ObamaCare Blamed for up to 47% Hike in Insurance Rates

BS.

I just showed figures that show that Admin and NET cost of Medical Insurance has gone up 11% more than can be accounted for by inflation and increase in population over the last decade.

I also showed where the net percent Admin took out of our total medical costs had increased 1.4% over the last decade, so there is no way you can deduce from those posts that I'm claiming that Insurance Admin costs have become more efficient.

Indeed the numbers show that they may be getting slightly less efficient.

But it also shows, as I've stated many times, the rising costs of our medical care is NOT driven by the rising costs of Admin and the NET cost of Medical Insurance.

Arthur

 

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I promise never to make any such claim. Never have, never will.

So?

If you want to discuss whatever, with somebody else, no problem - I'm not really interested in the details of insurance corporation budgets. If you want to discuss post 20 and the rest of my posts, and you keep quoting them as though you do, feel free to address them at any time - there's a discussion to be had (whether the drug company behavior depends on the insurance setup to survive, as I believe and would be necessary, for example).

 

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This is entirely incorrect. The actual statement in the source article is:

It does not say 63% of the rise in premiums.

Real per capita health care spending is the average amount per person spent on health care (e.g. actual treatments, exams, etc.) adjusted to allow for inflation, population growth and (to a degree) changing demographics. Or put another way, it represents the consumption of actual health care services per person.

Thus your mathematical skills should be applied to the rise in real per capita health care spending, not premiums. From 1975 to 2005, real per capita spending on health care grew an average of 4.2 percent annually (source: CBO), and is currently around 4.6%.

 

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And my posts haven't never been about insurance corporation budgets.

Arthur

 

Nor did I say premiums, but it does give us an idea of how much of the rise in premiums is due to the rise in the costs of care.

Gypsi, cut to the chase, in 2006 to 2007, when our medical costs went up $150 Billion, how much of that are you claiming was due to insurance?


Arthur

 

No, it doesn't - at all.

All it says is that, according to their particular analytical method, 63% of an average 4.5% rise in real per capita spending could be attributable to a sicker population.

63% of 4.5% = 2.8%.

How does this in any way explain premium rate increases vastly in excess of this – and vastly in excess of rises in every other relevant indicator such as inflation, wages and of course, total health care costs?

Arthur, you seem to have trouble distinguishing between "national health care costs" and "insurance premium costs" so I can't be entirely sure what you're asking.

Assuming that by “medical costs” you mean national healthcare expenditure, then as I have explained – though you refuse to accept it – “insurance” does not contribute to medical costs except by way of a share of admin that can be linked to medical costs ultimately paid for by insurance companies. Rather, money coming from insurance companies (in the form of claims paid) is one of the sources of funding by which the nation’s medical costs are paid.

Perhaps this picture will make it clear. (Which side is “insurance” on – income or expenditure?)

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Incidentally, the actual year-on-year increase in medical expenditure was 127.2 billion, or just over 6%.

Again, what justification is there for healthcare insurance companies to blame premium increases far exceeding this on "rising medical costs"?

It doesn’t matter how much you look at this and that increase in particular healthcare costs, the fact is, premium costs have far exceeded them. So when you say...

... you’re quite right. Their “take away” is in the form of unjustifiable premium increases.

Really, I don’t understand why you keep defending the insurance companies against blame for increased medical costs. They are being blamed for unjustifiable premium costs.

 

So Gypsi, since you are convinced that the insurance companies are stealing vast sums of money from us, where do you think it's going?

How are they HIDING these vast sums from the regulators who approve rate increases?

Give us NAMES of PEOPLE and COMPANIES whose profits are SOARING.

Because when health spending went up $150 Billion in one year, and industy profits didn't change from year to year (so you can't double count them)

But you claim that money went into unjustifiable premium increases

Where did the insurance companies hide it?????

Just consider this is the YEAR TO YEAR increase in our spending, in Billions of dollars per year, over just the last 8 years:
2008 $99
2007 $127
2006 $129
2005 $127
2004 $120
2003 $132
2002 $133
2001 $116

That's an increase of $985 Billion in just 8 years.
That amount of money DWARFS the profits of the entire medical insurance industry, so this huge increase in our medical costs isn't going to the Insurance companies, unless you can tell us how they manage to hide about 1 TRILLION dollars over the last decade.

Face it, your numbers are way off.

