The Bishop and the Butterfly: Murder, Politics, and the End of the Jazz Age

    Not a show stopper

    By Flavius on Thu, 11/14/2013 - 10:34pm |

    The insurance industry is shedding a lot of customers/policies that aren't quite profitable enough .Not hopeless "dogs"or they would have shed them long ago.

    I ask myself "what could make all those policies profitable." And the answer  is.......... 'put them in one pile'. We know that the way insurance  works is that insuring against just one risk is....... risky even tho insuring against 5 thousand of such risks would make sense.

    That's called taking advantage of the "law of averages". Or better "being an underwriter"

    Which causes me to wonder: if any one underwriter owned all of these policies  would it make economic sense.?Which I answer by saying "No because it      would be too much of a risk for any one underwriter to take." ( To keep it simple I'm not bringing in "Reinsurance)

    Unless it was the Government itself.Unlike any other single underwriter it could take the risk.

    So this is not a fundamentally unsolvable problem.And if something can be solved there's a pretty good chance it will  be.

     

     

     

      

     

    Comments

    It would have been interesting to give this set of facts to Larry Summers.  


    by Flavius on Fri, 11/15/2013 - 5:45am

    You made me curious enough to search the news. And what I found is someone basically saying "look at the really big numbers"

    Larry Summers: Obamacare Is Already Accomplishing More Than Expected
    Since the Affordable Care Act passed, the U.S. has finally bent the curve on health costs downward
    by CNBC Nov 13th 2013

    Former Treasury Secretary Lawrence Summers told CNBC on Wednesday that Obamacare has already yielded benefits to the economy. He also said the Federal Reserve should concentrate on pushing the economy to expand.

    "If you look at the medium run and the long run, the important thing that's happened for growth is, that in the last three years since Obamacare was passed, we have bent the [cost] curve on health-care costs," he said in a "Squawk Box" interview.

    The problems with the federal health insurance website HealthCare.gov have been "exciting theater" for the media, the former Obama advisor said. "Getting it right is obviously going to be important to fully getting the benefits of Obamacare."

    But he said that health-care reform has cut costs as a percentage of GDP. "That offers huge promise with respect to the future of the federal deficit, which looks much less serious than it did even a couple of years ago." [....]

    He's painting a picture where adjustments of billions of government dollars here and there along the way are petty things that wouldn't mean much in the scheme of things. I could certainly see him saying to Obama: "just run with whatever you feel you have to, why the heck are you worrying about it?"


    by artappraiser on Fri, 11/15/2013 - 10:18am

    It should be pointed out, though, that Summers and Zeke Emmanuel were the main ones who were concerned that there wasn't a health care czar to handle the rollout and Emmanuel has been out there this week reiterating that point.


    by artappraiser on Fri, 11/15/2013 - 10:33am

    There's a confab going on today:

    Insurance Executives Called to White House Meeting
    CEOs to meet with President Obama to discuss plan to allow people to keep insurance plans that don't meet new federal standards

    Time.com, Nov. 15

    Chief executives from several insurance companies have been called to the White House to meet with President Obama on Friday....


    by artappraiser on Fri, 11/15/2013 - 10:39am

    So, are you saying that if it was the government that took on fully insuring all the high risk people, than insurance companies wouldn't have to worry about getting a lot of healthy young people to sign up to offset the older, more ill people, thereby eliminating one of the big worries about what needs to happen if ObamaCare is going to "succeed" in the long run?

    Sounds good to me.  


    by MrSmith1 on Fri, 11/15/2013 - 4:23pm

    I haven't gotten far enough in m thinking to express an opinion on that


    by Flavius on Sat, 11/16/2013 - 11:20am

    Some state insurance commissioners sound really pissed, so far it seems they only see a passing of the buck. From After Obama Meeting, Insurers Question Plan’s Workability
    by Reed Abelson and Susanne Craig, New York Times, Nov. 15, 2013:

    [....] Logan Harrison, chief deputy commissioner of the Indiana Department of Insurance, said his state had not decided how to proceed but the fact that they were having to scramble to do anything was maddening.

