Does Obamacare Limit Profits for Health Insurance Companies in Your State?

Does Obamacare Limit Profits for Health Insurance Companies in Your State?

79
SHARE

One of the provisions in the Patient Protection and Affordable Care Act (a.k.a ACA, a.k.a. Health Reform, a.k.a. Obamacare) is that it limits the profits of health insurance companies. The ACA imposes a minimum medical loss ratio (MLR) on all insurers. The MLR is the amount of money spent on covered person medical care divided by the total revenue received through premiums. There is some debate of what constitutes ‘medical care’ (e.g., do investments in electronic health records count as medical care?), but insurer profits certainly are non-medical.

The ACA requires health insurers in the individual and small group market to spend 80 percent of their premiums (after subtracting taxes and regulatory fees) on medical costs. The corresponding figure for large groups is 85 percent. According to a recent Kaiser tracking poll, 60 percent of the public views the MLR concept favorably, although only 38 percent was aware that the provision is in the ACA. Insurance brokers may be getting squeezed for insurers to meet this amount.

Even though the MLR is a national law, it may not apply in your state.
Why? Because many States are petitioning for a waiver. HHS is currently reviewing applications from six states: Florida, Kansas, Michigan, Texas, Oklahoma and North Carolina. According to The National Association of State Budget Officers, HHS has granted waivers to seven states: Maine, New Hampshire, Kentucky, Nevada, Iowa, Georgia and Wisconsin. The department has denied them to Delaware and North Dakota.

Why did these States receive waivers? For a variety of reasons, but one of the reasons is due to the fact that some states have a less competitive medical market. Maine, for instance, requested a MLR of 65%. The reason was that State only has two large commercial insurers, Anthem Blue Cross Blue Shield (with 49% of the market) and MEGA Life and Health Insurance Company (with 33% of the market). A public-private partnership, DirigoChoice, makes up most of the rest of the market. Three HMO’s have less than 1% of the market combined between them. To avoid the case where a large insurer would leave the market due to minimum MLR requirements and create a near monopoly, HHS decided to approve Maine’s request.

Notes:

Section 2718 of the Public Health Services Act implements the minimum medical loss ratio requirement.
The National Association of State Budget Officers

Jason Shafrin is a Ph.D. Economist and Research Associate at Acumen, LLC. His research interests include all issues related to healthcare policy and economics, the health insurance market, and Medicare research. Shafrin is also founder of the blog Healthcare Economist, where this post was originally found.

Leave a Reply

79 Comments on "Does Obamacare Limit Profits for Health Insurance Companies in Your State?"


Guest
Mar 27, 2015

I don’t think there should be a specific limit to profits as long as claims are handled correctly and people get the treatment they are entitled to.

Guest
Sep 22, 2014

If some one wants to be updated with newest technologies therefore
he must be go to see this web site and be up to date everyday.

Guest
disabooo
Jun 21, 2013

I appreciate the time that the welfare bashing group took to make the comments. I respect your comments and respectfully agree with some of it.

However, what I’m asking is – who can respond to my questions? (A real, accountable person).

Guest
MirandaRiv
Feb 21, 2012

About freaking time laws like this exist. From what I understand the law states, my insurance company now has to spend between 65 and 85% (varies between states and size of the company) on health care for me. Which is great because then maybe I will actually get what I paid for, health care. For the past 2 years I have had insurance through my employer. I had my pay docked $1.15 a hour and I was paying $120 a month out of my checks. Work 40 hours a week that works about to be about $300 a month. So over those 2 years I paid about $7000 for health insurance. I went to the doctor twice. Th first time they paid the office visit and I paid the lab fees ($75). The second visit they didn’t pay a penny I paid for the whole visit $125. So as I see it the insurance company made a profit of $6,775. I wonder where that went? A new office building, bonuses for CEO’s?
This is only one clause of the the PPACA. Thank goodness for the one that outlaws “pre-consisting condition”. I can not imagine paying for insurance for 5 to 10 years and then being told that they won’t cover me cause of some bogus rule.

Guest
Nate Ogden
Feb 21, 2012

your problems are much deeper then insurance.

Majority of that $7000 went to pay for people who had $1,000,000 claims. That is why they call it insurance, its not meant to pay little claims you know are going to happen, its meant to pay large bills you couldn’t afford.

The second claim was probably not paid due to something you did wrong, safe bet after reading your post.

Pre-ex never went back 5-10 years. it use to apply for 12 months. Pre-ex really only existed in the individual market where people would wait until they were sick then buy insurance. You probably don’t see a problem with that though do you?

You also mentioned you paid $1.15 an hour towards benefits, that sounds like an H&W contribution to me. Care to share with us if your covered by a Union health plan? If so then there is a 99% chance that your $6,775 profit went to the Union and bought your union president and higher ups a new house and office.

Guest
Barry Carol
Feb 6, 2012

In talking about public housing decades ago, I once heard a Congressman, whose name I’ve long since forgotten, comment that you can’t take the people out of the slums until you take the slums out of the people. Unless and until you do that, public housing is likely to fail as a strategy to improve the living conditions of the poor. Personal responsibility is important and shouldn’t be underestimated.

While liberals like to claim the moral high ground around compassion for the less fortunate, fairness and social justice, they never squarely face how much their ideas will cost to implement and who is supposed to pay for them. Then, when they don’t work, they never admit failure. They think their ideas will ultimately work if we just throw more money at them.

Court ordered massive incremental spending for K-12 education in 31 poor NJ districts starting in the late 1970’s drove New Jersey’s state and local tax burden to the highest in the country and did absolutely nothing to close the achievement gap between kids from poor vs. middle class and wealthy families either within the state or nationally. Liberals might have more credibility if they would admit failure once in awhile, stop throwing taxpayer money down a rat hole and try something different.

