So, medical device manufacturers will have a tax on their product. They will pass it along to the consumer. Your company will be charged reinsurance fees, at $64/member, not covered employee. A 4,000 employee company with 8,000 members means $500,000 in increased cost if I understand it correctly (This is to fund the government obligations). These costs will passed along to you in rising premiums. Your deductible may go up, your max OOP may rise, co-insurance or co-pays may increase.

People have this misconception that carriers are driving the cost. Utilization and plan design drive costs. Carriers negotiate rates with providers to keep your rates lower. Ever get an EOB that shows the office charge? The poor sap who has no coverage "may" pay full price, but you will most likely not, except if you're dealing with Children s who negotiates with very few.

The insurance carriers actuaries are typically on the money with our projected spend. We are a self-funded plan, which means we only pay the carrier an admin fee to use their networks. So, do not lay this on the feet of the carriers. They are doing all they can to provide us with the best options to keep costs down.

You're missing out that in the past not everything had to be treated by hospitals, doctors, etc. The activity and exposure will increase tremendously.

 

I am not clear on what you are saying. Why will there be higher utilization under Obamacare?

I am not clear on what you are saying. Why will there be higher utilization under Obamacare?

 

Because insurance is forced to cover pre-existing conditions for one. Also, in the past many illnesses were not required to be treated by hospitals or doctors. Finally, there will be the natural tendency to head for medical care more often as someone else is paying for it. I have a brother who managed to go years and years with only a handful of doctor visits. Once his wife obtained family insurance he goes all the time to get one thing or another checked out. Most of the time it's nothing.

Remember that Obamacare will place new taxes on providers of service this year. Substantial new taxes. These will be charged to the insurance carriers. These types of charges that were not present will definitely drive up rates. 2014 rates will be much higher. Given that the providers are just now figuring out what these taxes are and the insurances rates for 2013 do not really reflect them buying stock in health insurance companies would be ill-advised. From an insider - they are in panic right now.

 

Anyone who is getting completely no-charge insurance from their company better plan on that going away. Companies are shifting this to employees fast. I am not sure if the 'Cadillac' plan taxes are driving this. Companies had to start reporting what healthcare cost in this years W-2s. There is a new line box 12 for that.

 

Is this a prelude to health care benefits being taxable?

Is this a prelude to health care benefits being taxable?

 

It puts a quantifiable number to it and that would make easier to tax as 'income' but I am not sure.

Because insurance is forced to cover pre-existing conditions for one.

 

Those in poor health are already receiving treatment even if they don't have insurance.

 

Also, in the past many illnesses were not required to be treated by hospitals or doctors.

 

Explain this one to me. People who are sick get treated, right?

 

Finally, there will be the natural tendency to head for medical care more often as someone else is paying for it. I have a brother who managed to go years and years with only a handful of doctor visits. Once his wife obtained family insurance he goes all the time to get one thing or another checked out. Most of the time it's nothing.

 

As you point out, that already happens with anyone who has coverage. But I can see your point here that people who did not have insurance before may not have sought treatment. On the other hand, they are paying for the coverage now.

 

Responses in blue.

Responses in blue.

 

Let's just ignore the fact that your last statement of everyone is paying is completely untrue. You are avoiding the post on the dozens of new taxes introduced . Which in a simple business model you can see why premiums are on the rise. Taxes increase cost for medical care suppliers and providers. So from there to keep profit margins similar both supplier and provider must increase the price to patients or in most cases the insurance provider. So from there insurance companies can either take a loss or pass the cost on to the consumer. Guess what any CEO is going to do that wants to keep his job? With healthcare being a inelastic product we the consumer are at mercy of the added bureaucracy to the industry which leads to a rise in cost.

 

You can continue to defend and ignore mathematics, along with decades of business model studies. But when it's all said and done this law did not benefit anyone currently with healthcare or that could afford healthcare and chose not purchase. It increased costs period. To deny it is silly. If you want to say parts of the law are worth the increase , well then that's a different discussion.

