Tuesday, July 07, 2015

Deck chairs. Titanic. SCOTUScare.

A couple of years ago, we noted this about the Transitional Reinsurance Program:

"Once an individual exceeds $60,000 the TRP will reimburse 80% of expenses up to $250,000. That works out to 80% of $190,000 or $152,000 of losses"

Since SCOTUSplans are guaranteed issue, and must cover pre-existing conditions, there's really no way for carriers to duck major claims. Indeed, as we learned the other day, newly insured folks have turned out to be even less healthy than anticipated, leading to more claims and thus higher insurance costs, which are in turn passed on to the government.

AKA thee and me.

And exactly how many dollars are we talking here?

Big bucks:

"Officials at the Centers for Medicare & Medicaid Services (CMS) today posted health insurance companies' 2014 reinsurance and risk-adjustment report ... the reinsurance program received $8.7 billion in contributions and will pay about $7.9 billion to 484 eligible insurer companies"

Interesting use of the term "contributions."

And lest you feel less than charitable, be aware that good ol' Blue Cross of California got over $400 million of that almost $8 billion (that's 5% of the total just for one carrier).

This, by the way, was my favorite part of the linked article:

"PPACA drafters created those PPACA risk-management programs ... to protect health insurers against the possibility that the many PPACA policy design rules, underwriting rules and programs ... could swamp some health insurers with unexpected tidal waves of claim risk."

Gotta love that "unexpected." What did they think was going to happen when they removed risk from "insurance?"

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