Health Insurance Premiums Going Up

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pennview
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Health Insurance Premiums Going Up

Post by pennview »

There's an article in today's Wall Street Journal that "health insurers are privately warning brokers that premiums for many individuals and small businesses could increase sharply next year because of the health-care overhaul law, with the nation’s biggest firm projecting that rates could more than double for some consumers buying their own plans."

A similar story by the Washington Post a week ago says "some Americans could see their insurance bills double next year as the health care overhaul law expands coverage to millions of people.

The nation’s big health insurers say they expect premiums — or the cost for insurance coverage — to rise from 20 to 100 percent for millions of people due to changes that will occur when key provisions of the Affordable Care Act roll out in January 2014."

It seems the so-called "affordable care act" isn't going to be so affordable!
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dusty
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Post by dusty »

pennview wrote:There's an article in today's Wall Street Journal that "health insurers are privately warning brokers that premiums for many individuals and small businesses could increase sharply next year because of the health-care overhaul law, with the nation&#8217]The nation’s big health insurers say they expect premiums — or the cost for insurance coverage — to rise from 20 to 100 percent[/B] for millions of people due to changes that will occur when key provisions of the Affordable Care Act roll out in January 2014."

It seems the so-called "affordable care act" isn't going to be so affordable!

We really are not surprised are we?

The insurers expect premiums to rise because that is part of their plan.

I expect the cost of food and fuel will go up too. Then there is the cost of education. Free preschool the Administration says. Where do the teachers come from? Have they not learned - "There is nothing free in this life". Funny thing is these increases hardly impact the CPI.
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pennview
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Post by pennview »

It is convenient for the Government to create statistics that make things look better than they really are. They ignore things like food and fuel when they talk about inflation, and they don't count folks who supposedly have left the work force and are no longer looking for work when they compute the unemployment figures.
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pennview
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Post by pennview »

Dusty, you are right regarding no free lunches. And, it is for this reason specifically that I don't think it's part of a "plan" by insurance companies to raise premiums, but rather a simple cause and effect situation. When Government tells insurance companies they must provide "free" mammograms or colonoscopies, or that children up to age 26 must be covered on their parent's insurance plan, these companies have no recourse but to raise premiums. Moreover, when the Government further reduces payments to health care providers, they're going to ration health care or stop providing it entirely.
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fredsheldon
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Post by fredsheldon »

Could you be more specific. Some, Many and Could makes good press but doesn't really identify exactly what, who and how much. I prefer to wait and see what really happens before I get too excited :)
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mrhart
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Post by mrhart »

8 years ago when I took this job, health care insurance was costing me $80 every two weeks for med, dental and vision on a family plan. Then it doubled. The new cost was $160 every two weeks. Then the next year it doubled again. they wanted over $300 every two weeks. I stepped my coverage down to the lower plan and avoided the increase, however sacrifiing coverage. The the next year it doubled again! Now I could not avoid $301.50 every two weeks for the lowest option plan. This is where I'm at today.
The shock of another increase won't be there, but the price tag will be.

Anyone know of any options to keep a family in heath coverage (decent) without going through their employer?
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pennview
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Post by pennview »

If you want to read the Wall Street Journal article, you'll have to buy today's issue or subscribe to their on-line service.

For last week's article by the Washington Post, you can go here -- http://articles.washingtonpost.com/2013 ... s-premiums

To not believe that health care premiums are and will continue to increase because of the Affordable Care Act requires a willing suspension of disbelief!
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dusty
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Post by dusty »

fredsheldon wrote:Could you be more specific. Some, Many and Could makes good press but doesn't really identify exactly what, who and how much. I prefer to wait and see what really happens before I get too excited :)
It is and has been those who just do not believe "all of this negative talk" that are making it possible for this Administration to continue.

These same people do not believe that the country has a "spending problem".

They seem to believe the the trillion dollar annual debt increase is not real. A 20 trillion dollar national debt by the end of this President's term is a figment of the Republican's imagination.
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db5
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Post by db5 »

fredsheldon wrote:Could you be more specific. Some, Many and Could makes good press but doesn't really identify exactly what, who and how much. I prefer to wait and see what really happens before I get too excited :)
I can give you a specific example that is related: I take a specialty medication that is filled monthly. In January 2012 the co-pay for that medication was $265. In January 2013 it was $750; in February it was $910. There can be two things that account for this: The pharmaceutical companies are jacking up the prices to make a killing in the event there are some negotiated prices as exist in Canada or the insurance companies are already sticking it to the consumer.
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Post by frank81 »

When I worked in insurance, the entity I was in charge of analyzing held most of our employer health business. So I will give you guys a basic overview of how that works, and how its priced, so we can all understand its not a conspiracy by insurance companies.

Insurance works by pooling a group of people together.

The Cost of Insurance (COI) is the total amount spent on benefits by the entire pool. Think of this as material costs in manufacturing. Every aspect of your coverage is equivalent to a part in the bill of materials if you were building widgets. So if your employer covers something the business down the road doesn't, that adds to the BoM, increasing the expected COI.

On top of the COI, they add "Loading" for the costs to administer the plan. Think of it as labor and overhead in manufacturing.

Then they price your premium to achieve x% margin, the same as selling widgets out of a factory.

The margin is usually below 20%, but they will lower or raise rates for the pool of participants depending on "experience" which basically says your group has been consistently spending more or less than the anticipated COI.

Premiums are always priced this way, cost plus, because they don't really care too much about profiting from the insurance. Most of their profit is Net Investment Income (NII), their real goal is positive cash flow so they can invest your premiums and earn a fraction of a percent before paying out benefits.

So with all that said, your premiums are going up because health care reform has forced them to cover people with much higher than average COI's, so the pool you are in is spending a whole lot more than before. Premiums HAVE to go up, otherwise they would have to split out these new customers and charge them more than they can afford.

And now you see why Republicans wanted to reform healthcare by attacking the cost structure, rather than forcing more people into the system to get a small discount on premiums due to economies of scale. Bascially the only area savings could come from is loading, which is maybe 3 or 4% of your premium so not much and the COI is balooning by a whole lot more than that so their planned savings are in reality cost increases. If you lower healthcare costs across the board (and there is a TON of waste and profiteering to be cut), you lower COI's. If you lower COI's, you lower premiums, which means more people can afford health insurance and coverage expands.
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