So, medical device manufacturers will have a tax on their product. They will pass it along to the consumer. Your company will be charged reinsurance fees, at $64/member, not covered employee. A 4,000 employee company with 8,000 members means $500,000 in increased cost if I understand it correctly (This is to fund the government obligations). These costs will passed along to you in rising premiums. Your deductible may go up, your max OOP may rise, co-insurance or co-pays may increase.

People have this misconception that carriers are driving the cost. Utilization and plan design drive costs. Carriers negotiate rates with providers to keep your rates lower. Ever get an EOB that shows the office charge? The poor sap who has no coverage "may" pay full price, but you will most likely not, except if you're dealing with Children s who negotiates with very few.

The insurance carriers actuaries are typically on the money with our projected spend. We are a self-funded plan, which means we only pay the carrier an admin fee to use their networks. So, do not lay this on the feet of the carriers. They are doing all they can to provide us with the best options to keep costs down.

 

Do you know at what size companies usually go 'self insured' and what percentage of company plans are actually self funded plans?

 

Many believe that all this money is flowing through the insurance companies and they are putting their mark-up on it. But I know big companies are always self-insured and only use the carriers for planning and management services. But I have never known when it makes sense for companies to go self-insured and bear the medical cost risk directly.

Let's just ignore the fact that your last statement of everyone is paying is completely untrue.

 

Everyone was the wrong word. Many more people will be paying for health care than under current law.

 

You are avoiding the post on the dozens of new taxes introduced . Which in a simple business model you can see why premiums are on the rise. Taxes increase cost for medical care suppliers and providers. So from there to keep profit margins similar both supplier and provider must increase the price to patients or in most cases the insurance provider. So from there insurance companies can either take a loss or pass the cost on to the consumer. Guess what any CEO is going to do that wants to keep his job? With healthcare being a inelastic product we the consumer are at mercy of the added bureaucracy to the industry which leads to a rise in cost.

 

I agree. The taxes should increase cost.

 

You can continue to defend and ignore mathematics, along with decades of business model studies. But when it's all said and done this law did not benefit anyone currently with healthcare or that could afford healthcare and chose not purchase. It increased costs period. To deny it is silly. If you want to say parts of the law are worth the increase , well then that's a different discussion.

 

I am not defending the law. I am just trying to understand two things.

 

1. There will no longer be indigent care under Obamacare. Everyone has coverage. Doesn't that mean there is more money being paid to healthcare providers and insurers under Obamacare? Won't healthcare providers and insurance companies be collecting more money than ever for their services since they will now be getting paid for care they currently provide for free?

 

2. Since everyone will be required to have coverage and many of those people who chose not to purchase will now have to pay into the system, more money in, right? More money into healthcare should reduce the cost ... unless the providers put it in their pockets.

I am not defending the law. I am just trying to understand two things.

 

1. There will no longer be indigent care under Obamacare. Everyone has coverage. Doesn't that mean there is more money being paid to healthcare providers and insurers under Obamacare? Won't healthcare providers and insurance companies be collecting more money than ever for their services since they will now be getting paid for care they currently provide for free?

 

2. Since everyone will be required to have coverage and many of those people who chose not to purchase will now have to pay into the system, more money in, right? More money into healthcare should reduce the cost ... unless the providers put it in their pockets.

 

The cost of product and service is skyrocketing. In most medical devices we could be looking at increases of 60-70% added cost to the supplier. There are multiple examples of cost shooting up. There are no numbers I've seen from any reputible person in the industry that thinks the added people will offset the added cost. Numbers don't match up.

 

The health insurance industry has always been based on a concept known as adverse selection. When we force all the highest risk people on the industry at once this will require premiums to go up as well.

The cost of product and service is skyrocketing. In most medical devices we could be looking at increases of 60-70% added cost to the supplier. There are multiple examples of cost shooting up. There are no numbers I've seen from any reputible person in the industry that thinks the added people will offset the added cost. Numbers don't match up.

