<p>The more people who sign up in the older age groups where they are likely to be more unhealthy and the fewer who sign up in the younger age groups where they are likely to be healthier is going to give you a lopsided mix of unhealthy to healthy.</p>
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</p>
<p>Amazing. The Razor works every single time. Why have you been hiding this wondrous instrument?</p>
<p>Ok…</p>
<p>It depends on the premiums charged, right?</p>
<p>It is all about the pricing.
Are the revenues going to cover the costs?</p>
<p>You are saying the insurance companies screwed up. The mix is wrong and the revenues are going to be too low and wont cover the costs.</p>
<p>Maybe…</p>
<p>Then you are saying the risk corridors arent large enough.</p>
<p>Maybe.</p>
<p>I think we will be ok but we need a good March</p>
<p>I say the insurance companies counted on a 40% representation of the 18-34 group. If it comes in at 25%, the mix of healthy to unhealthy in this age group will be much different than what they expected.</p>
<p>First off… It wont be 25 percent.</p>
<p>Second we know Wellpoint priced for 25 percent. That takes care of 15 percent of the problem. Wellpoint is 15 percent of the market. I think. :)</p>
<p>Third… The insurance companies have to have priced tor a 40 percent number AND the rest of the pool that exists has to be SICKER than the insurance companies expected. </p>
<p>Fourth… The risk corridors bave to be insufficient.</p>
<p>Fifth…insurance companies dont think the 2015 sign ups look profitable and price accordingly.</p>
<p>We are at the end game now. We will know soon.</p>
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</p>
<p>But you assert this with no evidence, and against common sense. </p>
<p>No one seriously believes they run only one model.
. </p>
<p>I didn’t come up with 40% number. It’s the administration’s number and what seems to be the goal of everyone who was involved in the drafting and promotion of this law. Now, people are stepping away from it because it seems unachievable. Like dstark said, let’s see what happens.</p>
<p>
</p>
<p>40% might be an eventual goal, but it was never the expectation that there would be immediate take-up in the first year.</p>
<p>I think it was the goal for the first year.</p>
<p>Talk about deja vu, dstark.<br>
It’s a model. Likely they ran multiple models til they were coming out of their heads. Having lots of arguments. And for a variety of reasons, picked one they felt tested and served their needs and was feasible enough. Not cast in concrete. Probably represents some workable compromise- statistically and in the gut department.</p>
<p>Don’t fixate on it. There are checks and balances- and it’s a multi-year project. And everything else everyone else keeps saying.</p>
<p>I actually think you’re not listening to me, anyway. </p>
<p>And now for something completely different:</p>
<p>Here’s a great (and rather long) article from Time detailing the way that the Healthcare.gov site was fixed:
<a href=“Obama's Trauma Team: Inside the Nightmare Launch of HealthCare.Gov - TIME”>http://content.time.com/time/magazine/article/0,9171,2166770-1,00.html</a></p>
<p>Carry on…</p>
<p>Also, in other tech news… I finally figured out how I can access this board without having to revert to “stealth” mode. (Before it was just a persistent error message that never went away…)</p>
<p>GP, you are too hung up on the 40 percent number.</p>
<p>The reason the model shows the need for higher premiums is because the model projects a sicker pool. That is it. I dont know why Jonathan got into this Kaiser thing.</p>
<p>Look at the model. The two charts you posted. The sicker the pool that is left, the more premiums rise. That is why the premiums increase the most with the 40 percent sign ups and the highest percentage of sick people. That adds up to more sick people.</p>
<p>What numbers do you want to use?</p>
<p>Start at 7 million sign ups…</p>
<p>2.8 million (40 percent) young people at 150 a month? Equals 420 million </p>
<p>2.1 million middle aged people at 300 a month? Equals 630 million</p>