Guest
steve
Feb 6, 2012

May I suggest you read the actual stats on education over the last 35 years?

http://nces.ed.gov/pubs2011/2011012.pdf

While our national numbers are improving, we could do better. I would agree that we have been guilty of throwing money at problems. We should study what has been successful elsewhere and try to adopt/adapt what we can. I think the literature suggests we need more emphasis on early education. Without that, money spent later is not as well spent.

Steve

Guest
AC Points
Feb 6, 2012

“While employees premiums and OOP might increase seldom does their % of total cost.”

Right. Our company insurance costs have continued to increase. Just not as much as if we had stayed with the more comprehensive plans. Everyone gets to share the pain.

Guest
AC Points
Feb 6, 2012

I guess one thing to be clear on is whether you’re talking about profit per policy or just overall profit.

I can’t even speak for my state, but I can relay experience with our individual carrier. This is a small group plan purchased through an industry organization. The premium increase we got for 2011 was at the high end of the range of increases percentage wise we have received in the 8 years of our company. (Note this was not all with the same carrier.)

Per our carrier’s 2012 rate request filings with the state, their 2011 profits were much higher than estimated when the 2011 rates were established. The premium increase we received for 2012 was the lowest percentage wise by far that we have ever received.

Two years and one carrier are hardly enough to make any definitive judgements, but so far our vendors profits seem to be up, and the two year increase for us is lower percentage wise than the years prior to ACA.

One factor that is in the middle of all of this is something we were forced to start doing a couple years before ACA, and that is shift more of the expense to the employee in terms of higher deductibles and higher out of pocket. Many providers have talked about the lower than expected claims that have contributed to higher profits in 2011, and I think that a lot of that has to do with companies shifting more of the cost to the employee.

Guest
Nate Ogden
Feb 6, 2012

“we were forced to start doing a couple years before ACA, and that is shift more of the expense to the employee in terms of higher deductibles and higher out of pocket.”

While employees premiums and OOP might increase seldom does their % of total cost. Historically employees contribution to total cost has continued to decline, one of the reasons wages have stayed flat.

Guest
Barry Carol
Feb 6, 2012

“In the medium and long term term (2015 onward) it has no impact on margins, because competitive pressures keep the industry about where it is today, even though the MLR/AER ratio keeps getting better.”

Jonathan H. – I agree. This is exactly why I said I thought the minimum MLR rule is a dumb idea. It will have no long term impact to speak of on the industry’s profitability. In the meantime, there will be compliance costs, the need to calculate rebates, if any, and mail checks and the state regulators will have to spend time, effort, and money to ensure that insurers are in compliance with a rule that wasn’t necessary in the first place.

Guest
disaboo
Feb 6, 2012

Sorry, I don’t care about more profits for the health insurance. Is there somewhere that I can ask for more legal information on how we (the 99%) can get more information on the horrendous poverty trend that has been caused by the insurance company?

Guest
Nate Ogden
Feb 6, 2012

the poverty trend is caused by stupidty of the 30%, your not part of the 99%. The 30% that have no skills, can barely read, and aren’t worth $3.00 per hour let alone $7.50, or the local minimum wage, are mad becuase they aren’t given handouts at the level they feel they should be. Instead of getting some skills and earning their money; they want to camp out, do drugs, and rape runaways. As long as this 30% fails to contribute to society in any meaningful way their poverty will continue. When the 70% gets feed up with your parasitic living the handouts your afforded now will be discontinued and your pverty made even worse.

Keep blaming insurance companies though and see how well that fixes your poverty.

Guest
steve
Feb 6, 2012

30% of people want to do drugs and rape people? Do you have a citation for this? Personal experience?

Steve

Guest
Feb 6, 2012

Complete mischaracterization. A healthy person doesn’t want to do anything but feel loved and valuable just like anybody else. If you disenfranchise them, deprive them, thus making their life a living hell by not providing the basics of life, education and role models, what do you think their best options are?

It ends up involving escape through entertainment, alcohol, drugs, and attempting to validate some small quantity of power and control in the world through violence.

If you find that behavior undesirable, the only destined to success strategy is to give them better things to do. Its not that they don’t want better, Its a combination of simply not knowing how to take advantage of the opportunity.

The ‘handout’ systems are designed to handle the basics of life, health, and some education, but fail to provide good health, education and role models that enable people to fulfill their potential opportunities. Its flawed, yes. But its going in the right direction. Sick people don’t succeed.

Guest
Nate Ogden
Feb 6, 2012

“If you find that behavior undesirable, the only destined to success strategy is to give them better things to do.”

If you spoil a child you end up with a spoiled child not a well behaved socially engaged and productive member of society. Its not the job of society to entertain and engage individuals. That has never worked in the history of mankind.

Guest
Feb 6, 2012

“What country do you live in? Your obviously not here in the US.”

I live in the USA. Your unwillingness to see what is around you does not make it go away.

“We don’t have unregulated slums in America. ”

Then you’re doing something, aren’t you, even if all you’re doing is giving people money. Don’t you think we should KEEP DOING SOMETHING? Why are you advocating doing nothing?

“the worst slums in the country are public run housing. ”

Cornering the market on slums doesn’t make the problem go away. Paying capital holders to rent their property to people is doing something about the problem, by handing money to people. Which you *seem* to be advocating that should be stopped.

” over 50% of those insured are through self funded plans that don’t have an insurance carrier making 3% like you say. ”

Insurance carrier nothing. How about the health care institutions themselves?

“Another 60 million or so are covered by Medicare and Medicaid, why do their cost go up if carriers 3% margin is the issue?”

