Our BCBS explained that it is losing money every year from ACA patients and that it pays more in claims than it gets in premiums. It raised premiums but still lost money last year and will be trying to raise premiums again because of the high costs.
If healthy folks opt out of coverage and instead pay the small penalty, the risk sharing common to keeping group rates low is not there.
“Losing money” can have multiple practical meanings. My state is tough on regulation. Every year, they get the same whining from the insurers, go through a process where they ask for the details, we all wait and watch the spin.
It seems to me the insurers were telling the truth about actually losing money on the exchanges. If they had been making money, they would have stayed in the market. Don’t look at what they say; look at what they do.
I’ve thought all along that the individual mandate penalty was too small. I still think it.
Yes, I agree that the penalty has to be big enough to make most opt in, not out.
concur. If the carriers were even close to break-even on claims experience, they’d likely stay in at least one more year to avoid the public (& political?) backlash from their state regulators and the local press. (Bad press is just not good for bidness.)
I don’t doubt this costs them a bit more. Just saying “Profit & Loss” are rarely simple math.
I’m going to whip out Fang’s Razor again: they’re not idiots.
I have no trouble believing insurance companies are greedy predatory bloodsuckers. But don’t expect me to believe that insurance companies are greedy predatory bloodsuckers who were secretly coining money in the individual market but decided to get out of it.
It boggles my mind that the insurance companies are not making a profit on ACA. But looking at the out of control drug prices and the abuse of the ER system, I am not really surprised. Under our system, the drug companies can pretty much raise prices without limits and the cost is just passed through to the consumer. Not the insurer fault, it is our broken system. If you can afford it, we have one of the best healthcare system. If you can’t afford it, our system can become one of the worst.
BCBS-NC did consider pulling out due to losses. However they stated that with the increased premiums this year that they might be able to make a profit. I hope so or there will be no exchange in NC next year.
Without the current subsidies, I am reaching the point where I wonder if the insurance is worth it. The problem is that without insurance, the hospital and doctors can charge anything they want. At least with insurance, the rates are negotiated. Don’t get me wrong, I often feel that the what the insurance company pays is actually low but what the doctor/hospitals bills is often inflated. I once had two identical procedures. Same doctor and hospital. One bill was 10K higher than the other before being adjusted.
We’d consider dropping insurance altogether, but as 2 relatively healthy people in their early 60’s, anything can happen healthwise at any time. We feel it would be financial suicide not to have insurance, but with ridiculous premiums, high deductibles in an HSA plan, we could pay out over $25000 before insurance kicks in. Paying the penalty for not having insurance sure is tempting.
Insurers can make money off the group policies but the individual policies and complying with the ACA just aren’t profitable, so they are dropping that business. The insurers don’t want to break even, they want to make money. Part of the pyramid scheme of ACA was that there would be lots of healthy people buying policies but not needing heath care and those premiums would help pay for the health care costs of the sick. The cost of the premiums for the healthy is just too high, so they aren’t buying into the exchanges. In some cases it is cheaper for them to be self insured, pick any doctor they want, and pay the tax on being uninsured.
I’m surprised many of you think that medicare is going to be so much cheaper. My parents pay over $400/mo each for premiums (which is about 20-25% of their SS payments), and have fairly high co-pays. My father pays several hundred toward back hospital bills every month for prior hospitalizations for which he couldn’t pay the deductible at the time. If he goes to his therapy, hearing doctor, eye doctor, he can add $200 in co-pays per month.
“complying with the ACA just aren’t profitable”
I thought all policies had to be ACA compliant these days?
Pyramid scheme? That’s how insurance works. Everyone pays in, and then when bad things happen to someone, they get reimbursed. Do you call fire insurance a “pyramid scheme” because everybody pays in and the premiums of the people whose houses didn’t burn down pay to rebuild the houses of the people whose houses did burn down?
There are still grandfathered and grandmothered plans which are not ACA compliant. We have been able to remain a small group - husband and wife, no W2 employees - via a grandmothered plan. It is my understanding that the ACA mandates these plans must cancelled at the 2017 open enrollment.
BS offered us a renewal changing the plan year from 1/1/17-12/31/17 to 10/1/16 to 9/31/17. We were given a premium benefit for renewing early and for a different time frame. My guess is they are trying to reduce the number of folks they need to deal with during the standard open enrollment. I also think they keep extending the group plan because it is solvent and makes a profit.
It is my fervent hope that “they” will continue the extensions on these plans. SHOP - the marketplace for small businesses is vaporware - basically nonexistent even though it is mandated.
After years of double digit premiums, this year’s increased only slightly. We pay $1850/month for a bronze level $3500 deductible plan. That’s for H and I. But, we still have a full network of providers. We can go across state lines if we wish.
I dread the day we are forced into the individual market. All the group benefits will terminate. But, part of the financial structure of the ACA is to place a good portion of the cost burden on small businesses, especially those run by only family members.
Kaiser is now in our area…that will be our default.
Anyone who looked at the underlying assumptions and financial structure of this plan realized very early on that what we are seeing now was inevitable.
When I researched insurers on ACA for D, I couldn’t find any plans that allowed PPO and for the patient to have a wide network of providers. All the offerings were less attractive than the family plan she’s been on since she was born from H’s former employer, which he’s continued in retirement. When you have chronic illness, a wide provider network is very helpful.
@dietz199 As a small business owner, are you able to write off healthcare insurance expenses?
The way our business is structured they are a schedule A line item.
The fire insurance industry doesn’t have to insure every single person that applies for it. And if they bother discussing it with someone who has a history of, oh say, two or three house trailers burning down to their frame, they’ll be asking for higher premiums. Way higher premiums.
Not a pyramid scheme but a logical risk pool, in other words.
@dietz199 – if you have met your deductible prior to 9/30 next year, make sure you have scheduled all of your routine care before the 10/1 renewal. Your plan may renew with a higher deductible that is implemented at 10/1, requiring you to satisfy the increased deductible amount before receiving care. Personal experience here this month, but without the benefit of advance warning.
2015 employer health plan was $1500/month for family coverage for a plan with a $7000 deductible. OOP was $13,000 including the $7000 deductible, so medical costs for the year were $31,000. Excellent provider network, but that is a lot of money for many employees.
I do not look forward to navigating the ACA plans next week.
I don’t know I’d call it Pyramid scheme but health insurance is different in that you can’t opt out and risk is more predictable. I can choose to self insure my house. I can’t choose to opt out auto insurance but we get credit for safe driving and everyone’s risk of gettin in an accident is more uniform. Car accidents are more random than sickness. With health insurance you can’t opt out or get lower price for maintaing good health. In fact, it doesn’ work if healthy young people don’t pay up for sick and costly patients. I would think single payer is the only way not to overburden the young and healthy by having a huge pool of participants. With only 11 million participating in ACA which attracts the sick, burden on an average healthy people is too great.
“As a small business owner, are you able to write off healthcare insurance expenses?”
s-corp owners pay tax on their and families health insurance. (the part covered by the company i believe) so if your company pays 55% of your insurance you pay tax on that 55% that is not taxed because your company covered it.