 

Skyrocketing cost is not due to Obamacare though, right? Yes, some of it due to tax but not "skyrocketing".

 

The health insurance industry has always been based on a concept known as adverse selection. When we force all the highest risk people on the industry at once this will require premiums to go up as well.

 

High risk people without coverage require care at some point. They get care. They don't pay. In the current system, who pays for that care? Is it provided free by the providers? Under Obamacare, they will be getting paid for providing that care. I can see premiums going up because more claims will be pushed through the insurance network. However, the health care providers are going to be collecting more money than ever. Am I wrong on that?

 

See above.

Responses in blue.

 

Don't know how to do the point by point thing. No, people who are sick often do not get to be seen. I am not sure what the actual rules are but people get sent home or refused service regularly. Maybe some one in the industry can tell us the actual rules in place. Those in poor health are often not receiving service. There is projected to be a tremendous increase in people seeking services. Those actuaries referred to above are really good at what they do. I hope they're wrong this time, and by a lot.

See above.

 

The first point I can't understand. You seem to be minimizing the cost increase due to increased taxes on suppliers and providers. This is no small part of the equation.

 

The second point the easiest way to expalin is to understand how an actuary works. When they now have to put those people in a pool with other people and they are determing risk and longevity it will only increase premiums for the entire group. Now that all people are covered you will not be able to turn anyone away no matter how minor the issue. Yes hospitals had to treat life or death situations. Not all hospitals treated all cases. Thoses cases will now have to be covered. I understand what you are trying to say but it is very simplistic. "more people are paying, so things should be cheaper", than the actual law has become. Some people won't pay in and will just pay the penalty because its cheaper. Some people just won't have the money to pay in at all.

 

If you understand how the numbers are crunch to calculate premiums, as well as the added cost with taxes its simple to see how rates are rising.

Sadly, I do not believe they are wrong. With regards to Self Funded groups, which takes you out of some of the requirements of the ACA "Affordable" Health Care Act, in the past it was group's over 50 lives at least. Surprisingly, no, not ALL large groups were self funded. However, they are moving to it now. In fact, Carriers are starting plans for self funded UNDER 50 lives, which in the past, was not seen often. Also, many healthy small groups are requesting "early" renewals or change to carrier prior to 1/1 to avoid the huge cost increase they will see in 2014. The "sick" small groups will look forward to relief in 2014 to their premium costs. And sadly you will likely see a good portion of small groups simply drop the employer sponsered plan in 2014 and send their employees off to the exchanges. If I heard correctly, then, at tax time, individuals will show your proof of insurance or suffer the penalty.

The first point I can't understand. You seem to be minimizing the cost increase due to increased taxes on suppliers and providers. This is no small part of the equation.

 

The second point the easiest way to expalin is to understand how an actuary works. When they now have to put those people in a pool with other people and they are determing risk and longevity it will only increase premiums for the entire group. Now that all people are covered you will not be able to turn anyone away no matter how minor the issue. Yes hospitals had to treat life or death situations. Not all hospitals treated all cases. Thoses cases will now have to be covered. I understand what you are trying to say but it is very simplistic. "more people are paying, so things should be cheaper", than the actual law has become. Some people won't pay in and will just pay the penalty because its cheaper. Some people just won't have the money to pay in at all.

 

If you understand how the numbers are crunch to calculate premiums, as well as the added cost with taxes its simple to see how rates are rising.

 

I agree on the premiums. There is no doubt community rating will raise premiums significantly.

 

I also agree that there is a big error in Obamacare on the penalty on those who don't get coverage. That will need to be fixed for this to work. There are a lot of things that need to be fixed.

 

I guess the key factor that we don't know is how much care was provided pro bono. If there was a significant amount, then that is more money that will be paid to the providers for services they are already rendering. That is found money for the healthcare providers. That is the money that I don't think is being accounted for.