Because if more revenue goes through the coporate health care system, more people profit more money from it. Anything they can do, any policy they can promote, anything action they can take that will cause MORE people to see MORE health care expenses is going to improve their bottom line. Profit based health care systems – not only the insurers, but all the rest of it too – are at fault.

“so what exactly is the individual’s motive for getting sick?”

The individual is not the empowered one in this situation, no motivation is required on their part. Its the corporation that was able to neglect people instead of helping them be healthy, and profited from the action of doing so that has the power to make people sick. We make trade-offs on liberty all the time – can I be sick if I want to? Can I not go to the doctor if I don’t want to? Can I incur massive costs by neglecting my health care? A proactive health care system would put a gateway on participation – our health care is cheap, but you absolutely must participate in our preventative consultations with experts. If you don’t, you’re going to cause our costs to rise out of control. But they don’t do that – not because they can’t – but because its more profitable to them if they don’t. People would apparently rather be irresponsibley stupid. If they can offload their risk onto an insurer, at least.

” why do people allow corporations to infect them with these illnesses and cancers just so they could treat them?”

Its nothing so direct as that. Its more like ‘do nothing and they’ll get sick’. Which is pretty much a foregone conclusion. The problem is that its not in the corporations direct financial interest to make sure that people do NOT get sick. They get less money when people don’t get sick.

” If an insurer came to me and said I’m going to force you to eat all this food and get really fat so you get diabetes, then not allow you to exercise, and on top of that we are going to force you to smoke and sit outside so you get lung and skin cancer I would say no. Why is it people let corporations make them ill, that just defies logic.”

How can a insurer sit by in good conscious while I am on their plan and let me get fat and get diabetes with no counseling on healthy eating, allow me to smoke without discussing alternative means of stress relief, let me get by without exercising without discussing the long term ramifications of such a lifestyle? That defies logic. It is THEIR MONEY at that point. They get $$$ so that MY health care is taken care of. If I don’t get sick, if I live healthy, they don’t have to treat me. They get to keep the money. Why is it that corporations don’t proactively take care of their insureds? Because they get more money when they’re sick. More now, and more later.

“Resources are finite”

I said do what we CAN do, and What you CAN do is restricted by resources, don’t be assinine.

“Its in society’s interest for people to be educated, ”
“Very true, but not at liberal indoctrination camps we call colleges. ”

At least we agree on something, I’m not sure what the hyperbole about knitting is though.

“If ten thousand people would have died if you did nothing, and eight thousand”
If 10 people would have died if you did nothing and tens of thousands died because of public housing which was better?

Obviously the nothing, your point? You don’t know when you make the initial decision which is more likely, you may not even have enough information to tell that anybody is going to die as a result at all – it may look from the front like six of one and half dozen of another.

“But you can’t know, any more than I can, whether it would be better or worse had you not acted.”
Sure I can, its called education and intelligence.

No, you can’t, the sheer unknowability of large and chaotic situations does not allow any amount of education and intelligence to do more than make a guess, and even then only on general statistical type terms, not specific individual terms, and even then only on matters for which we have information and a scientific(ish) statistical model to work from.

“I can take known facts and extrapolate probabilities from that.”

That doesn’t make your extrapolations valid. Its always, if this, and if that, and we think there is a good chance that… and it requires you HAVE data to extrapolate with.

There are more theories about the alternative futures of doing something than doing nothing… there a a million things you can do and a million possible outcomes resulting, but only one of them is the result of doing nothing. I think most of those million things is better than doing nothing. Sheer random attempts will generally improve things.

” I know for a fact PPACA increased insurance premiums more than if it wasn’t passed. ”

That would only be a negative if the premiums were not artificially low due to not covering things that moral imperative indicates they must. Otherwise its a … so what?

“I know not allowing drilling in the US is more harmful to the environment then allowing it.”

Directly speaking, that is entirely nonsense. If you’re trying to imply that the probable human action consequences of not drilling is more harmful to the environment, you’ve left the realm of determinism entirely, nobody knows anything about that.

” I know taking thousands of poor people, many not working, and stuffing them in a high rise will lead to very bad things.”

But apparently doing nothing is not the right answer either – if we did nothing, we’d leave these thousands of poor people, many not working, and relegate them to an unregulated slum. And we’re not doing that.

“Some decisions are clearing bad, smart people call them dumb decisions, liberals call them policy.”

Some people think they skip their moral imperative to love their neighbors by virtue of doing nothing.

Guest
Nate Ogden
Feb 6, 2012

What country do you live in? Your obviously not here in the US.

“Is an unregulated slum better than a housing project? The former is ‘doing nothing’, the latter is doing something. At least the latter is built by engineers and is more or less sanitary.”

We don’t have unregulated slums in America. Our poor live better then the middle class in most of the rest of the world. Taking an apartment building and calling it section 8 doesn’t mean its more sanitary then before HUD bought it. The living conditions of the poor were better prior to moving into the worse housing projects. You are 100% wrong in your argument, we’ll chalk this up to you not being American and thus having no idea what you are talking about. Housing projects sanitary, that’s a laugher.

The last seven families yesterday vacated the Lexington Terrace high-rise building that symbolized the problems of the Baltimore City Housing Authority.

“I’m glad to get out,” said Betty Flowers as she left 734 W. Fayette St. in West Baltimore where she lived for 20 years.

“I raised one child and one grandchild in there, but the pipes leaked water into my bedroom and it was unsanitary,” Ms. Flowers recalled. “At times, dirty, sudsy water from other places came up through the sink.”

When it opened in November 1962, Robert Taylor Homes was the world’s largest public housing project. The complex extended more than two miles along State Street on Chicago’s South Side and comprised 28 buildings, 16 stories each, containing almost 4,300 apartments in all. By 1965 it was home to 27,000 souls, 20,000 of them children and young people, and it already had gained a local reputation as a dangerous and forbidding place. Twenty years later, Robert Taylor
Homes, along with another Chicago high-rise project, Cabrini-Green, had become a national symbol of urban squalor.