I've yet to see any actual evidence that Insurance costs increases OVER TIME aren't in line with our rising cost of medical care.

Indeed, over the period of that paper you referenced, from 1986 to 2002, the cost of health care went up 8% per year which is an average of 4.7% per year when adjusted for inflation.

But so what, that 4.7% per year still drove the total cost of medical care from $471 Billion in 1986 to $1,602 billion in 2002, and we know that over $1,000 billion of that was just to disease prevalence, and we know that Admin and the NET cost of insurance only went up $80 billion.

Indeed, from that same article:

So the article clearly states that our health care spending is on the sick, not on insurance.

So if you don't believe that paper and you don't believe the government's figures then what you need to find is PROOF that health insurance premiums, for the same level coverage, in those same years has grown by substantially more than 8% per year (or 4.7% per year adjusted for inflation) on average.

Because they are NOT to blame.
If they WERE to blame, then fixing the problem of our rising medical costs would be a piece of cake.
But it's not.
Indeed, if you really believe this is true, then go to the Obamacare Gov web site and find where they say the problem is the insurance companies are ripping us off and all we have to do is repeal those "unjustifiable premium increases" and call it a day.

Arthur

 

This not rocket science:

http://www.dailyfinance.com/story/health-insurer-profits-jumped-250-in-last-decade/19363504/

A kid with a little knowledge of basic math could figure out the answer Arthur.

 

It's not rocket science so why don't you understand it?

So a little parsing is in order:

The headline states:

But then we learn what the AMOUNT of this 250% jump is:

So then we compare it to 2008 cost of medical care and we find that this profit represents ONE HALF OF ONE PERCENT of our medical costs (less when compared to 09).

So it is no big deal.

Well except for people who don't know math and are easily fooled when people use PERCENTS.

Or look at it this way.

If you extrapolate from 2000 to 2009, from $4.9 Billion in profits to the $12.2 billion in 2009 to get your 250% increase, that comes to a total of $85 Billion dollars.

From 2008 to 1999 though, we spent $17,953 Billion on health care, or it shows the profits for that period have averaged, Damn, ONE HALF OF ONE PERCENT

LOL

No joe, it's NOT rocket science.

Arthur

 

You really don't have a clue, do you.

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The bottom line is insurance companies are becoming more and more profitable and spending less and less on actual heatlhcare expenses with each passing year. There are certian other factors that affect health insurance costs. No one is denying that fact. But this thread is not about the other factors, it is about insurance company costs. You really don't know who to stay focused on a topic do you?

 

Oh dear. Where do I start....

No, I did not say that an increase of $150 billion in healthcare spending went into unjustifiable premium increases. How on earth could it?! An increase in healthcare spending means that more money is being spent on healthcare. This is so self-evident that I'm surprised you could bring yourself to accuse someone of thinking otherwise.

What I did say was that the extra $150 billion (actually $127 bn) represents a 6% increase in healthcare spending. I then pointed out that premium increases are far higher than this, and far higher than every other relevant increase. Because of this they are "unjustifiable" premium increases - and it is in this manner (via unjustified premiums) that insurance companies are "taking away" money, at the expense of policyholders.

In case you still don't get what I was saying, let me rephrase my statement that “their take away is in the form of unjustifiable premium increases” into something a little simpler for you:

Insurance companies raise premiums for the sole reason that they would like to make more money, blaming those increases – with no justification whatsoever – on “rising healthcare costs.”

Again, no one – least of all me – is saying that "healthcare spending" monies are going to "insurance companies". Money spent on healthcare is spent on (surprise, surprise) healthcare. Please do explain what aspect of this confuses you, so we can fix it, because an unfortunate side-effect is that you think others are as muddled as you are. Consequently, you keep accusing me (and others) of saying things they haven’t said.

Once again, money spent on healthcare is spent on healthcare - actual tests, procedures, pills, etc. Healthcare spending does NOT mean money spent on insurance. Thus I have never said that money spent on healthcare goes to insurance companies because I am clearly aware that it doesn’t – it goes to the providers of healthcare. Therefore, whenever you think this what I am saying, because of your own confusion, think again. Better yet, grasp the concept yourself. Refer to the diagram I posted last time. Remember, “Spending” is the right hand pie chart - note the absence of “insurance”.

By golly I think you’ve got it at last!

