or over $300, while the states that asked for low increases were already over $300, and in some cases well over. (Vermont is at $430 -- and asking to go to $476! "Only" an 8.4 percent increase, but wow.) It seems as if states where insurers initially underpriced are now trying to move toward a natural price somewhere between $3,600 and $5,000 a year for a single nonsmoker. If that's the price of providing basic benefits, regulators cannot command it away by fiat; the best they can do is to force insurers out of the market
I assume that these large insurers are willing to incur some losses in the market for exchange policies in order to stay on the good side of their state regulators and HHS, because overall, those policies are not a large part of their business. But getting those rates down to something more on the order of 10 percent would require some pretty big losses. How long, exactly, will they be willing to carry a product that loses that kind of money?

Here's a concept.  If they can't provide health insurance plans that meet Obamacare requirements, and there are plenty of insurers who can, then maybe they need to be forced out of the market.

Remember, health insurance companies make big bucks on A) providing services that aren't used and the premiums that go with them, and B) denying claims.  I don't have a whole lot of sympathy for health insurance companies to begin with.  Part of the purpose of Obamacare was to do exactly that: force the bad players out of the market by limiting overhead costs.

We're seeing cost-cutting in health care across the board now.  The major, major problem is that we have the most expansive health care in the world, and finally we're starting to see some progress on the cost front, thanks to Obamacare.

So ideally, it'll cost the insurance companies less to provide coverage for care, so maybe they won't all go out of business.

Weird how that works.

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