In the beginning, officials in the Chicago Housing Authority (CHA), as well as the tenants, had high hopes that Robert Taylor Homes would succeed. Soon, however, the CHA staff was overwhelmed by the challenge of maintaining an enormous but poorly planned physical plant. The elevators, for example, broke down constantly. When the elevators stopped between floors, passengers were forced to climb out, and once a child fell down the elevator shaft. In another incident, three children died when a broken elevator prevented firemen from reaching the 14th floor in time.

Changes in the tenant population, Venkatesh shows, contributed to the
deterioration of life at the project. Early on, about half the households
received some form of assistance; but two-thirds of the households were
two-parent families, and CHA staff and tenants worked together to screen prospective tenants. By 1970 the admission committees no longer met, and the CHA was accepting more of the unemployed and more female-headed families. Up to 70 percent of the tenants were on welfare, and half of the school-age youth had dropped out. Men lived at Robert Taylor Homes, but usually surreptitiously to avoid welfare and CHA officials.

Hawaii is also notoriously bad. Not sure about the country you live in but here in the US the worst slums in the country are public run housing.

“Costs of health care keep going up because it’s in the interests of the corporations for it to go up. If they make 3% profit, why not make 3% profit on 5 billion instead of 1 billion?”

Again not sure what country you live in but in America over 50% of those insured are through self funded plans that don’t have an insurance carrier making 3% like you say. Another 60 million or so are covered by Medicare and Medicaid, why do their cost go up if carriers 3% margin is the issue?

Maybe if you lived in the US your arguments would be better, I can see how it would be hard debating these issues not living here and seeing how any of these things really work.

“It seems blisteringly obvious to me why the cost of health care keeps rising, and its self interest of the health care industry. They get more money when people are sick.”

Blistering something…..so what exactly is the individual’s motive for getting sick? In your “scenario” why do people allow corporations to infect them with these illnesses and cancers just so they could treat them? If an insurer came to me and said I’m going to force you to eat all this food and get really fat so you get diabetes, then not allow you to exercise, and on top of that we are going to force you to smoke and sit outside so you get lung and skin cancer I would say no. Why is it people let corporations make them ill, that just defies logic.

“we must do everything we can to help them become ready – anything less is irresponsible.”

They don’t teach economics in your country do they? Resources are finite, if you did everything for everyone you would be broke in a month or two. Don’t get me wrong, its a great bumper sticker, or rickshaw in your country?, but it doesn’t exist. Ride Unicorns instead of Cars would be great way to reduce oil consumption but its not going to happen. Everything for Everyone is just as big of a waste of time.

“Its in society’s interest for people to be educated, we’ll educate people. Even if they do not get a job, they’ll be more able to join the public discourse, spreading their knowledge around, be a part of watch dogging for corruption in their communities, and generally improve everything.”

Very true, but not at liberal indoctrination camps we call colleges. Teaching every person in America to knit at a cost of 10 billion is not beneficial.

“If ten thousand people would have died if you did nothing, and eight thousand”

If 10 people would have died if you did nothing and tens of thousands died because of public housing which was better?

“But you can’t know, any more than I can, whether it would be better or worse had you not acted.”

Sure I can, its called education and intelligence. I can take known facts and extrapolate probabilities from that. I know for a fact PPACA increased insurance premiums more than if it wasn’t passed. I know not allowing drilling in the US is more harmful to the environment then allowing it. I know taking thousands of poor people, many not working, and stuffing them in a high rise will lead to very bad things.

Some decisions are clearing bad, smart people call them dumb decisions, liberals call them policy.

Guest
Feb 6, 2012

“Communism/Socialism has never worked and will never work no matter how many times you try it. To keep repeating the same failed ideology is pointless.”

You assume the ideology is flawed. Its not. Its the implementation that have been flawed. Ask any scientist or engineer: “What do you do when you find several ways to try and do something that don’t work?” A clue: the answer isn’t ‘stop trying’.

” If your not open to the possiblity that doing nothing might be the optimal answer your guaranteeing failue.”

Hindsight is 20/15 vision, the man saying ‘see, I told you so’ is right every time. By that measure, no matter what you choose that isn’t a resounding unqualified success, you fail. That is an unrealistic expectation. There is no way to tell if the decision you made was the right decision until you get there – whether you did nothing or something. Its foolish to avoid doing something for fear of being held at fault – you’re every bit as morally culpable for your sins of omission as those of commission.

Is an unregulated slum better than a housing project? The former is ‘doing nothing’, the latter is doing something. At least the latter is built by engineers and is more or less sanitary.

Costs of health care keep going up because its in the interests of the corporations for it to go up. If they make 3% profit, why not make 3% profit on 5 billion instead of 1 billion? Five times as much profit! Its an entirely logical formula and trend when you put the profit motive in the ethical profession of keeping people healthy. Start paying the insurer only for how many days I go without being sick and the formula would change immediately. It seems blisteringly obvious to me why the cost of health care keeps rising, and its self interest of the health care industry. They get more money when people are sick.

Your preconceptions about what current support stuff does consist of is at odds with what it can be. We can have a system that supports the people that can get ahead, giving them a hand up and bringing them along. But we’re not going to get it if we insist on a policy of abandoning all support until they’re ready. No. Unacceptable, we must do everything we can to help them become ready – anything less is irresponsible. And just because you think you’re ready means neither that you ARE reasy or that you should have to gamble away your future on debt. Its in society’s interest for people to be educated, we’ll educate people. Even if they do not get a job, they’ll be more able to join the public discourse, spreading their knowledge around, be a part of watchdogging for corruption in their communities, and generally improve everything.

