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More ACA success stories
Posted: Fri Mar 04, 2016 5:39 pm
by Long Run
Insurers lost big in the roll-out, providing low premiums in an attempt to make the program look good. Now comes the big rate hikes, reduced provider panels and other cost containment strategies.
Oregon health insurers hemorrhaged red ink in 2015 as the industry continued
to struggle in the Affordable Care Act era. The collective losses of the state's seven major insurers nearly quadrupled to more than $164 million, with troubled Moda Health Plans alone losing nearly $50 million in a high-profile financial implosion.
The state's hospitals, meanwhile, are basking in an Affordable Care Act
honeymoon of soaring revenue and big profits. The hospitals' charity care has plummeted since passage of the act, which has led to a tripling of their 2015 profit margins compared to 2013.
The hospitals' bonanza comes at the expense of taxpayers, the insurance
companies and consumers who, in some cases, face double-digit insurance premium rate hikes.
"It's the providers who have won in the Affordable Care Act," said Jack
Friedman, former chief executive of the Providence Health Plan. "They've gotten a whole bunch of new business and the charity care the hospitals were providing is just a fraction of what it once was."
Eighteen months since the landmark Affordable Care Act took effect, the
legislation has succeeded in its primary goal: Getting 16.4 million formerly uninsured Americans some sort of insurance coverage. In Oregon, more than half a million people got coverage through Medicaid or commercial insurance through the newly created exchange.
* * *
Surprisingly, Providence Health Plan, not Moda, posted the largest losses
of the year among the big seven players. It lost $63 million in 2015, a drastic reversal from the $22.3 million profit it posted in 2014. Providence spokesman Gary Walker attributed the big loss to an influx of expensive new customers and an ill-advised 14 percent rate cut it implemented in 2015.
"We're all learning this as we go," said Walker, who added that Providence
has an immense capital reserve, nearly 1,000 percent beyond state requirements.
Moda last year lost $49.5 million, its second straight year of red ink. The travails of the second-largest carrier in the state have been well documented: Its aggressive push into the individual market created by the Affordable Care Act proved to be a financial disaster, which got even worse when the federal government backtracked on promised financial assistance.
* * *
A wave of consolidation is already underway in the health insurance business
and most expect it to gather steam in the face of similar financial struggles industrywide. Health Net is merging with St. Louis based Centene Corp. Springfield-based PacificSource in October entered into an alliance with Legacy Health, one of the state's largest hospital chains.
In the end, the insurance companies most likely to survive are those
like Kaiser and Providence, which are affiliated with enormous hospital systems.
* * *
Oregon's 28 largest hospitals provided $143.3 million worth of charity
care in the first six months of 2015, according to the Oregon Health Authority. That's down by nearly two-thirds from the $414.7 million worth of charity care the big hospitals provided in the same period of 2013.
As these former charity cases became paying customers, Oregon's big hospitals,
many of them owned by non-profits, saw their profits swell. The operating margin at the state's larger hospitals hit 8 percent in the second quarter of 2015, according to state data, more than triple their profits from the same period in 2013.
For champions of reform, who repeatedly harped on the importance of reducing
health-care costs, hospitals' big profits are not what they envisioned.
"The unspoken understanding for a long time was that hospitals were going
to charge more than they really needed to in order to cover the cost of charity care," O'Brien said. "Now, there are fewer and and fewer of those people. Does it really make sense for hospitals to continue passing along charges for costs that are no longer in the system?"
Re: More ACA success stories
Posted: Fri Mar 04, 2016 6:45 pm
by rubato
Many, if not most, hospitals are run by health plans in Oregon like Kaiser and Providence, so a little money lost on one side is more than made up for on the other.
"Hospital Profits" are then are not unexpected or evil but merely an offset to losses on the other side.
Disruptions and shifts were inevitable and for the most part they have been beneficial.
Funny that you could quote an article that said "Providence losses are wicked" in one place and then "Providence hospitals making more money is also wicked" someplace else. And not notice. making sense?
Reducing the burden of uninsured patients to hospitals is entirely a good thing and will help the health plans keep premiums far lower overall.
yrs,
rubato
Re: More ACA success stories
Posted: Fri Mar 04, 2016 7:12 pm
by Big RR
Reducing the burden of uninsured patients to hospitals is entirely a good thing and will help the health plans keep premiums far lower overall.
You're assuming this is an aim of the companies owning both; somehow I think their goal is more likely to milk both sides and maximize profits--they are profit making entities after all.
