Here's a statement of the obvious: The opinions expressed here are those of the participants, not those of the Mutual Fund Observer. We cannot vouch for the accuracy or appropriateness of any of it, though we do encourage civility and good humor.
Well before the PPACA came into existence, I received two increases, both more than 30%, in the same year in my private-pay plan, with no change in my health whatsoever (no claims, no meds, nada).
This year (and next) my grandfathered private-pay plan (with a different insurer, this time the Blues) was scheduled to go up massively. I slid into Medicare just in time.
Before Oc was fully in effect there were mandatory requirements imposed upon existing plans. That was probably a large part of the increase.
Also, if you were able to get into medicare your age were probably a big factor with the increases.
A little confirmation about what I was saying about the Wellmark Iowa narrative:
Executives from [Wellmark Blue Cross & Blue Shield and Coventry Health Care] said the premium increases are fueled by higher-than-expected health care costs, including for people who were uninsured before the Affordable Care Act helped them find coverage.
Wellmark Vice President Laura Jackson said ... soaring prices and use of prescription drugs are a major factor. So is higher-than-expected use of expensive hospital services, such as those for premature babies or cancer patients, she said.
Jackson said her company's actuaries previously underestimated such trends, including for new customers. She also said that although Wellmark and other players are trying to improve care and health, she doubts cost increases will be reined in soon, especially since so many Americans are in poor health.
Nothing about gaming the system, just a backlog of people whom Wellmark had likely refused to cover in the past.
In fairness, the report on Wellmark's rate filing by Iowa's actuary does mention risk exposure due to "lapses from the beginning in force risk pool". But the report says that this is proprietary information, so there are no figures given for how significant a factor people dropping policies really was.
Explanation for rate increases? http://www.wsj.com/articles/how-to-game-obamacare-1412032995 But it could also be that insurers are underpricing their policies to capture market share. There are few business downsides for insurers to write artificially cheap policies because of the federal government's reinsurance and risk corridor programs that offer nearly unlimited protection from significant losses. At worst, if costs explode and premiums don't cover claims, the insurer can raise rates in year three (2016) or four (2017) after the reinsurance programs expire.
#2 - Your application, like IRS filings, is made under penalty of perjury. Up to a $25K civil fine for negligent misrepresentation, and if the government can prove intent, up to $250K civil file. Since the application is made under penalty of perjury the government can also pursue criminal charges.
Even if fines (or worse) are long odds, is that something you want to risk? If you need the money that much, it seems that if you lose, game over.
#4 The idea here is that when you're expecting high expenses, purchase a higher price/higher coverage plan. Nothing wrong with that. It's called adverse selection, and the wiz kid actuaries should already be on top of that. (I thought I'd already said I did something like that in selecting plans.)
Where the gaming comes in is in dropping coverage mid year. Now that turns out not to be nearly as advantageous as the page would make it appear.
First, it gives an example of knee surgery. Family experience there suggests that follow up physical therapy is often in order. Drop the coverage and you're just hurting yourself, literally.
Second, drop ACA coverage, and there will be penalties imposed for lack of coverage, that are getting larger by the year.
Third, you will likely not qualify for any stop gap coverage (because of recent incident, again using the knee surgery example, I can state confidently that's treated as a preexisting condition). So you are, as the article said, going naked. Twist that leg in a pavement crack, and, well ...
I'm relieved to see that a site by the name of "thefederalist.com", promoting criminal activity (perjury), appears to have no connection to The Federalist Society. At least none I can see. I do think better of the latter.
I have a friend who is an insurance agent in Iowa. He told me that Iowa Wellmark BCBS's experience in 2014-2015 is that people signed up, got insurance, got medical treatment and then cancelled their insurance. BCBS was out about $10 million in Iowa due to this. My Colorado BCBS is going up 30% in 2016.
@DaveC If they did this, did they still have to pay the penalty?
#2 - Your application, like IRS filings, is made under penalty of perjury. Up to a $25K civil fine for negligent misrepresentation, and if the government can prove intent, up to $250K civil file. Since the application is made under penalty of perjury the government can also pursue criminal charges.
Even if fines (or worse) are long odds, is that something you want to risk? If you need the money that much, it seems that if you lose, game over.
There has to be some wiggle room in that law. Underestimate by income by $2,000 can't be too much of a red flag. Win the lottery - can they get you for that!
I'm not working so I have to estimate, interest, dividends and my small pension for next year now.
I'm not working so I have to estimate, interest, dividends and my small pension for next year now.
@Dex I don't know all the details of your situation, but I believe Lowe's and Starbucks provide health care benefits to part-time workers. There are probably other companies, as well.
There has to be some wiggle room in that law. Underestimate by income by $2,000 can't be too much of a red flag.
Absolutely agree. By the same token, that wiggle room won't amount to gaming the system.