You can’t know whether your decisions helped more or less people die. If ten thousand people would have died if you did nothing, and eight thousand people would have died if you did something, which is the right thing to do?

This is a world of shades of gray – its never a good for eight thousand people to lose their lives, but how much worse is ten? I could save two thousand lives through my action, yet with your hindsight you can assert, my actions caused eight thousand deaths. You can hypothesize that it would have been better to do nothing, maybe only five thousand would have died. But its a MAYBE. You don’t know. And the deaths of those three thousand people are not off your conscious merely because you did nothing – we can just as validly hypothesize that doing nothing is what caused their deaths.

But you can’t know, any more than I can, whether it would be better or worse had you not acted. So we have to take on faith that action is the moral imperative – My hand is out to any and all neighbors that can use a hand up, and I will vote for action.

Guest
Nate Ogden
Feb 6, 2012

“You’re falling into the same trap all conservatives do, equating a past failure of government as a reason to stop trying entirely.”

Communism/Socialism has never worked and will never work no matter how many times you try it. To keep repeating the same failed ideology is pointless.

Holding people accountable for themselves is not doing nothing. Its a proven system for the sustainment of society. Your failure is rooted in the fact your model always starts with doing something. If your not open to the possiblity that doing nothing might be the optimal answer your guaranteeing failue.

We see this with heathcare and its one of the reasons cost keep going up. Doctors and patients insisting that something has to be done even when doing something is more harmful then doing nothing.

i.e. prostate cancer just diagnoised in someone 80+ in early stages and growing slowly. The person will die of old age well before the cancer affects them but treating the cancer can hard or even kill them.

We don’t let people live in deprivation except babies we allow to stay with their mothers. Anyone outside children and handicapped living in deprivation in America is there by their own doing. No government program is going to prevent people from being stupid and lasy or making bad decisions. All we can do is provide them the opportunity to improve their sitution when they are ready, something we already do.

“If you try to give somebody a hand out of the flood, and you fail, are you going to blame yourself with recriminations, saying that you shouldn’t have tried to help them because they probably would have made it fine on their own had you not failed? No.”

That depends, if I was a liberal and there was a flood and my decisions in trying to help killed them then yes. This is one of the disgusting traits of liberals, have you ever heard a single liberal apologize for housing projects? How about welfare that paid teen moms to have more kids and not marry? In both those cases those individuals would have been better off had liberals done nothing.

Guest
Feb 6, 2012

First of all, ideology doesn’t have to know the answer to all the details, ideology is a direction to go in, something to strive for. a statement of principles on which to hash and work out a plan for action.

What level of engagement? Whatever level suits the purpose of society. If society does it because its cheaper than dealing with crime, then raising people to the level of engagement with society such that petty crime is not a logical option is the level. It directly follows out of the profit, or compassion, of society at large. What do we want out?

If you provide no reasonable capability of the individual to raise the value of his personal endeavors, you are at fault. This isn’t about what people think they might like to do. This is about providing a path that equalizes opportunity so that they can engage and get to do what they think they might like to do later. Yo

Society is taxed for the public good – if we can afford to pay police officers to beat our powerless people and sweep the homeless out of the view, we can certainly pay people to go to school and make something of themselves, whether that is with art or engineering or whatever. The same people that pay for the police pay for this – the society must bear the cost for the good of its own continuation and safety.

In the aspect of our society being a place that could use more art and expression in it, I see no reason to limit the amount of study and creation an individual can do, whether or not it has a capitalistic value to it. It is less expensive to society to have somebody making pointless pieces of art than it is to have that person engaged in crime and worse, propagating examples of that kind of lifestyle as any kind of legitimate to the next generation.

That artist may have the answer. The philosopher and thinker who worries about and is even inspired by the situations around him – we aren’t close to the limit to what we as humanity can create in terms of innovative solutions – even ones that will allow society to do whats in its best interest without allowing personal greed to run rampant with abuse. But if you never enable the soft talents to develop, because you’re too concerned with the capitalistic imperative of every single person’s value being defined by the wage they can demand in the marketplace, you won’t find those answers. Because those answers are NOT in the interests of capitalism. There will be less profits for the capital owners. Such collectivist goals that look to the benefit of the people with an eye to consuming all resources to the level of no profit will never interest capitalism.

The more automated, powerful, and complex our machinery and robotics get, the less people we need in the work force doing stupid jobs like flipping burgers, manipulating physical objects. What are we going to do with these people? They’re either going to be unemployed and impoverished, or supported by the society doing nothing useful, or supported by society doing something that can possibly yield good. We’ve rejected the former already, we’re doing the middle as an attempt, and the latter hasn’t been tried in any concerted way.

Your experience does not indicate reality any more than mine does. We’re going to have to step beyond our personal interpretations of our personal circumstances and try to look at a problem that is bigger than any of us can address alone. I don’t have the answers.

You’re falling into the same trap all conservatives do, equating a past failure of government as a reason to stop trying entirely. We are all human, we try things, we fail sometimes, we find some things that work. Science and study and judicious experimentation and lots and lots of people working on the problem will find a solution. If we keep trying and studying and not discarding the baby with the bathwater.

Refusing to try, doing nothing and letting people live in deprivation is not okay, is not compassionate, and does not result in a better outcome. If you try to give somebody a hand out of the flood, and you fail, are you going to blame yourself with recriminations, saying that you shouldn’t have tried to help them because they probably would have made it fine on their own had you not failed?

No. That is rejecting the idea of the good samaritan out of hand. We are bound by ethics to help our neighbors when they’re down.

Guest
Nate Ogden
Feb 6, 2012

lets discuss details, the place this ideology always dies.