Re: More ACA success stories
Posted: Fri Mar 04, 2016 7:49 pm
by Long Run
rubato wrote:
Funny that you could quote an article that said "Providence losses are wicked" in one place and then "Providence hospitals making more money is also wicked" someplace else. And not notice. making sense?
It is not as simple as the names suggest. First, there are a lot of independent insurance companies and hospital, as well as other medical providers, so they are not all part of a system. For example, a big loser is Moda with no connection to a hospital system. Second, while the names indicate that they are part of the same system, the Providence insurance is for-profit and the Providence hospitals are tax exempt, meaning they have to be kept separate -- you can't use tax exempt dollars to prop up a for-profit affiliate. The key take away, though, is not that the hospitals are making out like bandits, it is that the insurance companies that went all in the ACA exchanges have been hammered and are going to recoup this with big premium increases.
Re: More ACA success stories
Posted: Fri Mar 04, 2016 8:05 pm
by Burning Petard
Big change in our whole societal expectation. In my youth, every hospital in Jackson County, Missouri was operated by the government, or by a religious charity. The one exception was run by a Doctor's co-op. They were expected to operate at a loss. Now (I could be wrong) they are all a for-profit business, or an independent 'non-profit' organization that still expects to cover all costs with fees collected for services provided.
snailgate
Re: More ACA success stories
Posted: Fri Mar 04, 2016 8:08 pm
by oldr_n_wsr
insurance companies that went all in the ACA exchanges have been hammered and are going to recoup this with big premium increases.
I love the smell of future government bailouts in the morning. Smells like......
I really hope I'm not smelling that bull$#it
Re: More ACA success stories
Posted: Fri Mar 04, 2016 8:22 pm
by Long Run
oldr_n_wsr wrote: insurance companies that went all in the ACA exchanges have been hammered and are going to recoup this with big premium increases.
I love the smell of future government bailouts in the morning. Smells like......
I really hope I'm not smelling that bull$#it
Actually, the insurance companies weren't all acting like drunken sailors in setting low rates. They were counting on being reimbursed from a pool of money created by taxes paid by all private health plans (the reinsurance fee program). Problem was, there was only so much money in the fund for all of the demand from insurers who had terrible claims experience. And, given that there was zero buy-in from the Rs when the ACA was shoved through the D-controlled Congress, it was a DOA proposal to have Congress provide any increase to the ACA reinsurance fund. So any federal government bailout is unlikely.
Re: More ACA success stories
Posted: Fri Mar 04, 2016 9:43 pm
by Big RR
Where were all these low rates--as I recall, most of the original complaints were that the rates were exorbitant.
Re: More ACA success stories
Posted: Fri Mar 04, 2016 9:58 pm
by Long Run
It varied by marketplace but the general impression I have is that most people were pleasantly surprised by the initial premiums. Critics said to wait, and they were right as the bill is coming due.
Re: More ACA success stories
Posted: Fri Mar 04, 2016 10:11 pm
by Big RR
It may well have varied, but I recall many in the northeast complaining about high premiums and less coverage--which is par for the course with insurance companies.
Re: More ACA success stories
Posted: Sat Mar 05, 2016 2:15 pm
by MajGenl.Meade
Long Run wrote:It varied by marketplace but the general impression I have is that most people were pleasantly surprised by the initial premiums. Critics said to wait, and they were right as the bill is coming due.
That's certainly my experience. First year was amazing - Ok coverage for a reasonable price. That went up 300% over the next two years.
Re: More ACA success stories
Posted: Sun May 15, 2016 1:01 pm
by BoSoxGal
Single-payer is the way to go, but until then, ACA is better than nothing. As a chronic illness sufferer without healthcare benefits from employment, it's pretty great to be able to go to the doctor and get the treatment I need because I have a very decent health insurance policy for a reasonable premium. It IS sad that premiums have increased as they have, but not a surprise given the stranglehold of the insurance companies. Again, I hope to live to see the US establish a national healthcare as in Canada, the UK, etc. - but in the meantime, ACA is a heck of a lot better than living without health insurance.
Re: More ACA success stories
Posted: Sun May 15, 2016 4:29 pm
by Long Run
Except that before the ACA, people could have health insurance even if they lost employer provided coverage or never had it. There was and is the temporary COBRA coverage (usually 18 months), there are the portability provisions in HIPAA, and there were limited time periods to exclude pre-existing conditions. In addition, there were the high risk insurance pools that most states had to cover high-cost individuals on a subsidized basis.
