Cost of Health Care Continues to Rise

[merrylander]

Originally Posted by whell

Employers who are still in recovery mode as a result of the current recession will be hard - pressed to absorb the cost of their standard annual renewal, much less the increased costs of compliance with PPACA.

Exactly what they are doing at present, employers are passing along more than the current increases in cost such that employee share is rising while employer share is dropping.

[whell]

Originally Posted by merrylander

Exactly what they are doing at present, employers are passing along more than the current increases in cost such that employee share is rising while employer share is dropping.

That's not at all true as an across the board statement. My company was hit hard by the economic downturn. They elected to defer merit pay increases for 12 month, but absorbed the approximately 11% medical premium rate increase for all participating employees. They have always maintained a 70%/30% premium cost sharing arrangement with employees for health premiums since I've been here, which is since 2001. We have not had communication yet on what our 2011 renewal will look like, and whether the cost sharing arrangement will be maintained.

Many of my clients, whose benefits we administer, have struggled to offer benefits that both the business and the employees can afford. This is not easy to do in an environment where sales and profit margins are decreasing in the midst of a recession. The typical client will maintain a cost sharing arrangement as described above, so that the business and the employee share equally in the cost increase, or make some changes in the plan offering to control the cost of premium while still maintaining a relatively generous contribution. It happens, but is has been relatively rare, where a client will pass along 100%, or even most of, the cost of the renewal to the employee.

[whell]

Originally Posted by noonereal

can you site an example?

As I understand it the healthcare industry is free to charge as much as they like hence the profits will not diminish as that is the primary function.

if folks get medical help along the way, well shit happens but it's sure not something they care about

Here are some examples:

http://www.thehealthcareblog.com/the...tio-rule-.html

http://www.lifeandhealthinsurancenew...ers-Weiss.aspx

[merrylander]

Originally Posted by whell

That's not at all true as an across the board statement. My company was hit hard by the economic downturn. They elected to defer merit pay increases for 12 month, but absorbed the approximately 11% medical premium rate increase for all participating employees. They have always maintained a 70%/30% premium cost sharing arrangement with employees for health premiums since I've been here, which is since 2001. We have not had communication yet on what our 2011 renewal will look like, and whether the cost sharing arrangement will be maintained.

Many of my clients, whose benefits we administer, have struggled to offer benefits that both the business and the employees can afford. This is not easy to do in an environment where sales and profit margins are decreasing in the midst of a recession. The typical client will maintain a cost sharing arrangement as described above, so that the business and the employee share equally in the cost increase, or make some changes in the plan offering to control the cost of premium while still maintaining a relatively generous contribution. It happens, but is has been relatively rare, where a client will pass along 100%, or even most of, the cost of the renewal to the employee.

Then your company is not average, but hey y'all had your chance but Palin, Hatch, Grassley and company lied through their teeth about Canada's Single Payer plan - you could have had single payer and industry would have had a more competitive position. That's why GM's Chev Impala is so competitive pricewise - they build them in Oshawa, Ontario.

In fact before all this China insanity started the Province of Ontario was our biggest trading partner.

[BlueStreak]

Originally Posted by merrylander

Then your company is not average, but hey y'all had your chance but Palin, Hatch, Grassley and company lied through their teeth about Canada's Single Payer plan - you could have had single payer and industry would have had a more competitive position. That's why GM's Chev Impala is so competitive pricewise - they build them in Oshawa, Ontario.

In fact before all this China insanity started the Province of Ontario was our biggest trading partner.

Rob, Rob, Rob. When are you going to learn that Republicans never lie. Jesus wouldn't approve and everyone knows George Washington never lied, so it just doesn't happen. Shame on you.

My Challenger was built in Canada. I had my Dakota in the shop getting a new tire yesterday. While waiting in the store, I noticed there were only two brands, Kelly and Dunlop that weren't made in Canada. Could it be that the grossly inefficient (But highly profitable.) way we do healthcare is partly responsible for this? Hmmm?

Dave

[BlueStreak]

Wow, "....profits have jumped from 5% of premium to 20% in the last 15 years.......". Just think, if we can get that figure alone back down to 5%, we'd save many billions. Sounds like the execs in the insurance industry need to be shown the pitchforks and guillotine.

I wanna pull the rope! Please, can I?

Dave

[BlueStreak]

“Most large health insurers will be able to handle it. But we are concerned that weaker, less profitable insurers will be forced out of the market, reducing competition and ultimately leading to fewer choices and higher premiums for consumers,” he said.

Just weeding out the weaklings. "Higher Premiums"? Maybe so. We deal with that bridge when we get to it.

Dave

[noonereal]

Originally Posted by whell

Here are some examples:

http://www.thehealthcareblog.com/the...tio-rule-.html

This supports my statement. So you agree with me? (somehow I doubt this)

[whell]

Originally Posted by BlueStreak

Wow, "....profits have jumped from 5% of premium to 20% in the last 15 years.......". Just think, if we can get that figure alone back down to 5%, we'd save many billions. Sounds like the execs in the insurance industry need to be shown the pitchforks and guillotine.

I wanna pull the rope! Please, can I?

Dave

No, that's not what moving from 95% - 80% MLR means. An 80% MLR does not indicate that a carrier is making 20% net profit on each dollar of premium. It means that the carrier has $0.20 on each dollar of premium to cover operating expenses, including labor costs, and what's left over is profit. Broker commissions alone can bite 6% or more out of each premium dollar.

Now, if you want to talk about profit margin, that's a different subject all together. The average net profit margin in "Corporate America" for the last 25 years or so is about 8%. This does not include 2009, which was a recession year, where you might expect profit margins to shrink. The average profit margin in the insurance industry - all insurance types - is around 6%. Aetna's net profit margin is 5.5%, Humana 3.5%, Kaiser Permenente is 3.4%, Wellpoint 3.0%.

By comparison, Apple Computers net profit margin is 15%, Microsoft is 28%, Kraft Foods is 7.5%, AT&T 10.5.

Are carrier's profit margin's unreasonable?

[noonereal]

Originally Posted by whell

No, that's not what moving from 95% - 80% MLR means. An 80% MLR does not indicate that a carrier is making 20% net profit on each dollar of premium. It means that the carrier has $0.20 on each dollar of premium to cover operating expenses, including labor costs, and what's left over is profit.

Correct however administrative costs have nopt gone up and this insane rise has indeed been in profits.