What have I been saying all along? Healthcare spending is on... healthcare, for the sick. It might be useful to re-read my posts in the full understanding that what you think you are “revealing” to me here, in the above snippet, is something that I have been trying to explain to you all along.

This is why I have never said that increases in healthcare costs can be blamed on insurance companies. What I have said is that insurance companies can’t blame their premium increases on rising healthcare costs – the premium increases are much higher than increases in healthcare costs. They are also much higher than inflation, wages, etc. In other words, there is no justification – other than profits – for these huge premium increases. Blaming them on rising healthcare costs is a smoke-and-mirrors act to mask unscrupled profiteering.

For 1999 to 2008:

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Source: Kaiser foundation: Trends in Health Care Costs and Spending

One year later and the increase in insurance premiums was higher yet – 131% for 1999 to 2009, compared to inflation of 28% for the same period.
And then add to this graph a 250% profit increase for the 10 largest insurance companies for the period 2000 to 2009.

Hopefully you understand now that what people are unhappy about is rises in insurance premiums that are unjustifiably blamed on rising costs in healthcare.

Just to be clear:

The complaint is not that insurance companies are causing rising health care costs.

The complaint - the issue at hand - is that insurance companies are:

(a) raising their premiums by huge amounts and
(b) falsely blaming the raises on rising medical costs

In other words, there is no real justification for such high premium increases. That is why I call them unjustifiable premium increases.

So, can you explain them - can you justify these excessive premium increases?

 

Sorry, but you are wrong. The cost of Insurance is most definately included in the annual figures for health care costs. In that chart, it's unfortunately included in OTHER.

BUT

http://www.cms.gov/NationalHealthExpendData/02_NationalHealthAccountsHistorical.asp#TopOfPage

Download the spreadsheet for National Healthcare Expenditures and Source of Funds.

In this full accounting of the cost of Heatlh Care you will find the top of the spread sheet has the Annual Cost of Health Care amounts that agrees with the amounts everyone uses, but in the break down of the annual costs you will find the line item for:

Admin. & Net Cost of Priv. Hlth Insurance

Which was $159 Billion in 2008, or 7.3% of heatlh care costs

Which you'll find exactly agrees with the charts you will find:

http://www.kaiseredu.org/Issue-Modules/US-Health-Care-Costs/Background-Brief.aspx

In this case it's called "Program Administration", but it includes the Net Cost of Private Health Insurance. which is what we pay to the Insurance companies in premiums that is NOT paid back out for our care. The rest of our premiums is a pass through.

Sorry if I can't make it any clearer for you.

Except I've covered that issue in detail.


While the AMOUNT of this 250% jump represents only $12.2 billion dollars.

So then we compare it to 2008 cost of medical care and we find that this profit represents ONE HALF OF ONE PERCENT of our medical costs (less when compared to 09).

Or look at it this way.

If you extrapolate from 2000 to 2009, from $4.9 Billion in profits to the $12.2 billion in 2009 to get your 250% increase, that comes to a total of $85 Billion dollars profit over that entire period.

But, from 2008 to 1999 though, we spent $17,953 Billion on health care, or it shows the profits for that period have averaged, Damn, ONE HALF OF ONE PERCENT

So going on and on about their unreasonable profits as the cause of premium increases just doesn't wash, as it remains 1/2 of 1 percent.

Nor does that chart mean anything at all.

It shows premiums compared to earnings and inflation.
What you want to show is premiums compared to the cost of Medical Care

And then you have to account for what percent of people have insurance, because as unemployment goes up, the number of people with insurance goes down and thus the costs are spread to fewer payors and premiums go up.

By the way, do you have the data that backs up that chart, because I've not seen a way to validly compare "average premiums" over time.


Finally, if you really believe this is true, then go to the Obamacare Gov web site and find where they say the problem is the insurance companies are ripping us off and all we have to do is repeal those "unjustifiable premium increases" and we can call it a day.

Indeed that is NOT what they've done, Instead, the plan is to make ~30+ million more people buy insurance from the insurance companies and by doing so they claim they can save the average person money. So our solution is really an expansion of the insurance industry. So the Gov seems to see them as part of the solution, not the inherent problem.

Or do you not believe Obamacare can save us money?

Arthur

 

They've been about nothing else - you do nothing but compare budgetary lines in insurance company account books with things like medical care expenditure overall.

