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Share this pageInsurers’ criteria for exchanges
Posted by PNHP on Friday, Jan 25, 2013UnitedHealth CEO sees ‘time of great potential and profits’
By Kip Sullivan, J.D.
The Jan. 18 Wall Street Journal carried an article about the willingness of big insurers to participate in exchanges. Its focus was UnitedHealth Group (“United Health weighs in on new exchange option,” B3). UHG consists of an insurance division (UnitedHealthcare) and a number crunching “health services” division (Optum).
According to the WSJ, UHG’s CEO Stephen Helmsley predicts UnitedHealthcare will participate in only 10 to 25 of what it says “could be as many as 100” exchanges. (I assume United derives 100 by multiplying the 50 states times 2 to reflect the Affordable Care Act provisions giving states authority to create separate exchanges for individuals and small employers.) However, Helmsley didn’t write that estimate in stone. He said he is making “absolutely no firm commitment to that range.” The Jan. 18 Minneapolis Star Tribune reported the same statement.
The WSJ article said Aetna “will probably participate in 15 exchanges in 2014,” Humana and Cigna will probably be in 10, and the Blues are expected to “participate widely.”
In short, nine months before enrollment in policies sold on the exchange is due to start, even the biggest insurers cannot say which exchanges they’ll participate in. If they are unsure about which exchanges they’ll be in, they must be even more unsure about what premiums they’ll be charging.
The WSJ article mentioned three factors that insurers say will determine which markets they participate in:
* Whether younger people will be scared off by high premiums (and not sufficiently intimidated by the fine for not having insurance);
* whether the insurer will be able to sign contracts with providers with low reimbursement rates; and
* whether the insurer already owns or can create networks of providers that restrict patient choice of provider.
In states where they already have significant market share, large insurance companies already have some sense of what their provider fees are likely to be and whether they’ll be able to create HMO-like, limited panels of providers. What insurers everywhere haven’t figured out yet is whether premiums for policies sold on the exchanges will have to soar because the exchanges attract disproportionately older and sicker people. The level of uncertainty will decline somewhat over the 2014-2016 period because the fines for not having insurance rise rapidly during those years, and that will force more healthy people to buy insurance rather than pay the fine.
The Star Tribune quoted Helmsley saying the ACA will be good for UHG. As the Star Tribune put it, Helmsley “sees the coming year – and into 2014, 2015 and beyond – as a time of great potential and profits.” The most obvious reason is that the ACA gives UnitedHealthcare millions of new customers. According to Helmsley, the ACA also raises demand for United’s “core competencies.” That is corporate speak for, “The ACA promotes the myth that health care can be improved by data crunchers. The ACA thus raises demand for our computers, our enormous claims data base, and our number crunchers.”
The Star Tribune attributed to Helmsley this exquisitely wrought prose:
“Over the last several years, we have shaped our enterprise as a uniquely adaptable construct of market-facing businesses that serve the critical markets that the ACA is expanding,” Hemsley said.
Uniquely adaptable construct? Market-facing? Construct of market-facing businesses? Don’t you wish you could write stuff like that? What Helmsley really meant was, “Thanks to the insurance industry bailout enacted by the Democrats in 2010, we expect to make a bundle. We’re quite sure we’ll make money off the ACA as a data cruncher, and we’re pretty confident we’ll make money as well selling shoddy insurance to low-income Americans forced onto the exchanges by the individual mandate in the ACA.”
Kip Sullivan, J.D., is a member of the steering committee of Physicians for a National Health Program, Minnesota chapter.
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non-group subspecies
January 29th, 2013 at 7:21 pm
According to the CBO, uninsured non-group members are healthier and will cost less than insured. This is because of the self-selection process of years of double-digit rate hikes. Healthy small business and self-employed chain-cpi’d their insurance years ago. Only the sickest, most desperate paid the sharply higher rates.
The New York Times recently had a column in which it said rates for non-group were being raised by double-digits this year. The Wall Street Journal said rates for these insurance pools would go up triple-digits.
It is not because we are older and sicker. It’s because they can; we have no political protection. As a group we take very good care of ourselves because we have not been able to afford care for years.
Stick with me here. You are just the doctor I want to talk to. The 14th Amendment says we have equal protection of the laws.
Nolo’s plain English puts it this way:
The right to be treated the same, legally, as others in the same situation. If a law discriminates between on group of people and another, the government must have a rational basis for doing so…
In theory, the ACA mandates we all have insurance. In practice, the law demands that non-group uninsured be placed in a discriminatory pool. For example, in 2009 the CBO estimated insurance in the non-group pool would cost $5,800 per person. Mind you, the CBO said this group was cheaper to insure and anticipated they would access care less than people in large pools. Yet, Gov. Scott of Florida is in a pool where he pays less than $400 a year to cover himself and his wife. Florida state career service workers pay $50 a month.
What is the rational basis to require the self-employed and small business owners and their employees to be in a pool that cost them at leas $5,880 a month, even if they cost the insurers less, to be discriminated against while the law enforces our participation?