HSA Doomed?

[sdmillar]

When you really think about it, having an 80% MLR gives incentive to the insurance companies to encourage health care costs to go up. IF health care costs were say $1,000,000, insurance companies would have to pay out $800,000 which leaves $200,000 for profit and expenses. What if the same amount of health care were to go up to $2,000,000, that would then leave them $400,000 for profit and expenses. Last I checked $400,000 is more to go toward the bottom line than $200,000. Same issue on the fraud. Encourage it and you end up making more money in the long run.

Granted, this is an oversimplification of the process, but a system where the payor (insurance industry) has no incentive to keep costs under control, to the extent that they can, will see an industry where costs will sky rocket even higher.

Think about contracts that are drawn up as cost PLUS. The contractor makes a percentage over what ever the costs of a project turn out to be. Do they have incentive to keep overall costs down? NO, therefore if they want to make more profit, let prices go as high as they can.

 

[somarco]

having an 80% MLR gives incentive to the insurance companies to encourage health care costs to go up.

AARGH!

You forget that HHS has decided they have the authority to determine what is a fair rate increase and what isn't. If premiums are forced up due to a cavalier attitude by carriers to reign in costs their new rate has a bullseye and comes under public attack.

 

[sdmillar]

AARGH!

You forget that HHS has decided they have the authority to determine what is a fair rate increase and what isn't. If premiums are forced up due to a cavalier attitude by carriers to reign in costs their new rate has a bullseye and comes under public attack.

Then it is obvious that carriers unable to count on at least the 20% for expenses and profit will exit the market pretty quickly. HMMMM..... Nationalized healthcare RUN by the government? I thought Obama said that was not what this was all about?

If insurance companies are told that they must spend 80% of premium dollars on health care, are we saying that HHS can deny that costs are what the costs are? Apparently they can

 

[somarco]

I thought Obama said that was not what this was all about?

He lied.

Yeah, I find that hard to believe as well.

If insurance companies are told that they must spend 80% of premium dollars on health care, are we saying that HHS can deny that costs are what the costs are? Apparently they can

I believe you answered your own question.

DC is on a roll. They are taking over banks, insurance companies and auto manufacturers and making their own rules. They force a company in to bankruptcy then tell creditors they are subordinate to the union. They sell guns to drug dealers. Tell the public they must buy health insurance and will tax them if they don't buy insurance or buy the plan the govt wants you to have.

They tell us what kind of light bulbs we can use. What kind of food we should eat and what we can't. They take our money and then decide how it should be spent. Sloths are rewarded with free living quarters, food and health care. Deadbeats have their mortgages forgiven or reduced to 2% loans while the rest of us work to cover not only our own expenses but those who are too lazy to work.

We have a tax system that rewards low income workers with a bonus and penalizes productive workers with high incomes.

Apparently you have missed a lot. You really should get out more.

 

[Yagents]

Or just watch Fox news for a reality shot.

It's considered prev care and free under obamacare

 

[YouGotMyMoney]

He lied.

That's not possible, why are you spreading hate? That certainly is a racist thing to say. Only white politicans lie. Please stop spreading bigoted rumors.

.....

Wait he does have several shades of white to him, hmmmmm....mb u have a point?

 

[Yagents]

Ok, found this example. Plan designs will be changing. When you're forced to back into the numbers, lower deductibles are the only route to achieving 80% MLR:

White paper from Roy Ranthum http://www.healthcarechoicecoalition.org/pdf/mlr-regulation-createschallenges.pdf

New Regulation Threatens Agents, HSA Plans | John Goodman's Health Policy Blog | NCPA.org

Dan Perrin, of the HSA Coalition, notes another consequence — instead of lowering the cost of coverage, the MLR will raise it. He argues that lower-cost "bronze plans" and HSAs will be banished from exchanges because both achieve their lower premiums by having higher out-of-pocket responsibilities. The out-of-pocket spending is not counted in the MLR calculation. He writes:
To repeat, just so everyone is clear: If an insurer pays for a health care service for their insured, the MLR rule counts that in their MLR rule. But if an individual pays for a health care service to meet their deductible, the MLR rule does not count that expenditure.
Let's give an illustration:

• I buy an insurance policy with no deductible that costs $5,000.
• I have $4,000 in medical expenses.
• That is 80% of my premium, so the health plans is in compliance.

However:

• If I buy a policy with $1,000 deductible for $4,000 in premium,
• And still have $4,000 in medical expenses.
• I pay the first $1,000 directly to meet my deductible.
• The health plan pays the remaining $3,000
• That is only 75% of my $4,000 premium, so the plan is not in compliance.

Exact same total cost of coverage. Exact same medical expense. But one design complies and the other does not.

 

[sdmillar]

Ranthum's White paper is an excellent explanation of how we are going to be abandoning high deductible health plans in favor of low or even zero deductible health plans to comply with the MLR calculations. Why would insurance companies do it any other way?

First dollar coverage plans while saying we are trying to bring down actual health care costs is just comical. "Sure doc, give me that MRI, CT SCAN, and any other expensive test you want cuz I aint paying a thing for it...."

 

[somarco]

Let's give an illustration:
I buy an insurance policy with no deductible that costs $5,000.
I have $4,000 in medical expenses.
That is 80% of my premium, so the health plans is in compliance.
However:
If I buy a policy with $1,000 deductible for $4,000 in premium,
And still have $4,000 in medical expenses.
I pay the first $1,000 directly to meet my deductible.
The health plan pays the remaining $3,000
That is only 75% of my $4,000 premium, so the plan is not in compliance.
Exact same total cost of coverage. Exact same medical expense. But one design complies and the other does not.

While true, that is an oversimplification.

Lower deductible plans, especially with copay's, have higher admin costs which eats away at the carrier side of MLR.

And as Scott pointed out, plans with first dollar coverage encourage excessive utilization which further drives up the overall cost of health care leading to even higher premiums.

This is what happens when the govt tries to design something and they have no clue what they are doing.

 

[stuy119]

Does the phrase "We have to pass it to see what's in it" ring a bell with anyone?