Who determins what level of engagement an individual should have and who should pay for this? I recently read an article about the chronic unemployement of European youth. One of these individuals wanted to be an artist and go to some art school in Italy.

Are you saying if we don’t send this individual to art school in Italy they will be disengaged and it will be our fault? Who is suppose to pay to send this individual to Italy? How long are they allowed to study art before they are expected to support themselves and contribute to society. And finally what if they suck as an artist, should society spend $100,000 each to tuen out terrible artist?

The problem with your philosphy is you allow people to define what engagement is. For most responsible people it’s the opportunity to work and support themselves and be happy. Where it collapses is when you have those that want to live unsustainable lives supported by others. This concept is very contagious, if kids see their friends not working, still in school at 30 and being supported by society/locality/parents they want it to. We can’t have entire generations in college “finding themselves”.

In life I have found more sociopathic and destructive people to have come from a highly engaged upbringing then those that were neglicted. i.e. sons of single moms that have no brothers and sisters, way to much attention and spoiled and turn into nutcase criminals.

Your failing into the same trap all liberals do, you equate compassion with doing something regardless of the outcome. I.e. you probably see public housing projects as compassionate even though they killed 10s of thousands and destroyed millions of lives.

Appearing to do nothing, even if it leads to better outcomes is lacking compassion while doing something with terrible results is laudable.

Guest
Feb 6, 2012

Engaging individuals is what works, period. Whether or not you consider it the job of society – or the local community – or just the parents – it is the only thing that has ever worked.

If you don’t teach people to be engaged, you get sociopathic and destructive behavior within those disengaged, indeed, you create a lower class of disenfranchised people.

If you think society should have policies that minimize sociopathic and destructive behavior, then you think society should engage people and aren’t disagreeing with me. You’ll help them have the basics and education and everything you can to promote policies that enable them and lead them to engagement and bettering themselves and all of society.

If you disagree, well, your misanthropy has been noted, but your lack of compassion is,in the opinion of many, unacceptable. It will be decided at the voting booth.

Guest
Feb 6, 2012

I can understand the idea that it is a good idea to limit profits – after all – if limited profits were actually a competitive advantage, the auto insurance companies wouldn’t be running the huge margins they’re running. Its evident in the market that low margins do NOT make a company competitive, it is far more complex than that. I think the profit limit is a policy patch against a tendency that happens when you require risk coverage on a capital market. That is, its a problem inherent in such a system – a system with large investment and vested capital interest is easier patched with a policy than changed in its fundamentals.

I think the commenter who mentioned a need for a ‘low barrier to entry’ is most astute. The insurance industry has stunningly large barriers to entry, legislated no doubt by lobbyists who convinced politicians they were somehow protecting the consumer through the regulations – when all they were really doing is protecting the large corporations and capital from less well funded competition.

Guest
Jonathan H
Feb 5, 2012

Getting back to the original point: by how much does the ACA limit insurer profits?

Lets say a pretty typical for-profit insurer now has a large group AER of about 9%, an MER (now unfortunately known as MLR) of 85%, investment income of 1%, gross margin of 8% and profit of 5%. For small group, the AER goes up to around 15% and the MER is around 80% (very crude generalizations for illustration purposes)

The profit can only increase if something else changes, according to the ACA, and the obvious target is admin costs/AER. So how low can it go? Well, in The Netherlands, Switzerland and other nations with universal healthcare and private insurers, the admin costs are kept down to about 5%, roughly the same as single payer systems. So in theory, the profit of US insurers could be more than twice as high as they are now. For that to happen, there needs to be a great deal more standardization in health insurance. And lo and behold! The ACA has provisions to bring about more standardization in health insurance administration (claims payiment, etc). These standards are changes that AHIP generally supports. I hope you can see the logic of it. this is a win-win-win situation in the long run (payers, providers, public)

So yes, there is a limit on profit, but in the long run it isn’t very low. In the short run, it is only minimally different from the status quo.

Guest
Overpaid Healthcare CEO
Mar 21, 2012

Did you know that the CEO of Aetna made a base salaey of $24 Million in 2008. This is before all the added perks and stock options. Prior to the 1940’s healthcare companies were not-for-profit (not to be confused with government run) and basically provided a service to people. Premiums were low, coverage was vast and the whole system worked. Enter corporate greed into something that never should be profit based and we see sky rocketing costs, a shift to try to deny rather than facilitate coverage, and worse of all, we see lobbying dollars buying politicians and the media to convince Americans that we are the problem, not the greedy healthcare companies.

Guest
Nate Ogden
Mar 21, 2012

Did you know you sound like a real idiot who should spend more time learning what they talk about and less time posting? Your class war fare BS and preying on the stupid is a waste of everyone’s time.

Did you know Aetna is more then a Health Care company?

Did you know Aetna has been in Insurance since 1810s?

Did you know Aetna entered health insurance in 1899, one of the first publicly held, sorta disproves your 1940 BS doesn’t it?

Did you know Aetna’s revenue is greater then all the healthcare insurance of 1940?

Enter stupidity and ignorance into a debate and look what we get. Learn to use the internet for something other then running your mouth.

Guest
Mar 22, 2012

Name calling, Nate?

Its obvious that the ethics of business and profit have changed in the intervening years. Your data points don’t invalidate or disprove overpaid’s points at all – surely you don’t think merely because overpaid has some numbers and dates wrong means that his point that corporate greed has subverted the market is wrong. They’re distinct issues. To use such a false correlation would be a logical fallacy.

If you can’t provide any information that corporate greed has not been the motivation behind the problems with the system, you are not addressing the point at hand.

