Forcing lower premiums is fools errand … and by the way Obamacare has not made much of anything “affordable “

You simply cannot force (negotiate) lower health insurance premiums. Sooner or later premiums must be sufficient to cover health care claims plus related administration. Pundits, regulators and politicians should know that … and they should tell you the truth … but they don’t.

While you may squeeze administrative costs, squeeze too hard and it is counterproductive; fraud, abuse and unnecessary costs increases result. Medicare is a good example of supposed low administrative costs and resulting rampant fraud often taking years to uncover.

Look at the sentences I have placed in red. There is a good bet part of that 13.2% increase is the result of rates being artificially kept low in 2016 and now they have to play catchup. Not covering all your costs in a year merely compounds the problem in subsequent periods. And by the way, it’s not necessarily overall medical costs that continue to climb, but rather the use of health care services by individuals enrolled in the health plans.

California’s Obamacare premiums will jump 13.2 percent on average next year, a sharp increase that is likely to reverberate nationwide in an election year.

The increase, announced by the Covered California exchange Tuesday, ends the state’s two-year respite from double-digit rate hikes.

The announcement comes as major insurers around the country seek even bigger rate increases for open enrollment this fall, and the presidential candidates clash over the future of President Obama’s landmark health law.

California won plaudits by negotiating 4 percent average rate increases the past two years for its 1.4 million enrollees. But that feat couldn’t be repeated for 2017, as overall medical costs continue to climb and two federal programs that help insurers with expensive claims are set to expire this year.

Health policy experts said California is rejoining the pack after outpacing much of the country during the launch of Obamacare.


Categories: Government, Healthcare

1 reply »

  1. Just think of what the rate increases would have been, but for the decision by many insurers, to abandon the public exchanges. For example, from today’s Wall Street Journal, we have reports concerning UnitedHealth Group, Inc.:

    UnitedHealth’s Profit Jumps on Health-Services Growt. Health insurer, though, books another $200 million in losses related to Affordable Care Act plans. UNH has said it would leave many markets it currently sells Affordable Care Act plans in next year.

    By ANNA WILDE MATHEWS and ANNE STEELE Updated July 19, 2016 11:43 a.m. ET

    UnitedHealth Group Inc. on Tuesday posted strong earnings for its latest quarter as revenue continued to surge in its pharmacy-services business. The company, which is the biggest U.S. health insurer, also gave a slightly rosier full-year outlook.

    But amid the positive news, there was one abiding dark spot: Affordable Care Act plans, which UnitedHealth will almost completely stop selling next year. The insurer booked another $200 million in full-year ACA-plan losses in the second quarter, bringing its projected total loss for the year to about $850 million. About $245 million of that was included in 2015 results and $605 million this year.

    ACA-plan enrollments were larger than expected, including more limited attrition. Also, costs mounted because enrollees were even sicker than projected, with more chronic conditions than last year, including AIDS, hepatitis C, diabetes and chronic obstructive pulmonary disease.


    Just think what California’s rate increases would have been had UnitedHealth Group remained in the public exchanges … and attempted to implement rates that not only covered its expected 2017 costs, but also attempted to recover its 2016 losses!


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