Health Insurers Will Be Charged to Use New Exchanges

[Scuba]

This is a short read I found useful in understanding fees associated with the ACA "exchanges". Note counterpoints between the insurance industry spokesman and the Administration's position as articulated by Kathleen Sebelius.



Health Insurers Will Be Charged to Use New Exchanges

http://www.nytimes.com/2012/12/01/health/health-insurers-will-be-charged-to-use-new-exchanges.html?_r=0

WASHINGTON — The Obama administration said Friday that it would charge insurance companies for the privilege of selling health insurance to millions of Americans in new online markets run by the federal government.

The cost of these “user fees” can be passed on to consumers. The proposed fees could add 3.5 percent to premiums for private health plans sold in insurance exchanges operated by the federal government.

...

“Any new fees to pay for the administration of exchanges will add to the cost of coverage,” said Robert E. Zirkelbach, a spokesman for America’s Health Insurance Plans, a trade group.

Erin Shields Britt, a spokeswoman for Ms. Sebelius, predicted that insurers would not raise prices. “Exchanges will provide already profitable insurance companies with access to 30 million new customers while cutting down insurers’ marketing and advertising expenses,” Ms. Shields Britt said. “Exchanges force insurance companies to compete and drive down costs for consumers. The Congressional Budget Office has estimated consumers will save up to 20 percent on their premiums.”

[BlueToTheBone]

1. Interesting. n/t

[rainin]

2. Companies always threaten

to raise prices on consumers when they argue against regulation... meanwhile, they are already raising prices. For most of us, insurance is already unaffordable. I, for one, can't wait for the exchanges so I can shop for affordable insurance. Note to insurance companies: if you try to gouge me on the exchanges, I'm going to pick a different insurance company. If you want me as a customer, you'd better offer competitive rates.

[ProSense]

10. Exactly, and

if the insurance companies don't play nice, they can be kicked out of the exchanges.

Welcome to DU.

[enlightenment]

3. Thanks for my morning chuckle!

Erin Shields Britt, a spokeswoman for Ms. Sebelius, predicted that insurers would not raise prices.

Isn't she just precious? That is so cute! Like taking a walk and suddenly coming upon a hidden meadow filled with pretty pink unicorns with big blue eyes.

[Scuba]

4. The CBO says consumers can expect to save 20%. You expect it to go the other way?

If so, what's your rationale for that?

[enlightenment]

5. I expect that the for-profit insurance companies

will use every available loophole (and please don't tell me there aren't any) to raise their rates. They are currently using the delay between announcing the new rules and implementation of the new rules to raise their rates to create a new "floor" from which to base future increases - what on earth makes you think they'll stop looking for ways to increase their profits?

The CBO and the spokespeople assume best case scenarios, and a touching belief that these corporations have an ounce of integrity. They don't. Their only concern is their stockholders' bottom line. There is no such thing as a foolproof plan and their lawyers and accountants will have had more than three years to figure out how to game this one by the time the exchanges roll around.

If I'm wrong, I'll admit it when it becomes evident that I'm wrong - until then, I am not going to walk around with rosy colored glasses on and pretend that the insurance companies are going to suddenly discover the better angels of their natures come 2014.

[TheKentuckian]

6. They don't need to, they can raise prices just by increasing allowable charges

Which providers will not object to and by doing things consumers will love like opening up networks and formularies.

They don't have to be even a little sneaky.

Hell, they can increase under 10% no questions asked anyway.

[enlightenment]

11. I know.

But they'll use any available loophole, as well - and the system is set up to actually help them out in that regard. Using a phrase like "unjustified" in regard to rate hikes is one example; the number of "ifs" and "buts" in the details of that rule leave it wide open. Clauses like: "If you are in a health plan that existed on March 23, 2010, your plan may be a grandfathered plan, which is exempt from the Rate Review rules. (from: http://www.healthcare.gov/law/features/costs/rate-review/index.html )

I absolutely agree that they will certainly take advantage of the 10% rule (unless their state has filed for an exception, like Alaska, at 17%, and Wisconsin, which has asked for a variable rate cap). Those 9.95% increases will add up over the years.

The foxes are in the hen house.

[brokechris]

13. prices always rise---inflation, cost of living

and medical care out paces other things because they are always making new advances, designing new drugs--and it all costs money.

So yes--of course medical costs are going to rise--it would be crazy to think otherwise.

[gravity]

7. What is stopping insurance companies raising rates now?

Companies can't just double their rates and deliver the same service unless they are a monopoly. Competition will drive people to lower priced competitors which is what the exchanges facilitates.

In reality, companies absorb much of the cost of fees and pass some to consumers. They say it will drive up the costs consumers just like Republicans saying tax increases on the rich hurt small businesses. They spin it to look good for the average joe, when the majority of the benefits are for the 1%.

If they could really pass 100% of the costs to consumers then they wouldn't be advocating against it.

[enlightenment]

9. Nothing is stopping them -

and if you look around, even on DU, you'll see that they are raising rates. Are they advocating for not raising rates? I haven't heard that.

[kestrel91316]

8. They aren't going to compete. They're going to collude to fix prices.

It's an American tradition among big corporations.

[TheKentuckian]

12. I find this claim shocking, no one is trying to get them to compete

Even though we didn't get a single TeaPubliKlan vote, meaning a Democratic law we couldn't even remove their anti-trust exemption.

They are legally entitled to fix prices and collude.

[ProSense]

14. Really?

"They are legally entitled to fix prices and collude."

Two words: rate review.