As the article states, the ACA lets the IRS claw back excess subsidies, up to a limit. You won't come close to that limit (i.e. it will all be clawed back) unless you make some outrageous claims, like the example given: a family with income of $85K stating their income to be $52K.
@Dex I don't know all the details of your situation, but I believe Lowe's and Starbucks provide health care benefits to part-time workers. There are probably other companies, as well.
Thanks - that gave me a chuckle and if you knew my net worth so would you.
The cost of Oc without a subsidy is un-affordable when what it was before.
@Dex I don't know all the details of your situation, but I believe Lowe's and Starbucks provide health care benefits to part-time workers. There are probably other companies, as well.
Thanks - that gave me a chuckle and if you knew my net worth so would you.
The cost of Oc without a subsidy is un-affordable when what it was before.
It's not a question of net worth...if it was, why are so many fabulously wealthy CEOs (eg., Warren Buffett) still working? In the case of OC (IMO), it's a question of being passive vs. being active. I didn't vote for Obama, but I believed him when he said we could keep our plans, keep our doctors, have lower premiums (I seriously doubted this at the time, but OK...let's give it a try), etc. That didn't happen...so, what are my choices?
1) Do nothing...and I can afford this, but it makes me angrier. 2) Work full-time. Don't want to give up golf and working out...and I don't need the money, just want the healthcare. 3) Start a business. Did this before...see #2, only amplified to the 10th power. In a year or so, I probably would be dead, so no need of healthcare anymore. 4) Find an easy part-time job that offers healthcare....I will probably do this after I move. Don't need the $$ at all...but I've never been one to passively accept my fate.
Oh, and 5) Be sure to vote out any and all lawmakers who voted for it!!
Maybe consider #3) Start a self employed part-time business. Insurance premiums costs can be offset dollar for dollar against self employment income.
From Turbo Tax (updated for 2015): "If you are self-employed, you may be eligible to deduct premiums that you pay for medical, dental and qualifying long-term care insurance coverage for yourself, your spouse and your dependents. This health insurance write-off is entered on page 1 of Form 1040, which means you benefit whether or not you itemize your deductions. Unlike an itemized deduction, this deduction treatment is beneficial because it lowers your adjusted gross income (AGI). Having lower AGI can reduce the odds that you’ll be affected by unfavorable phase-out rules that can cut back or eliminate various tax breaks. Keep in mind that this deduction treatment also means you can’t deduct the premiums when you calculate your self-employment tax liability."
It's not a question of net worth...if it was, why are so many fabulously wealthy CEOs (eg., Warren Buffett) still working?
They're kings - it is good to be king.
4) Find an easy part-time job that offers healthcare....I will probably do this after I move. Don't need the $$ at all...but I've never been one to passively accept my fate.
I think I would like to do that sometime - I don't know what exactly.
The only time I really would like to have a job is during the winter months.
@Dex My bf has a seasonal part-time job as a tax preparer with an accounting firm. No benefits (as a retired automotive engineer, he doesn't need them), but great pay. Only works from Feb through April, with some "on-call" time during other months.
@Dex My bf has a seasonal part-time job as a tax preparer with an accounting firm. No benefits (as a retired automotive engineer, he doesn't need them), but great pay. Only works from Feb through April, with some "on-call" time during other months.
That's a great idea. I have a background in it - to a degree. I would have to take prep courses.
My older brother (a multi millionaire) got bored and tried to get a job as a limo driver. No one would hire him. Then again he looks old.
I think this wanting to work, if you need to or not, for older people will be a big issue in the future.
\\\ ... Oh, and 5) Be sure to vote out any and all lawmakers who voted for it [ACA] !!
As investors we probably would not want to do that (NYT today):
Last year the economists Alan Blinder and Mark Watson circulated a paper comparing economic performance under Democratic and Republican presidents since 1947. Under Democrats, the economy grew, on average, 4.35 percent per year; under Republicans, only 2.54 percent. Over the whole period, the economy was in recession for 49 quarters; Democrats held the White House during only eight of those quarters.
But isn’t the story different for the Obama years? Not as much as you think. Yes, the recovery from the Great Recession of 2007-2009 has been sluggish. Even so, the Obama record compares favorably on a number of indicators with that of George W. Bush. In particular, despite all the talk about job-killing policies, private-sector employment is eight million higher than it was when Barack Obama took office, twice the job gains achieved under his predecessor before the recession struck.
Why is the Democratic record so much better? The short answer is that we don’t know. Blinder and Watson look at a variety of possible explanations, and find all of them wanting. There’s no indication that the Democratic advantage can be explained by better monetary and fiscal policies. Democrats seem, on average, to have had better luck than Republicans on oil prices and technological progress. Overall, however, the pattern remains mysterious. Certainly no Democratic candidate would be justified in promising dramatically higher growth if elected. And in fact, Democrats never do.
