2013
The press is full of the good news about premiums in the California health exchange beginning in 2014. Actually there is much more to the story and many people will see large premium increases.
However, even beyond that is one of the main reasons for lower than expected premiums.
In many plans the number of participating physicians and hospitals is greatly reduced. The smaller the network, the more leverage the insurer has in negotiating fees … as long as it can deliver patients to the provider.
The fact is that the premiums the insurers set for 2014 are irrelevant. They are guessing, they are curbing their networks; as reported in the press, some insurers are lowering their profit margins to generate lower premiums in 2014. In other words they are taking a risk that there will be robust enrollment of the right mix. But you see the premiums don’t matter, what matters is the claims generated by the people who do enroll. Regulators can crow all they want about forcing lower premiums … only the actual experience means anything … and that won’t be known until sometime in 2015. The insurance companies that guessed wrong will take a bath.
From Bloomberg, May 30, 2013, 2:55:44 PM
UnitedHealth Group Inc. (UNH) has trimmed its plans for selling to the uninsured under President Barack Obama’s health-care overhaul, in the latest sign large insurers see little gain from quickly plunging into the new market.
To read the entire article, go to http://bloom.bg/11rs0tq
From the New York Times editorial 6-1-13 touting the great success of competition under Obamacare and mocking Republican criticism of the law (ok, that part’s fair). Read this quote carefully. Talk about spin. Suddenly, 8% trend in health care spending is a good thing and surprise Obamacare did add 5% to costs. . A couple of years ago we were gnashing our teeth over double digit premium increases.
Blue Shield of California said that its premiums for individual customers would increase about 13 percent on average next year over current premiums; about 8 percent of that increase would the cover rising cost of medical care, which would have happened anyway. The other 5 percent pays for better benefits, guaranteed coverage for pre-existing conditions, and taxes and fees imposed on insurers by the reform law.
Related articles
- The Obamacare Shell Game (Part 1) (economicpolicyjournal.com)
- California didn’t have ‘rate shock.’ But California isn’t like most other states. (washingtonpost.com)
- California health exchange reveals premium costs, insurers (sacbee.com)
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