Like this: :

Now granted some of that was in somewhat relevant response to other posters - but you posted the same stuff in response to quoting from my posts, as if in response to my observations, points, etc.

So post 20 remains orphaned, and the rest of my posts likewise. There's no rule says you have to pay any attention at all to my posts, but when you quote them and act as though you are responding to them, an actual response is not too much to expect.

Any time.

 

Sorry Ice, I have no idea what your issue is.
I've used Gov figures for the NET cost of insurance for every calculation, NEVER budgetary lines in insurance company account books.

http://www.cms.gov/NationalHealthExpendData/02_NationalHealthAccountsHistorical.asp#TopOfPage

Indeed, as I've mentioned to Gypsi the plan is to make millions more people buy insurance from the insurance companies and by doing so they claim they can save the average person money. So our solution is really an expansion of the insurance industry. So the Gov seems to see them as part of the solution, not the inherent problem.

Do you disagree with this conclusion?

Arthur

 

Read the posts, reply to the posts, it's not rocket science. Start with post 20, which is just a couple of sentences.

What conclusion? That the current plan cannot control (much less reduce) costs, because it deals in the main source of cost inflation in the US system essentially uncurbed?

Yeah, I agree with that.

 

First, to repeat, I've used Gov figures for the NET cost of insurance for every calculation, NEVER budgetary lines in insurance company account books.
You really need to look at the Government's figures and tell me which numbers you think are incorrect.

As to post 20, I've told you, I've seen no proof of that and you've provided none.

If you think you can compare it to some other country's system, then you need to do an apples to apples comparison.

I do think that one of the reasons that the US health care system is over-burdened compared to many other countries is because we have a large number of poor people who only get treated when the conditions reach hospital level, we have an epidemic of obesity that causes a lot of cronic problems and then we compound it with our horrendous rate of traffic accidents, our high rate of smoking (still suffering the effects of previous years of heavy smoking because most lung cancer vics are in their 60s and 70s), our long time love affair with guns and illegal drugs, not to mention all the soldiers we have to treat for various injuries suffered in the wars we fight.

What I'm saying is it is very hard to separate our medical system from our somewhat unique way of life, which seems to be more expensive medically.

Now if you have some actual figures that shows the US is more expensive AND the reason is DIRECTLY attributable to our Insurance Companies, I'd be glad to review it.

If you are just saying that our system is more expensive for a comparable level of care to another country, that's quite different.

It's assigning the CAUSE of the difference that seems problematic.

Arthur

 

I used that example above, specifically with emergency room overburden, as an item of that evidence you seem to have overlooked.

Read the post, reply to the post.

Now that you have typed a bit of it, maybe it will commend itself to your attention.

No difference. Same numbers, same source, same irrelevancy.

Here's France, say: http://www.guardian.co.uk/world/2003/oct/27/worlddispatch.france

They pay less than half what we pay, and get better delivery.

 

And yet not a SINGLE figure to back up your assertion.
That's the problem ice, assertions without facts mean diddly squat.
By the same token I could assert that it's great that the under insured go to our emergency rooms and thus keep the staff busy, thus insuring high utilization of these people.

Yeah, you do seem to think facts are irrelevant, and NO they are not the numbers from the companies ledgers, these are the NET costs of insurance overhead to the system. The rest is actually spent on medical care. Now since we've shown that the DIRECT cost of the insurance companies is not the primary driver of the rise in the cost of our health care we are left with trying to find out what does cost so much, because indeed, our money is going into Hospitals, Doctors, Nurses, Techs, Equipment, Clinics, Medicine, Dentists, and Medical devices. Which means your assertion is simply that we pay way too much for these people and these medicines. Which might be true, but it doesn't really answer why.

Again ice, some FIGURES would help your cause.
And figures that are broken down to this level are needed to make a valid comparison:

http://www.cms.gov/NationalHealthExpendData/02_NationalHealthAccountsHistorical.asp#TopOfPage

The reason is you need to compare apples to apples, to make sure everything that comprises one nations cost of health care is also in the others.
Then you can also see, where the differences are, and thus get an idea of why one system is more expensive. Comparing outcomes has to be done similarly detailed. I'm way too skeptical to just accept assertions.

Arthur

 

It's not the "cost of insurance", it's only the admin (non-medical) costs associated with insurance, which why it is "unfortunately" (as you see it) included in OTHER - because that's where it belongs.