Guest
Mar 22, 2012

In my estimation, limiting profits will only play loophole games with how companies operate, rather than making a meaningful change. My proposals to fix the problem are to remove the profit motive from the risk assumption market entirely – either by the power of the people exercising their liberty to collectively do it themselves efficiently enough that the for-profit companies exit the market for lack of profit or run razor thin margins – or by the power of the people empowering the government to do it – it may have downsides, but the government fundamentally answers to the people. The for-profit corporations fundamentally answer to their investors.

I don’t know about you, but I’d rather an organization that is fundamentally answerable to the likes of me be trying to do it than one that is not.

Guest
Nate Ogden
Mar 22, 2012

If you want an argument that profit is not subverting the office 75%+ of all healthcare insurance is non profit and majority of all hospitals delivering care are non profit.

Not to call names but only a dumb ass would argue for profit companies repsressenting a small minority of the total market where able to subvert the entire market.

Guest
Nate Ogden
Mar 22, 2012

“Prior to the 1940′s healthcare companies were not-for-profit”

“Did you know Aetna entered health insurance in 1899,”

How does for profit Aetna in health insurance since 1899 not disprove his claim that prior to 1940 they were non profit?

His contention was prior to 1940 there was not profit seeking so the introduction of profit seeking must be the cause of the increases. If he is wrong on when companies started to seek profit he can’t be right on his argument.

Oh wait, my bad, your a liberal so facts and accuracy don’t matter. Even when the dates, amounts, facts, are wrong the point is still correct.

What has be presented to show any link between profit seeking and market subversion? How do you show something is not the driving force between a problem that doesn’t exisit? He came on her to make a point by lying and using inaccurate information. Illregardless of the point he was trying to make I called him out on his complete BSing of facts. I could care less what he has to say but he needs to get his facts right.

Guest
Nate Ogden
Feb 5, 2012

“The ACA has provisions to bring about more standardization in health insurance administration (claims payiment, etc).”

claims payment isn’t the problem. ACA does nothing to require providers to bill EDI, use standard forms, receive payment electronically. All those have been required by payors for 10+ years. If you want to reduce cost get the providers to pull their heads out of their @$$ and join us in 2012.

These limits also apply to % of profit which is very shortsighted. All a carrier needs to do to make more money is increase the premium. This sounds counter to our supposed goal of reducing premiums. Covering preventive at 100%, low deductible, low out of pocket, etc etc. Many easy ways to drive up premium if they want more profit.

Guest
Jonathan H
Feb 6, 2012

What do you mean “these limits also apply to % of profit?”

Are you disagreeing with what I wrote? Insurers have historically had profit margins of 3-5%. My prediction is that in the short term it lowers profit margin by less than 1% overall but raises revenue from new business so that profits in $$ are consistent. In the medium and long term term (2015 onward) it has no impact on margins, because competitive pressures keep the industry about where it is today, even though the MLR/AER ratio keeps getting better.

Guest
Nate Ogden
Feb 6, 2012

sorry meant only not also.

The percentage of profit is regulated not the amount giving carriers an incentive to increase cost.

I think fewer carriers will mean less competition and higher profit for those that remain. We are also seeing carriers exit the market.

Guest
Nate Ogden
Feb 6, 2012

Its more technical then that. They are not jacking up premium for the same plan, they are pushing plans that cover more and thus have higher premiums.

A fact the media, the left, and politicians have chosen to ignore in this dishonest debate is while insurance premiums have doubled a few times the benefits are consideribly richer. Individuals use to pay 50% of their cost out of pocket, that is down to 13%. If you take that to zero the premium for a zero out of pocket plan is obviously much higher then one that requires you pay 13% OOP.

if carriers want to increase profit they push richer plans, Obamacare assist them in this endeaver with stupid mandates like 100% preventive coverage, birth control, etc etc. By covering these at 100% the carrier now gets to make their 5% on those services as well.

“Which insurer is in the position to jack up premiums to get higher profits in absolute terms, hasn’t done so already,”

PPACA caps deductibles sold, and adds benefit mandates, prior to PPACA employers could ignore these plans and buy what they wanted. The passing of PPACA made this possible.

Being in the admin business I can assure you there is not a lot of fat to be trimmed there, not unless we go the medicare route and stop investing in fraud prevention, claims management, etc. In fact PPACA has greatly increased the administrative cost so you should expect to see it go up not down. Appeals, HIT, reporting, new mailings, etc etc.

I don’t think average margins will be effected either, fewer insurance companies will be making far more absolute $s though unless PPACA is fixed.

Guest
Jonathan H
Feb 6, 2012

Your first statement is a hypothetical whose antecedent conditions do not hold. Which insurer is in the position to jack up premiums to get higher profits in absolute terms, hasn’t done so already, but now suddenly will start to do it simply because of the MLR rules? In most market they will lose lots of business. For the rural state blues who could do it, why haven’t they already? Again, these insurers have typical profit margins of 3-5% and most are non profits.

Even for profits can easily achieve their historical margins, and eventually more, via admin cost reduction.

Fewer competitors is possible. So is more competitors. My crystal ball doesn’t reveal what will happen here. Either way, I’d bet it doesn’t affect average margins.

Guest
Jonathan H
Feb 6, 2012

Are you not aware that though insurers were mandated to offer HIPAA compliant forms and processes years ago, they were not obligated to 1) stop using proprietary formats, 2) use completely interoperable versions of HIPAA compliant formats. Both of these add to administrative costs.

You are right that the gap in using ERA/EDT, etc. is on the provider side. And we know the main reason why: mom and pop shops don’t want to or don’t have the competency to get hi-tech. It’s also true that the ACA went after the easier target of insurers and left providers alone on this, but once insurers do have more completely consistent formats and processes that will remove a big part of the barrier to finally leaving the paper era (and ERA).