<p>2.1 million old people at 500 a month? Equals 1.050 billion</p>
<p>Then take the 15 million people that already exist… Maybe they pay a little more…fewer subsidies… How about 400 a month? 15 million x 400 = 6 billion…</p>
<p>Add up the revenues… 420 m + 630 m 1.050 b + 6 B = 8.1 billion</p>
<p>Total revenue per month equals 8.1 billion</p>
<p>If you drop every single young young person off the list…2.8 million people…DROP All THE YOUNG PEOPLE…
we lose 5.1 percent of revenues…420 million lost divided by 8.1 billion.</p>
<p>5.1 percent of revenues lost…</p>
<p>Thst is it…</p>
<p>Let’s say only 33 percent of young people sign up…so 700,000 young people dont sign up…</p>
<p>700,000 x 150 a month equals…105 million (105,000,000)</p>
<p>105 million is the revenue lost… </p>
<p>105 million divided by 8.1 billion = 1.29 percent.</p>
<p>We lost 1.29 percent if revenues.</p>
<p>These numbers are approximations. </p>
<p>The rest of the premium rise in the model is due to the model using a sicker pool than the insurance companies…</p>
<p>I may be able to do this in simpler way if you want…</p>
<p>dstark, you are telling me only one side of the equation. It is not the fact that the 18 to 34 group makes up 5% of the revenues; rather, the important factor may be this group is contributing a large profit to offset significant losses from the older age groups. </p>
<p>GP… Yes profits are hit harder…</p>
<p>But the premium increases needed are just a little bit higher than the orrcentahe if premium that is lost. </p>
<p>I will do the profits tomorrow. I will do the percentage premiums have to rise tomorrow. </p>
<p>What do you want? Profits that are 2 percent of premiums? </p>
<p>Don’t know. Maybe the profits from the 18 to 34 group are 40% of premiums to offset losses of 10% from all other groups. Just throwing out numbers because it is difficult to know what the insurers are assuming. I would guess this is proprietary information. If they are wrong about the profits of the younger group and the losses of the older group, then their problem becomes compounded.</p>
<p>Of course, the subsidized subscriber will be okay because all it does is increase the size of the subsidy. It will be the unsubsidized policyholder who will get killed.</p>
<p>On another note, it is a few days shy of March and we still don’t have hard numbers as to how many sign-ups have paid. I wonder if the insurance companies have any idea of what the number is</p>
<p>Calmom, thanks for posting that article. I saw the reporter on TV last night. Fascinating. </p>
<p>Fangs Razor - love it. </p>
<p>I am glad there are do many good numbers people on this thread. 
</p>
<p>I want to give GP what he wants. My numbers are approximations. If somebody has better numbers that would be great. My numbers are slightly worse than Kaiser’s.</p>
<p>Let’s say the insurance companies expect to make nothing in the individual market. Nothing. The individual market is only 6 percent of their business anyway. </p>
<p>And lets say young people only signed up at a 25 percent rate. Thst would mean instead of 2.8 million young people signing up… Only 1.4 milliion signed up. And everyone of those 1.4 million people had zero costs. Zero.
100 percent profit margin. So… The revenue hit goes to the botton line. The revenue hit becomes a loss.</p>
<p>1.4 million fewer people x 150 a month is a 210 million loss a month. Times 12 months = 2.52 billion loss.
Even if my numbers are off by 20 percent. That is only about $3 billion.</p>
<p>The risk corridor is $16 billion. </p>
<p>This is why I say the percentage of young people signing up is not a big deal.</p>
<p>I can get worse numbers by having older healthy people not signing up. But then…like I said …the really bad numbers are because the pool mix was sicker. GP…if you understand what I wrote I will go forward with a worse scenario. I will throw in a scenario where some middle aged healthy people don’t sign up. </p>
<p>Yes LF…a deja vu moment. :)</p>
<p>Calmom, a big thumbs up to that link from Time . Fantastic. Great to read about people that know how to get things done. </p>
<p>I ^:)^ to them.</p>