Republicans, however, always make such claims: Every candidate with a real chance of getting the G.O.P. nomination is claiming that his tax plan would produce a huge growth surge — a claim that has no basis in historical experience.
... One constantly hears assertions that Ronald Reagan achieved economic and job growth never matched before or since, when the reality is that Bill Clinton surpassed him on both measures.
Last year the economists Alan Blinder and Mark Watson circulated a paper comparing economic performance under Democratic and Republican presidents since 1947. Under Democrats, the economy grew, on average, 4.35 percent per year; under Republicans, only 2.54 percent. Over the whole period, the economy was in recession for 49 quarters; Democrats held the White House during only eight of those quarters.
It is absurd to apply such reasoning. The presidency and recessions are like musical chairs - when the music stops the person standing get the recession blame!
The seeds of a recession are planted years earlier. And some are caused by external factors such as the oil embargo.
Anyone with a modicum of knowledge about economics knows this.
@davidrmoran how did you construe that from my comment? No, of course not...but for someone as data-driven as yourself, the NYT article seems a bit lacking...like astrology-driven or something.
FYI, I've been informed by my insurance company (Anthem) that my monthly payments for the same policy will rise by 32%. Oh, excuse me, I exaggerate. Rounded off it's only going up by 31.9%. This follows the 16% rise from last year.
I should add that this increase in payments is so large because the subsidy is unchanged. The increased cost for the policy itself is between 11-12%, the government picking up the same gross amount as last year with me picking up the entire increase.
Again, this is from the insurance company. I don't believe we will be able to see our actual choices of policies until November 1.
An update for anyone who is interested: By changing plans I've managed to reduce the premium payments a bit from last year! This is only possible because I can control my income and keep it at the lowest end of the scale. For those who can't do so, which is practically everybody, good luck.
BTW, the new plan is HMO instead of PPO (happily, my doctors and drugs are included in both), Anthem now will only pay 70% of hospitalization up to the maximum individual payment, 100% after (which is $100/year more in the new plan, a figure that I'll hit on drug payments alone), and there are various small charges which won't matter in the end because of that maximum individual payment clause.
Comments
Also, if you were able to get into medicare your age were probably a big factor with the increases.
http://www.desmoinesregister.com/story/news/health/2015/07/25/wellmark-coventry-rate-hearing-iowa-insurance-commissioner/30672155/
Nothing about gaming the system, just a backlog of people whom Wellmark had likely refused to cover in the past.
In fairness, the report on Wellmark's rate filing by Iowa's actuary does mention risk exposure due to "lapses from the beginning in force risk pool". But the report says that this is proprietary information, so there are no figures given for how significant a factor people dropping policies really was.
That Wellmark says this is proprietary also explain why Wellmark's 2015 filing is public record, but not its 2016 filing (under Iowa Code § 505.17 - see Consumer Reports on Iowa statutes). You can find the public filings here:
https://filingaccess.serff.com/sfa/home/IA
http://thefederalist.com/2015/02/16/five-easy-ways-to-game-obamacare/
Five Easy Ways To Game Obamacare
2. Understate Your Income
4. Buy it. Change it. Use it. Drop it
http://www.wsj.com/articles/how-to-game-obamacare-1412032995
But it could also be that insurers are underpricing their policies to capture market share. There are few business downsides for insurers to write artificially cheap policies because of the federal government's reinsurance and risk corridor programs that offer nearly unlimited protection from significant losses. At worst, if costs explode and premiums don't cover claims, the insurer can raise rates in year three (2016) or four (2017) after the reinsurance programs expire.
Even if fines (or worse) are long odds, is that something you want to risk? If you need the money that much, it seems that if you lose, game over.
#4 The idea here is that when you're expecting high expenses, purchase a higher price/higher coverage plan. Nothing wrong with that. It's called adverse selection, and the wiz kid actuaries should already be on top of that. (I thought I'd already said I did something like that in selecting plans.)
Where the gaming comes in is in dropping coverage mid year. Now that turns out not to be nearly as advantageous as the page would make it appear.
First, it gives an example of knee surgery. Family experience there suggests that follow up physical therapy is often in order. Drop the coverage and you're just hurting yourself, literally.
Second, drop ACA coverage, and there will be penalties imposed for lack of coverage, that are getting larger by the year.
Third, you will likely not qualify for any stop gap coverage (because of recent incident, again using the knee surgery example, I can state confidently that's treated as a preexisting condition). So you are, as the article said, going naked. Twist that leg in a pavement crack, and, well ...
I'm relieved to see that a site by the name of "thefederalist.com", promoting criminal activity (perjury), appears to have no connection to The Federalist Society. At least none I can see. I do think better of the latter.
Even if fines (or worse) are long odds, is that something you want to risk? If you need the money that much, it seems that if you lose, game over.
There has to be some wiggle room in that law.