The only real change that was needed was to make coverage more affordable, which could have been done with expansion of Medicaid (which was the only successful portion of the ACA -- it did what it was intended to do), along with a sliding scale subsidy for COBRA and individual insurance, and continued efforts to control healthcare costs. A few other tweaks would be good -- do not allow an insurance company to drop an insured (many states already had this) and to allow greater portability for those already covered. There was no need to create this complicated mess that has cost tens of billions of dollars just to figure it out, higher premiums for those already covered, and then severely damaged the individual insurance market, causing insurers to fail and abandon markets, jack up premiums and the like.
Nearly all the complicated provisions were implemented to address one issue: the person who gets sick without insurance. These people break down into two general categories: the people who could afford insurance but choose to go without (and there are still millions in this group); and the people who could not afford insurance, which gets back to the need for affordability. If you are going to defy a basic principle of insurance and let a person incur damage before buying insurance, failure is inevitable. While the ACA has damaged the individual insurance market, it has had only a modest impact on the employer market, mainly making it more expensive to obtain insurance for employees (these costs were offset somewhat by the long-term trend that started well before the ACA of slowing increases in healthcare costs). So, if the hidden goal of the ACA was to make the insurance market unviable, it appears it will fail on this count too.
Re: More ACA success stories
Posted: Sun May 15, 2016 9:26 pm
by Crackpot
You forget "pre existing" conditions. And cobra was by no means cheap.
Re: More ACA success stories
Posted: Mon May 16, 2016 1:40 pm
by Long Run
Crackpot wrote:You forget "pre existing" conditions. And cobra was by no means cheap.
I addressed pre-existing conditions, but may have been too brief. Under prior law, if a person had coverage and moved to new insurance, there was no exclusion for a pre-existing condition under the new policy (HIPAA portability). If a person was uninsured and then became ill/injured, they could still get insurance (either through their employer or through a high risk pool policy) but they had to wait 6 months for coverage of their pre-existing condition. As I noted, it is addressing the situation caused by this latter group -- the people who have gone without insurance and then get sick/injured -- that caused most of the complicated and unpopular provisions in the ACA.
COBRA continuing coverage is often surprisingly expensive. However, this is the cost the employer is paying to cover employees. If a person has an expensive condition, COBRA is a good deal despite its cost (which is why hospitals will often pay the COBRA premium for expensive cases). This, of course, gets back to affordability. One of the better programs implemented to soften the blow of the recession was the subsidy to maintain COBRA coverage for the millions of laid off workers. For the first time ever, the average claims experience of those covered by COBRA approached a reasonable amount (meaning healthy people were electing COBRA too).
Re: More ACA success stories
Posted: Mon May 16, 2016 11:07 pm
by rubato
COBRA was a non option for people who had JUST BEEN FIRED until Obama introduced a subsidy a few years before the ACA.
It was a zero unless you were already sick.
yrs,
rubato
Re: More ACA success stories
Posted: Tue May 17, 2016 1:46 pm
by Big RR
Not to mention that it only lasted 18 months, after which you were on your own for insurance; if you were medicaid eligible or got a new job, you could then get a policy that would cover your pre existing conditions, but if not, you were on your own until you spent enough money to bankrupt yourself and be Medicaid eligible. Medicaid and group plans covered pre existing conditions, but even if you could afford s personal policy, few, if any, provided that coverage.
Re: More ACA success stories
Posted: Tue May 17, 2016 2:46 pm
by Long Run
Big RR wrote:Medicaid and group plans covered pre existing conditions, but even if you could afford s personal policy, few, if any, provided that coverage.
The majority of states had subsidized high-risk pools that would cover anyone, including pre-existing conditions provided the individual went from prior coverage into the pool within the 63 day portability period. COBRA was never intended to be a long-term source of health insurance, but to deal with the typical situation of a person who temporarily loses coverage between jobs.
Re: More ACA success stories
Posted: Tue May 17, 2016 4:14 pm
by Big RR
Perhaps (I'll take your word that a majority of states provided this subsidized coverage), but a good number of states did not have those pools.
Re: More ACA success stories
Posted: Tue May 17, 2016 4:32 pm
by Long Run
Big RR wrote:but a good number of states did not have those pools.
Including PA, NJ and NY. Here is a pretty good look at the pools as they existed before the ACA:
http://kff.org/uninsured/issue-brief/st ... -overview/. Clearly, that was a change that was needed -- having fail safe coverage programs in all states for high risk individuals -- and the blue prints for doing so in a relatively efficient manner were there.