It Is Getting Real Gnarly Out There, Dude

            Insurance. Can’t live with it; can’t live without it. Pay me a sum of money regularly and if something goes awry, I will cover the costs incurred by any loss you suffer. Insurance is akin to derivatives which helped cause the near meltdown of the financial industry 6 years ago. Unlike derivatives which are often described as a bet on something to fail, insurance is based on a contract that specifies obligations and responsibilities. Due to the contractual nature of what is for the most part intangible, and to a certain degree subjective (“if your house burns down I promise to reimburse the loss.” Intangible promise made. “But that melted folding aluminum lawn chair with the torn webbing was my granny’s and is a priceless antique worth thousands.” Subjective appraisal), the state long ago stepped in to regulate this business; both to protect and promote the business itself as well as the interests of the consumer. The state IS very much involved in the Affordable Care Act though it begs to differ, saying it is a federal program. An AP article (9-3-13) by Scott Bauer, Insurance rates released by Wis. gov questioned, mirrors the controversy spawned in Ohio when Lieutenant Governor Mary Taylor released cost increase projections on premiums for health insurance coverage in Ohio after January 2014. In both cases independent study groups, as well as advocacy groups for consumer citizens, said the projections were flawed and didn’t reflect the entire package of subsidies, incentives, as well as benefits of increased enrollment.  In an online article entitled “Obamacare Rate Shock Isn’t What You Think” Adrianna McIntyre of the University of Michigan and Austin Frakt, health economist with the Department of Veterans Affairs present figures showing this to be not so; that it will make health care more affordable and enable young people to enter their most productive years without the anxiety of no health care protection. Many articles have pointed out that because health insurance currently offered will need to meet the “essential health benefits” specified by the Affordable Care Act and health insurers cannot deny coverage to anyone because of pre-existing conditions (and will thus have no excuse for providing insurance coverage) the cost of health insurance will increase. This is countered by economic analysis that says the increased pool of those insured (more buyers) will offset the initial shock of coverage to those previously uninsured. The most popular aspect of the ACA, embraced by both proponents and opponents has been the extension of parental health insurance coverage to their offspring who are no longer children but young adults. McIntyre and Frakt conclude “Rate shock isn’t a myth, but the notion that Obamacare transfers significant wealth from the young to the old is. Of course, the more that young and healthy consumers believe it’s real, the more likely they’ll be to opt out, pushing premiums higher for everyone else. It’s a cynical way to perpetuate the market dysfunction that Obamacare is intended to address.” Rate shock or not, health insurance aside, health care costs continue to increase faster and more extensively than the overall economy itself. Althea Chang reports: “Insurers stand to benefit from the impending health care mandates, however. “Insurance companies are happy that they’re getting more volume into their system,” Clifford said [“Tim Clifford, co-president of national account services at ADP”], but those companies face added risk since they’ll no longer be able to exclude consumers with pre-existing medical conditions.” (The financial impact of affordable health care 8-29-13, Yahoo Financial)


And now for the derivatives part, the bet on something to fail. Online Bruce Japsen (To Help Navigate Obamacare, United Way, Catholic Church, Others Get $67 Million 8-15-13): “The Obama administration said navigators are “trained to provide unbiased information in a culturally competent manner to consumers about health insurance, the new Health Insurance Marketplaces, qualified health plans, and public programs including Medicaid and the Children’s Health Insurance Program.”” But the Ohio legislature recently regulated this aspect requiring that insurance navigators be licensed and limiting their number. In Florida, which like Ohio opposes Medicaid expansion as well as state run health insurance market exchanges, “Republican opponents of the reform law were the driving force behind Florida Senate Bill 1842. Signed into law by Governor Scott in May, the legislation prohibits Florida’s Office of Insurance Regulation from providing any real protection for consumers from unreasonably high health insurance rates.” (Tom Brown for Reuters Top Florida health insurer touts Obamacare pain relief 8-31-13). In Browns article it is reported that ads are running touting: “”When the new healthcare law takes effect, you may be surprised how much more you could pay for health insurance,” says an advisory to consumers from Blue Cross and Blue Shield of Florida, also known as Florida Blue. “Find out how much you’ll save if you buy now,” adds the advisory, which has been mailed over the past month to homes of existing policyholders and potential new clients. “Let us help you get the best deal on health insurance right now,” the notice says. “We can even tell you if you can get help paying for coverage from the government.”” Caroline Humer for Reuters (6-29-13) headlines: Aetna pulls out of another Obamacare health exchange. She writes, ““Michener [Aetna spokesperson Cynthia Michener] said the full list of state exchanges where Aetna will participate is still being finalized. The new online insurance exchanges are the lynchpin of Obama’s healthcare reform, representing a massive technology build-out that has run up against multiple delays and political opposition in many states. In their first year, the exchanges aim to provide coverage to 7 million uninsured Americans, many of whom will be eligible for government subsidies. Aetna’s large competitors, such as UnitedHealth Group Inc and WellPoint Inc, have also planned limited entries into the new exchanges while they wait and see whether they operate smoothly and whether enough healthy people sign on to offset the costs of sicker new members.” Later she writes, ““Since then, it has withdrawn applications in Maryland, Ohio, Georgia, and Connecticut, where it is based. In Maryland, Aetna’s decision came after state regulators ordered the company to lower rates dramatically from what it had proposed.”  Finally, in a 9-1-13 online article, How Rick Perry’s And Bobby Jindal’s Medicaid Snubs Boost Private Insurance Costs, Bruce Japsen writes: “Health insurance rates for individuals purchasing private coverage could jump 8 to 10 percent in Louisiana, Florida and Texas where state political leaders have decided against expanding the Medicaid health insurance program for the poor under the Affordable Care Act, new research indicates. In a new study from the nonprofit research organization RAND Corp., researchers said the lack of an expanded Medicaid program will force more lower income people into the individual insurance market via exchanges created by the health law to provide more private coverage. The cost increase from this shift of more people to the individual market “reflects an influx of slightly lower-income and less healthy enrollees onto the exchanges,” RAND researchers wrote. “For these three states, these newly eligible individuals could cause premiums standardized for age, actuarial value and tobacco use on the nongroup market to rise by 8 to 10 percent, relative to scenarios that include Medicaid expansion.”” Tom Brown in the previously cited 8-31-13 article writes: “Florida Blue said the advisory is part of a direct mail advertising campaign aimed at drumming up new business for the Jacksonville, Florida-based giant, which reported $8.9 billion in revenues last year and covers more than 4.3 million people in its primary health business in the state. The company, a leading contributor to the political action committee of Florida’s Republican Governor Rick Scott, is one of nine insurers that have applied to sell non-group policies on the state’s new marketplace and the only one that promises to cover every county in Florida.” The vulgar, “on the street” definition of what a derivative is, and how it works, is that it is a money maker (for the seller) no matter how it turns out. In this case the “it” happens to be the Affordable Care Act and health care/health care costs for all Americans.


To sum up, AP’s Jonathan J. Cooper (States experimenting to lower health care costs 8-28-13) writes: “Most of the experiments are too new to produce reliable data about their success, but health policy experts warn that the rapid rise in costs is unsustainable. “It has to end eventually,” said Larry Levitt, senior vice president of the Kaiser Family Foundation, “because we can’t have an economy driven entirely by health care.””


As Jerry Lee Lewis would say: “Think about it.”


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