Obamacrap Requires Notification of Not Rebating

[Ann H]

"Now, if insurance companies were smart, they'd start bragging about the size of the rebate.

"We sent out a larger rebate than our next three competitors combined. Buy our insurance and you'll be getting money back!"

After all, the IRS has done it for years."

A carrier can brag that they sent a bigger MLR refund, but business owners and savvy IFP policyholders think the price was just too high to begin with. I explained to one policyholder that this isn't necessarily true.

An insurance company could meet the 80% MLR for several reasons:

• They honestly priced the plans correctly
• They honestly pay richer benefits for the price than other insurers
• They have a lot of sick people and/or they mismanaged their book through poor underwriting practices
• Their network contracts aren't as good, and they pay more to providers than other insurers do, for the same service
• Their current marketing is not as good. They have an older book of business with an aging risk pool, and they are not introducing fresh applicants into that pool.
• They have too many fraudulent claims (and now have less incentive to monitor for fraud).
• At the end of 2011 they quickly paid incoming claims that normally would have been paid in 2012.

 

[stuy119]

And more relaxed underwriting standards, especially on IFP.

 

[somarco]

more relaxed underwriting standards

It will be more difficult for carriers to maintain MLR without blowing it out under GI than the current scenario. I estimate it will take a carrier 2 - 3 years to get a handle on GI pricing, if they stay in the market that long.

In the interim some will send back mega rebate checks while others will suffer losses. Very few will ride close to 80 - 85% like they do now.

And what happens if they have to bring all pre-2014 plans into compliance with GI rates, community rating, etc.?

Those policyholders will get huge increases, at least double, and most of that business will go away which means they will be left with only a GI block and nothing to cushion the blow of transitioning from fully underwritten to GI.

Some carriers will implode while others will cash in their chips and walk away.

 

[Yagents]

Can the example of PCIP running at about 200% MLR be our crystal ball? Great points Bob

 

[Norwayguy]

Can the example of PCIP running at about 200% MLR be our crystal ball? Great points Bob

Yeah but PCIP only has unhealthy people, when you add healthy people into the mix things get a little better. Another problem with PCIP is they have a relatively small number of people enrolled. Obama was wrong when he thought there where many people just waiting for coverage they could purchase and all he needed to do was build it and they would come which is why PCIP had to resort to paying brokers for a period of time.

 

[VolAgent]

Yeah but PCIP only has unhealthy people, when you add healthy people into the mix things get a little better. Another problem with PCIP is they have a relatively small number of people enrolled. Obama was wrong when he thought there where many people just waiting for coverage they could purchase and all he needed to do was build it and they would come which is why PCIP had to resort to paying brokers for a period of time.

So why did we do this??? We gave people a chance to get coverage, no questions asked. They clearly still don't want it, or can't afford it. GI isn't going to fix either problem.

 

[somarco]

PCIP only has unhealthy people, when you add healthy people into the mix things get a little better.

Not really.

Group plans have a mix of healthy and sick and most of them have marginal to poor loss ratio's on much higher premiums than IFP.

It only takes a few sick folks to kill the deal for the healthy ones that never use the plan.

20% of the people generate 80% of the claim totals, and those 20% have 300%+ loss ratios.

 

[Norwayguy]

So why did we do this??? We gave people a chance to get coverage, no questions asked. They clearly still don't want it, or can't afford it. GI isn't going to fix either problem.

You asking me why we did all of Obamacrap when Republicans have pitched risk pools for a long time?

 

[VolAgent]

You asking me why we did all of Obamacrap when Republicans have pitched risk pools for a long time?

Eh, it was a rhetorical question. I know you know GI doesn't work.