I am more than familiar with those charts, and with the “Administration and the Net Cost of Private Health Insurance” item of expenditure.

I referred to it back it post #66, when I said this:

“insurance” does not contribute to medical costs except by way of a share of admin that can be linked to medical costs ultimately paid for by insurance companies.”​

The "share of admin" I referred to is the “Administration and Net Cost of Private Health Insurance". It is called the net cost because it is the difference between money received by insurance companies and money paid out by insurance companies on claims (healthcare). This difference is attributable to – represents - admin costs, which is why it is shown together with Administration.

Again, you never clarify what you mean by "cost of insurance". Premiums?

If by "cost of insurance" you mean premiums, then you are wrong – insurance premiums are not included as a healthcare cost. Only the associated admin cost is included (as explained above), within the "Admin and Net Cost of Private Health Insurance".

If by “cost of insurance” you mean the share of admin attributable to insurance companies, then you are correct – and repeating something I told you back at post #66.

Not true. Re-read the article, or rather, read the original source article. It says:

"the five largest health insurance companies – WellPoint, UnitedHealth Group, Cigna, Aetna, and Humana – took in combined profits of $12.2 billion, up 56 percent over 2008."​

In other words, the $12.2 billion refers to combined profits of the 5 largest healthcare insurance companies only, and in one year only [2009], making your subsequent “calculations” erroneous on this basis alone.

How else are they at fault? Well, they are based on the premise that insurance companies (and only 5 of them, to boot) pay for the entirety of healthcare costs, when of course they do not – or anywhere close. They are one of several sources of funding, the others including state and federal funding.

All insurance companies combined fund only about 33% of total medical costs - let alone 5 companies funding 100%!

Furthermore, even if you had your data and methodology in order, averages do not allow for the diversity in the insurance market, nor the actual practices and profits within each corporation - particularly important when just 10 companies between them hold 45% market share.

As I said, both your figures and methodology are wrong.

Actually, it seems that it does wash.

Just to go “on and on” some more:

Here’s a comparative example for 2009 for those top 5 companies::

Health Insurance Premiums +56%
GDP -1%
Inflation +0.3%
Health care costs +5.7%
​

Really, you’re just continually dodging the real issue here.

 

Gypsi,
When you deal with the 5 largest, you deal with ~90% of the industry.
For the purposes of these calculations that's close enough. The extra 10% represents just 1.2 Billion dollars and won't change growth over the decade calculation and the total profit percent is STILL ONE HALF OF ONE PERCENT of the cost of medical care.

THAT'S IT.

List of 14 Insurance companies in the Fortune 1000
http://money.cnn.com/magazines/fortune/fortune500/2009/industries/223/index.html

And if you will note, the profits DROPPED -36.4 % for the top 5 in 2008, so figures which show how much they went up in 2009, will tend to look HIGH.
For a more ACCURATE comparison, compare 09 profits to 07 figures. And because premiums are set ahead of time, and then when you get poor results as in 08, they have to be adjusted up more in the following year, which is why the insurance industry doesn't necessarily have smooth year to year rates. Which is why when you look at a 1 year horizon you can draw inaccurate conclusions. Insurance rates should't be looked at over less than 5 years, and preferably a decade.

Why YES, they are included.
How could they NOT be?
The are NOT included in the Admin line, that represents the OVERHEAD of the insurance company, in other words the amount of your premiums that don't get paid out to the Hospitals, Doctors, Clinics, Pharmacies etc.

They are in the spread sheet under SOURCE OF FUNDS, which when labeled as Private Insurance, is the money that we pay for premiums that the insurance companies pay out for us for medical services. If they were in the Admin it would double count the lions share of the premiums. I'm pretty sure when we discuss the cost of Insurance we aren't interested in the amount of money that simply passes through them to pay medical bills, it's the amount of money we pay for premiums that DOESN'T go to medical bills that is the issue, and that is in the ADMIN line.

Source?

(Again, a 1 year horizon can be awfully misleading and so you really need to look at multiple years because of how the Insurance industry rate increases are regulated).

But consider, if those numbers were correct, and even assuming that actual costs of Medical care go up 10% (high), then the profits for the top 5 insurance companies would grow in just one year from ~$12 Billion to over $100 Billion dollars.

Except that is NOT going to happen.

Arthur