That’s right, I punned. It could not be helped.

Guest
Feb 5, 2012

Jonathan H says:
February 5, 2012 at 8:26 pm
Steve and BobbyG, Nate and Barry are largely right on this. It’s too much to say an employer will never look for reasons to fire someone with an expensive disease, but they very rarely do since it’s illegal in most circumstances AND because employers generally want to take care of their employees (for smaller companies these may be friends and people the boss has known for years, in larger companies HR usually takes its mission seriously to improve employee satisfaction and productivity in conformity to the law).
__

OK. Fair enough.

Any data to support that? When I see words like “usually” the flags go up.

In fairness, the same question could be asked of me. When Deborah C. Peel goes off on the privacy dangers of permitting employers into employee claims data, it similarly germane to ask “any data to support that?”

Guest
Nate Ogden
Feb 5, 2012

How do you set up a study to prove something that doesn’t happen doesn’t really happen? Isn’t the absence of news stories and lawsuits evidence enough? The way the liberal media loves to vilify business if it was happening they would be running front page stories every day.

The penalities for firing someone to avoid medical claims are far worse then the claims. In fact employers are so scared of getting sued they will keep bad employees around to avoid the potential of getting sued.

Big business HR usually cares more about the employees then the company bottom line. We always have problems with HR being to protective of employees.

Guest
Feb 5, 2012

Doesn’t answer the question. Nothing unusual there, from you.

Guest
Jonathan H
Feb 6, 2012

Strip away the hyperbole and invective and once again I agree with Nate. HR is the department, in my experience, most reliably run by liberals. They operate under corporate constraints, of course. I don’t have hard data for you, Bobby.

Guest
Mar 7, 2012

Believe it or not, there are some companies that will porvide health insurance to part-time workers. Starbucks for one. The large health care porvider / hospital in my town does also. That would be a good solution to your problem. Good health insurance companies include Assurant, United Healthcare, Blue Cross Blue Shield, WPS, etc. Find out what the A. M. Best rating is for the company. They’ll tell you if you ask. Anything A, A+, or A++ is good. I believe that the premium will be a tax deductible business expense for your husband’s business. Check with your tax professional. Good luck.

Guest
Feb 6, 2012

OK

Guest
Feb 5, 2012

You can take it from here, Mr All-Knowing.

Guest
Barry Carol
Feb 5, 2012

Bobby G –

Don’t be so cynical. Large, self-funded employers have always had this information because they pay the bills and the insurer takes no financial risk. The insurer merely administers the plan and is the authorized signer for a checking account that the employer deposits money into as needed to pay claims. I don’t those employers blithely getting rid of employees as soon as they get sick and start to incur some meaningful healthcare costs. I should know as I was one of those employees myself Indeed, I needed a surgical procedure a mere three months after I joined my last employer and missed three weeks of work following it. I needed a CABG five years later and three other surgeries in the six years after that. I worked for that company for 18 years until my long planned retirement at the end of 2011. Small employers who purchase risk based as opposed to fee based products from insurers should be able to access the same data for their employees as well. Right now, they’re kept in the dark by insurers.

Guest
Nate Ogden
Feb 5, 2012

we have a small client, 5-6 employees, under 10 for sure. They have 2 brothers with MS. They were traditionally fully insured and get max rated for years. We moved them to a partially self funded plan and sure enough it was copaxone and some other drug costing 90K a year. The employer could easily have got rid of the brothers and hired healthy workers and saved a fortune, they never considered that option.

In any given year we have dozens of clients that could solve their insurance problems by getting rid of 1-2 employees and in 20 years not one ever has. Why do people on the left spread these lies, they know its not true when they type it yet some deficency in their morals allows them to just throw it out there anyway. And they wonder why problems don’t get solved, how about knocking off the rampant lieing? And when you do get caught admit it and apologise for it.

Guest
steve
Feb 5, 2012

The problem lies not with firing those you already employ (very bad for employee relations), but in making hiring decisions.

Steve

Guest
Nate Ogden
Feb 5, 2012

talk about doubling down on stupid, how would an employer have claims data on a new hire not covered by their insurance?

Care to keep diging?

Guest
steve
Feb 6, 2012

Jonathan- I said this above.

“very bad for employee relations”

Steve

Guest
steve
Feb 6, 2012

I actually hire people. I hire people we know. Hospitals being what they are, I can find out most of the details of anyone’s medical history before I hire them. If you live in a small town where everybody knows everybody, this will also exist. Where this will become even more of a problem is if we extend the limits of age of eligibility for SS and Medicare. Who will want to hire that 67 y/o with their potential for high medical costs?

Steve

Guest
Jonathan H
Feb 5, 2012

Steve and BobbyG, Nate and Barry are largely right on this. It’s too much to say an employer will never look for reasons to fire someone with an expensive disease, but they very rarely do since it’s illegal in most circumstances AND because employers generally want to take care of their employees (for smaller companies these may be friends and people the boss has known for years, in larger companies HR usually takes its mission seriously to improve employee satisfaction and productivity in conformity to the law).

Guest
Feb 5, 2012

“how about knocking off the rampant lieing?”

how about knocking off the rampant misspelling?

Guest
Feb 5, 2012

Point taken, Barry.

Guest
Nate Ogden
Feb 5, 2012

You know reality doesn’t matter to idelogues like Bobby. 60% of insured are in self funded plans where employers have claims data and it has not been a problem. That wont stop clueless propogandist on the left trying to say it is

Small Group self funding is going to be the biggest change in healthcare in a decade. We have already seen movement that way with termendous success. Groups under 100 have had zero management, by collecting claims data, educating employees, and managing risk employers are already saving billions. We just need to pray PPACA and its poorly written provisions don’t undo it all.