Sunday, March 31, 2013

Our Canary Died

Alarm bells. Warning lights. Bespectacled insurance agents jumping up and down and waving our arms. The last three years have had no shortage of dire predictions. Most have been ignored. The warnings were coming primarily from Republican leadership and insurance agents. Our motives were suspect. Though many in my industry offered possible modifications to the Patient Protection and Affordable Care Act (PPACA) to make the law more workable, the Republicans only offered to repeal the legislation, a totally impossible political grandstanding ploy. With the choice appearing to be all or nothing, the American public chose all.

The canary died last Tuesday.

The Society of Actuaries released their study on March 26th. Their prediction is an average increase of 32% in 2014 in the individual health insurance market. That is the average. New York policies may decrease an average of 13.9%. Ohio? You don’t want to know. The Society of Actuaries is looking at an 80.9% increase for Ohio individual policies.

Does this mean that your policy is going up 80%? Yes and no. If you are really, really unhealthy, your premium may be decreasing. If you are young, healthy, and have a good job – this could get ugly. If you are young, healthy, have a good job, and male – this could get very ugly.

How much of this increase will you see? The answer depends, in part, on your income. The Obama administration is counting on federal subsidies to hide the full impact. With assistance available to consumers earning up to 400% of the national poverty level, lots and lots of Americans will be getting help.

Where will all of that money come from? Individual policies will have two new fees (taxes) assessed on them as of January 1, 2014. The Reinsurance Fee adds $5.25 per insured member per month. That means that a family of four pays an additional $21 per month. The second fee is the new Market Share Fee which is projected to be an additional 2 – 3% of premium. The rest of the money will come from federal taxpayers.

The Obama administration has responded predictably to the actuaries’ report. Health and Human Services (HHS) Secretary Kathleen Sebelius admitted that “there may be a higher cost associated with getting into that market where folks will be moving into a really fully insured product for the first time.”

That moment of clarity was quickly followed by questions about the canary. The Christian Science Monitor reported that Secretary Sebelius said that “it’s too soon to talk specifics about premiums until the insurance companies submit their bids this summer”. She again predicted that the online exchanges will encourage competition which would bring down prices. And of course, the White House has questioned the motives and validity of the study.

I am particularly amused by the competition argument. Large corporations, many of them publicly traded, are going to lose millions, not by accident, but because they will be blindly caught up in a bidding war to insure our sickest Americans. A little real world capitalism is going to be a real shock to some of our Washington bureaucrats.

My own policy, a high deductible H.S.A. qualified health plan, renewed recently. My rate increased over 30% and yet, the premium is still competitive. Claims, taxes, new charges like the facility fees that are now appearing on our bills, and the incredible cost to comply with the new legislation are all contributing to this year’s increases. Next year? I suspect that 30% will be a fond memory. 

Damn. Our canary died.


Thursday, March 14, 2013


Robert Anderson grimaced. The next to the last thing in the world Bob (name changed) wanted to do was to defend The Path To Prosperity, Paul Ryan’s new budget. The very last thing would be to defend or even to agree with the Democrats and the President. This was going to be a difficult meeting for Bob.

I would describe Bob as a Conservative, right-wing Republican. He prefers Constitutionalist. He voted for Mitt Romney because he is a realist. A vote for anyone else last November was really a vote for Obama, but it was not a vote cast with pride. Paul Ryan was a welcome addition to the ticket. Bob had touted Ryan as the country’s future for years and he felt validated when the Congressman was chosen for the number two slot. That was last year. Now, March 2013, Bob was going to take crap from his friends in the middle and the left.

Paul Ryan’s budgets have always been more about politics than numbers. These are budgets designed for the campaign trail. No Ryan budget has ever had a chance of passage in the Senate. No Ryan budget could be signed by a president, especially this President. All of that is understood in advance. But this time Ryan went too far.

How far? When FOX calls out a Republican, he has officially jumped the shark.

Mr. Ryan’s new budget assumes the repeal of the Patient Protection and Affordable Care Act (PPACA). Oh sure, he retains much of the savings and revenues from ‘Obamacare” and the tax changes of the last year. He just dumps the benefits. It is as if the last election and the two long years of campaigning never happened.

Robert Anderson – business owner, Constitutionalist, American – was totally frustrated. He has taken the time to meet with our elected officials. He has explained the significant flaws in the legislation to members of both parties. But Robert, unlike Congressman Ryan, understands how doing nothing, how letting this law be enacted without needed modifications, will hurt his business. Republicans voting for the repeal of the PPACA are Republicans voting for the legislation’s enactment in its current form.

So Bob Anderson is now forced to agree with Dave Cunix, centrist Democrat. Neither the Democrats nor the Republicans want the PPACA to succeed. The Republicans won’t help to modify it because they want to be completely uninvolved. The PPACA is the key to unlimited campaign financing. The Democrats will use the failure of the PPACA to welcome a Single-Payer system.

The insurance companies who will be selling supplemental policies and taking care of the administration of this future Medicare-like program are cheering from the sidelines. Bob Anderson may be disappointed in Paul Ryan’s budget, but the politicians, left and right, are quite content.