As Obamacare losses mount, so do the lawsuits

[spuwho]

Per The Daily Caller:

http://dailycaller.com/2016/06/03/another-health-insurer-suing-feds-over-obamacare-losses/


Blue Cross and Blue Shield of North Carolina is yet another health insurer to file a lawsuit against the federal government, demanding $129 million in unpaid risk corridor payments.

Blue Cross and Blue Shield of North Carolina filed the lawsuit Thursday, claiming the federal government has paid less than 10 percent of the risk corridor payments they are owed from fiscal year 2014.

The risk corridor program is designed to hedge against sky-rocketing costs for insurance providers caused by high claims costs of new enrollees. Providers sought over $2 billion in 2014 in risk corridor payments, but the Department of Health and Human Services (HHS) paid out only $362 million.

BCBSNC is also asking that the federal government provide assurance that risk corridor payments for 2015 and 2016 will be provided in a timely fashion.

The suit is the latest in a string of claims made by health insurance providers against HHS. The lawsuit comes one day after Moda Health — of Portland, Oregon — filed a similar claim in federal court, seeking $180 million in risk corridor payments.

Nonprofit health insurer Highmark Inc. filed a lawsuit against the federal government Tuesday demanding roughly $223 million in payments it says it’s owed under the Obamacare’s risk-corridors program.

The Pittsburgh-based insurance provider – which plays a major role in the Pennsylvania, Delaware and West Virginia marketplaces – said by not making the payments, the government is in violation of the Fifth Amendment because it’s not providing the company with the “just compensation” it was promised.

The risk-corridors program, which was created to limit insurers that provide qualified health plans losses by providing funding to companies facing high claims costs for enrollees, saw far more claims than initially expected. And the Department of Health and Human Services paid just $362 million in risk corridors charges of the $2.87 billion requested in 2014.

The Wall Street Journal reports Highmark lost roughly $85 million last year, largely due to ACA plans.

[MusicMan]

The problem is "for profit" health insurance companies.

[carpnter]

The problem is "for profit" health insurance companies.

Not so much, there are regulations that say what percentage of premiums insurance companies must spend directly on healthcare of the policy holders. These insurance companies aren't raking in huge percentages in profits.

[Adam White]

The problem is "for profit" health insurance companies.

Not so much, there are regulations that say what percentage of premiums insurance companies must spend directly on healthcare of the policy holders. These insurance companies aren't raking in huge percentages in profits.

I don't know if that's true or not, but it's not the point, really. A universal, single-payer system wouldn't have this issue.

[Non-RedNeck Westsider]

The problem is "for profit" health insurance companies.

These insurance companies aren't raking in huge percentages in profits.

I'm pretty sure that's the point carpenter MusicMan  is making.  There shouldn't be any percentage.  (Edited)

Before OC passed, this was one of my own personal sticking points.  If you're going to require it, you're also going to have to eliminate the 'for profit' model.  If we half-ass it and compromise just to get it passed, we're going to end up with a half-assed program that's going to end up costing more to fix.

[carpnter]

The problem is "for profit" health insurance companies.

These insurance companies aren't raking in huge percentages in profits.

I'm pretty sure that's the point carpenter is making.  There shouldn't be any percentage. 

Before OC passed, this was one of my own personal sticking points.  If you're going to require it, you're also going to have to eliminate the 'for profit' model.  If we half-ass it and compromise just to get it passed, we're going to end up with a half-assed program that's going to end up costing more to fix.

Part of those profits are invested back into the company to allow for things like capital improvements, developing ways to streamline processes, etc...  All profits are not paid out to shareholders.

[JeffreyS]

The problem is "for profit" health insurance companies.

Not so much, there are regulations that say what percentage of premiums insurance companies must spend directly on healthcare of the policy holders. These insurance companies aren't raking in huge percentages in profits.

Whether or not you agree with Obamacare the % issue is counter productive to keeping costs down. The insurance companies are limited to 2% as a profit base over care provided so they prefer a 100k bill to a 10k bill.  I know that is overly simplified but the insurance companies have great negotiating leverage with the care providers and the 2% plan seems to disincentvise lower costs.

[MusicMan]

Very interesting read here:

https://www.healthinsurance.org/blog/2016/03/01/no-obamacare-isnt-killing-the-insurance-industry/


Several big for profit insurance companies and their price per share have never been better.