Underestimate by income by $2,000 can't be too much of a red flag.
Win the lottery - can they get you for that!
I'm not working so I have to estimate, interest, dividends and my small pension for next year now.
@Dex I don't know all the details of your situation, but I believe Lowe's and Starbucks provide health care benefits to part-time workers. There are probably other companies, as well.
As the article states, the ACA lets the IRS claw back excess subsidies, up to a limit. You won't come close to that limit (i.e. it will all be clawed back) unless you make some outrageous claims, like the example given: a family with income of $85K stating their income to be $52K.
That's an awful lot of wiggling.
The cost of Oc without a subsidy is un-affordable when what it was before.
1) Do nothing...and I can afford this, but it makes me angrier.
2) Work full-time. Don't want to give up golf and working out...and I don't need the money, just want the healthcare.
3) Start a business. Did this before...see #2, only amplified to the 10th power. In a year or so, I probably would be dead, so no need of healthcare anymore.
4) Find an easy part-time job that offers healthcare....I will probably do this after I move. Don't need the $$ at all...but I've never been one to passively accept my fate.
Oh, and 5) Be sure to vote out any and all lawmakers who voted for it!!
Maybe consider #3) Start a self employed part-time business. Insurance premiums costs can be offset dollar for dollar against self employment income.
From Turbo Tax (updated for 2015):
"If you are self-employed, you may be eligible to deduct premiums that you pay for medical, dental and qualifying long-term care insurance coverage for yourself, your spouse and your dependents. This health insurance write-off is entered on page 1 of Form 1040, which means you benefit whether or not you itemize your deductions. Unlike an itemized deduction, this deduction treatment is beneficial because it lowers your adjusted gross income (AGI). Having lower AGI can reduce the odds that you’ll be affected by unfavorable phase-out rules that can cut back or eliminate various tax breaks. Keep in mind that this deduction treatment also means you can’t deduct the premiums when you calculate your self-employment tax liability."
Self-Employment-Taxes/Deducting-Health-Insurance-Premiums-If-You-re-Self-Employed
My older brother (a multi millionaire) got bored and tried to get a job as a limo driver. No one would hire him. Then again he looks old.
I think this wanting to work, if you need to or not, for older people will be a big issue in the future.
\\\ ... Oh, and 5) Be sure to vote out any and all lawmakers who voted for it [ACA] !!
As investors we probably would not want to do that (NYT today):
Last year the economists Alan Blinder and Mark Watson circulated a paper comparing economic performance under Democratic and Republican presidents since 1947. Under Democrats, the economy grew, on average, 4.35 percent per year; under Republicans, only 2.54 percent. Over the whole period, the economy was in recession for 49 quarters; Democrats held the White House during only eight of those quarters.
But isn’t the story different for the Obama years? Not as much as you think. Yes, the recovery from the Great Recession of 2007-2009 has been sluggish. Even so, the Obama record compares favorably on a number of indicators with that of George W. Bush. In particular, despite all the talk about job-killing policies, private-sector employment is eight million higher than it was when Barack Obama took office, twice the job gains achieved under his predecessor before the recession struck.
Why is the Democratic record so much better? The short answer is that we don’t know.
Blinder and Watson look at a variety of possible explanations, and find all of them wanting. There’s no indication that the Democratic advantage can be explained by better monetary and fiscal policies. Democrats seem, on average, to have had better luck than Republicans on oil prices and technological progress. Overall, however, the pattern remains mysterious. Certainly no Democratic candidate would be justified in promising dramatically higher growth if elected. And in fact, Democrats never do.
Republicans, however, always make such claims: Every candidate with a real chance of getting the G.O.P. nomination is claiming that his tax plan would produce a huge growth surge — a claim that has no basis in historical experience.
... One constantly hears assertions that Ronald Reagan achieved economic and job growth never matched before or since, when the reality is that Bill Clinton surpassed him on both measures.
The seeds of a recession are planted years earlier. And some are caused by external factors such as the oil embargo.
Anyone with a modicum of knowledge about economics knows this.
Five years ago I paid about $330 for the same plan.
Next year my rate is over $720 for ACA Cheapo... bronze
Rates seem to have more than doubled every 5 yrs but now with ACA, they will pay for me to have a baby (not sure how that works as I have male parts!)
So 2008 was the golden age BO messed up (caution, wit ahead):
https://www.washingtonpost.com/news/post-politics/wp/2015/11/02/obama-pleads-with-democrats-for-a-sense-of-urgency-in-2016/
BTW, the new plan is HMO instead of PPO (happily, my doctors and drugs are included in both), Anthem now will only pay 70% of hospitalization up to the maximum individual payment, 100% after (which is $100/year more in the new plan, a figure that I'll hit on drug payments alone), and there are various small charges which won't matter in the end because of that maximum individual payment clause.