Continued from above.............

Rubio and others in the GOP often insist that the government should not engage in crony capitalism by bailing out failing companies. However, that is not what the law is intended to do. Rather, it seeks to eliminate risk corridors — a provision to smooth out over time the intense initial utilization of health insurance by the previously uninsured — in favor of tax credits. After all, people lacking coverage for medical care will want to determine their health status, and medical providers will need to provide services to establish health baselines for future monitoring. When patients are stable, they use insurance less and are more likely to be healthier in proceeding years. Therefore, while costs may be high during the initial years of the health mandate, they should eventually fall as demand decreases.

It is impossible to talk about insurance without talking about moral hazard, the idea that people take greater risks if they are protected from the consequences of those risks. In his Web series “Health Triage,” Dr. Aaron Carroll recently argued, citing the Rand Corp.’s study on health utilization behaviors, that unhealthy people should be insulated from risks associated with accessing care because it encourages them to see the doctor more. By extension, risk corridors insulate insurers from risk associated with covering care services for those sick people. Rubio wants to remove that security.

While his actions may be controversial, the use of risk corridors is not. As the American Action Forum notes in its primer on risk corridors, “The ACA’s exchanges are not the first federal entitlement program to use risk-spreading mechanisms to protect participating health insurance issuers.” Medicare Part D, Medicaid Managed Care and Medicare Advantage programs, for example, have also benefited from government insulation of risk. Such practices acknowledge the inherent risk of providing a new service and the uncertainty that it brings.

The potential fallout from Rubio’s maneuver is significant. While the provision had the initial impact of preventing highly affected insurers from gaining federal relief (with funds collected from high-performing insurers), the program is now under threat. The latest $1.1 trillion omnibus spending bill, passed by the House of Representatives last week, contains legislation that would eliminate the program. Instead, Republicans in Congress are offering $12 billion in tax breaks to health insurance companies as a means of helping offset the costs that would then be incorporated into future premiums. The risk is that the economic relief will be spread across the entire insurer market, while the former program targeted those that were affected most. Furthermore, such a change carries a $10 billion increase in federal spending compared with the previous program, funded by future losses in tax revenue, whereas the original program was self-funded.

Smaller insurers that would contribute greater competition to the insurer market are leaving the exchanges, are decreasing their involvement or have folded. People with policies from these organizations are experiencing disruption in their coverage. The long-term stability and effectiveness of the ACA have been compromised because of a twisted variation of the populist rhetoric against companies considered too big to fail. The government had targeted mechanisms in place to help, but one presidential hopeful decided to play politics instead.

Smaller insurance companies were under capitalized and had no business being in the health insurance business. Kari you are releasing White House press releases that make no sense. Why the shock that so many of them are now bankrupt? 

When I was buying more insurance last year, I made definite care to keep away from those no name companies like Health Republic. The fact that they were so cheap should have been a signal that something was wrong with them.

Health costs in the USA are much higher than they need to be and the ACA does little to resolve this problem, because it assumes that the only cost component is the health insurance.

Medicaid is riddled with inefficiency and corruption.  They ought to focus on fixing it, before they expand it. You should hear stories of waste in Medicaid, combined with the fact that only corrupt doctors can survive providing services under that plan.

There is a need for a whole sale discussion on why healthcare in the USA is so expensive, and yet provides mediocre out comes.  Neither the GOP, nor the Democrats seem interested in that topic, because both are beholden to certain stakeholders in the medical industry.

Kari posted:

 

Smaller insurers that would contribute greater competition to the insurer market are leaving the exchanges

This nonsense about "competition" is the crap which both the GOP and the Democrats sell to people.  If a company collects $100 they have to pay out $80 to healthcare providers.  That is the LAW, which is why I actually received a refund on my premiums a few years ago.

The law removes the incentive for companies to earn "excess" profits.  The law in fact forces companies to manage their underlying costs. As companies cannot control those costs, they do so by reducing the size of their networks, and insisting on higher deductibles and other out of pocket charges.

Until underlying costs are dealt with health insurance will remain expensive.

Rubio and Cruz are trying to out do each other on who is more anti-immigrant. This ediot pack of Republican Presidential hopefuls make George W Bush look like Dilip Kumar.