    “This is absurd,” he said. The president, he said, made a “purely political decision” that punts his problem squarely into the laps of state insurance commissioners. “It’s unfair to us and our citizens.” A number of other state officials, both Democrats and Republicans, echoed Mr. Harrison’s frustration but were not willing to speak on the record.

    This issue is arguably the biggest headache for the dozen or so states — from New York to California — that have their own exchanges, some of which are working reasonably well. “We did everything Obama wanted, and this is the thanks we get,” said one high-ranking official in a state with its own exchange. “I can’t tell you how fed up we are.”

    Insurance commissioners who had not decided how to proceed Friday were kicking around various compromises, according to officials who declined to be identified because of policies against speaking to the news media.

    Some states where the cancellation numbers are not high are hoping they can work with the insurance companies to call consumers and walk them through their options. There is no guarantee that people with old policies will have them renewed at current rates, and some states have considered approving the renewal of old policies, allowing insurance companies to charge 10 percent or 15 percent more. “It’s easy, so I like it,” said one state official who asked not to be named.

    Sandy Praeger, the Kansas insurance commissioner, is still trying to work out how to deal with the roughly 9,000 people in her state who received cancellation policies. No matter what happens next, she said, the consumer will get the short end of the stick.

    “Insurance is complicated to start with,” she said. “This, in the best-case scenario, would be a problem, but in the political climate we are in, it is a nightmare for the consumer.”

    While the insurers quoted in the first part of that article don't seem nearly as freaked out, not as the headline suggests.

    This piece at Talking Points Memo explains a complex situation in Calilfornia:

    Why California Is The Key To The Obamacare 'Fix'
    by Dylan Scott, Nov. 14, 2013

    where the state required the insurers to terminate the old policies if they wanted to be in the exchange and that the insurers had wanted and fought for that rule, even though they were first turned down and there was strong opposition to it. So now this would be re-fighting that battle.

     


    by artappraiser on Sat, 11/16/2013 - 2:01pm

    Suggestion that the Obama admin. is thinking about more government support  of risk corridors:

    Everything You Need to Know About Obama's New 'You Can Keep Your Plan' Policy
    By Matthew O'Brien, The Atlantic, Nov 16 2013

    [....] That's why it could be a problem if healthy people stick with their cheap plans. And it's why the Obama administration is already talking about strengthening the system's most important shock-absorber: risk corridors. The basic idea is the government will help cover higher-than-expected costs. See, every Obamacare plan has a "target" cost based on how sick they think their risk pool will be. So if healthy people stick with their old plans, Obamacare plans will have sicker risk pools—and costs will come in higher than anticipated. But to reduce this risk during the law's first three years, the government will cover half the costs of anything over 3 percent higher; 80 percent of anything over 8 percent higher. That's a "risk corridor," at least as it was originally conceived. We don't know how many more losses the government wants to cover. All we know is it does want to cover more—just in case more people do keep their old plans. [....]


    by artappraiser on Sat, 11/16/2013 - 3:06pm

    Follow the link in Dr. Gawande's re-Tweet to a post on topic at "The Incidental Economist":


    by artappraiser on Sat, 11/16/2013 - 5:09pm

    Risk corridor: It is like the movie Death Race 2000, but with actuary accountants.

    The O'Brien article is alive with the kind of self assured snark that reminds me I am getting old.

    But it does get to a kind of point; either some people's loss gets addressed or not. The rest is arguing about the cut off point.

    I don't know if the single payer route would have made a better mess but it would have at least made the cost issue more honest in terms of "us" being an inclusive democracy. The wanting to have a social instrument to moderate these things but rejecting the idea because it means we are quantifiable forgets we already did the second thing. Years ago.


    by moat on Sat, 11/16/2013 - 7:21pm