Friday, June 10, 2016
He who rides the tiger is afraid to dismount.
When the Obama administration its unleashed subsidized health exchanges through its healthcare.gov website in October 2013, it let a political tiger out of its cage.
Ever since that fateful October day, health costs have been on an escalating rise, with an average 7.5% expected in 2017, with outbursts of 60% requested by Texas Blue Cross Blue Shield and 40% by Kiesinger Health Plan and rises of more than 20% in a half-dozen states.
The inflationary tiger has many stripes:
· Pent-demand by consumers who have delayed treatment because they couldn’t afford it.
· The ACA provision that those with pre-existing conditions could not be denied or even asked about their health problems.
· The natural inevitable tendency of people to avail themselves of subsidized government care.
· Imbalance of the insurance pool with more of the sick and old and fewer of the healthy and young joining the exchanges, creating a possible death spiral.
· Many of the young and healthy dropping out of exchanges after being treated.\\
· The inherent fraud factor of 15% or so with government programs.
· Government programs, once in place, tend to remain permanent because they develop powerful constituencies.
For whatever reason, it is as difficult to put the tiger back in the cage as it is to stuff a genie back into a bottle.
In the June 9, 2016 New York Times reporter Robert Pear explains why health costs keep rising. Pear interviews Kurt J. Wroble, chief actuary of Geisinger Health Plan, a conservative health plan, one of the most respected, in the nation, notable for its staunch advocacy of ObamaCare.
Geisinger turned heads when it recently asked for a 40% rate increase in 2017, following its 20% hike in 2016.
Among other things, Wroble, speaking for himself and other actuaries, says:
““Historical experience is the lifeblood of what we do. We take that experience, adjust it for the underlying growth of health costs and project it into the future so we can estimate the expected costs for a particular insurance policy.”
“Our rates for Medicare, Medicaid and employer-sponsored insurance have been relatively stable, but those products have to bear the cost of our losses on exchange business.”
““But based on experience, the 2016 premium rate (20%) is too low, so we want to correct it in 2017.”
“The whole point of what we do, the foundation of good health insurance, is to develop long-term relationships with our members and to make long-term investments in their health. It’s not like buying a book on Amazon.”
“When we developed rates for 2014, we had no historical data. It was basically an educated guess.”
“Healthier people chose to keep their plans so the collective cost of care for people buying insurance on the exchange was higher than expected.”
“Geisinger has been here for 100 years, and we expect to be here another hundred. We are going to be taking care of the people in this community one way or another. So it’s really important for this program to be financially stable and sustainable.”
Robert Pear explains why what Wrobel says is important;
“Actuaries normally toil far from the limelight, anonymous technicians stereotyped as dull and boring. But as they crunch the numbers for their Affordable Care Act business, their calculations are feeding a roaring national debate over insurance premiums, widely used to gauge the success of President Obama’s health care law... ‘There is panic and anger as health care costs explode! ‘said Donald J. Trump, the presumptive Republican presidential nominee, wrote in a recent Twitter post, seizing on increases of nearly 60 percent sought by Blue Cross and Blue Shield of Texas.”
Translation: Unaffordable premium increases and spikes in health costs will be a factor in determining the outcome of the 2016 presidential election.