[Non-RedNeck Westsider]

The problem is "for profit" health insurance companies.

These insurance companies aren't raking in huge percentages in profits.

I'm pretty sure that's the point carpenter is making.  There shouldn't be any percentage. 

Before OC passed, this was one of my own personal sticking points.  If you're going to require it, you're also going to have to eliminate the 'for profit' model.  If we half-ass it and compromise just to get it passed, we're going to end up with a half-assed program that's going to end up costing more to fix.

Part of those profits are invested back into the company to allow for things like capital improvements, developing ways to streamline processes, etc...  All profits are not paid out to shareholders.

I could be wrong, but it's my understanding:  If it's reinvested back into the company, then it's not a profit.  If you're spending it on r&d, then it's not a profit.  Profit is exactly what's paid out to shareholders.  Bonuses to execs are typically tied directly to profits. 

[finehoe]

I could be wrong, but it's my understanding:  If it's reinvested back into the company, then it's not a profit.  If you're spending it on r&d, then it's not a profit.  Profit is exactly what's paid out to shareholders.  Bonuses to execs are typically tied directly to profits.

No, you're not wrong, that's exactly how it works.

Funny how some of the biggest cheerleaders for "free"-market capitalism don't even know how it works.

[Non-RedNeck Westsider]

I could be wrong, but it's my understanding:  If it's reinvested back into the company, then it's not a profit.  If you're spending it on r&d, then it's not a profit.  Profit is exactly what's paid out to shareholders.  Bonuses to execs are typically tied directly to profits.

No, you're not wrong, that's exactly how it works.

Funny how some of the biggest cheerleaders for "free"-market capitalism don't even know how it works.

So using that basic concept, carpenter, what incentive, in a for-profit model no matter or any limit placed, is there for the company to reduce the price? 

None.  All the incentive is in reducing the actual cost of production while fighting tooth and nail to continue to raise pricing while crying 'poor mouth'.

This really is that simple.  In fact, I would go on to say that there is no reason at all that any company contracted by the government should be 'for profit' as a government contract is guaranteed money.  Why horde it?  Why not continue to reinvest and find better means and methods & pay better salaries; offer better benefits?

[Adam White]

I could be wrong, but it's my understanding:  If it's reinvested back into the company, then it's not a profit.  If you're spending it on r&d, then it's not a profit.  Profit is exactly what's paid out to shareholders.  Bonuses to execs are typically tied directly to profits.

No, you're not wrong, that's exactly how it works.

Funny how some of the biggest cheerleaders for "free"-market capitalism don't even know how it works.

Depends, I suppose on what is meant by 'profit'. I think Carpenter was likely referring to gross profit - not net profits.

[Non-RedNeck Westsider]

I could be wrong, but it's my understanding:  If it's reinvested back into the company, then it's not a profit.  If you're spending it on r&d, then it's not a profit.  Profit is exactly what's paid out to shareholders.  Bonuses to execs are typically tied directly to profits.

No, you're not wrong, that's exactly how it works.

Funny how some of the biggest cheerleaders for "free"-market capitalism don't even know how it works.

Depends, I suppose on what is meant by 'profit'. I think Carpenter was likely referring to gross profit - not net profits.

I'm going to step out on another limb here, but simplistically speaking gross profits = Selling price - Cost of goods sold. 

What are the cost of goods?

My point is simply that there is no tangible good being sold so how is it anything BUT net profit?  And why should they receive any?

Rhetorical QotD:  What incentive do insurance companies have in getting the health care providers to lower their costs when the insurance model is for profit?   Set the percentage cap wherever you'd like, because they will always make more regardless as long as health costs stay high.

[Adam White]

I could be wrong, but it's my understanding:  If it's reinvested back into the company, then it's not a profit.  If you're spending it on r&d, then it's not a profit.  Profit is exactly what's paid out to shareholders.  Bonuses to execs are typically tied directly to profits.

No, you're not wrong, that's exactly how it works.

Funny how some of the biggest cheerleaders for "free"-market capitalism don't even know how it works.

Depends, I suppose on what is meant by 'profit'. I think Carpenter was likely referring to gross profit - not net profits.

I'm going to step out on another limb here, but simplistically speaking gross profits = Selling price - Cost of goods sold. 

What are the cost of goods?

My point is simply that there is no tangible good being sold so how is it anything BUT net profit?  And why should they receive any?

Rhetorical QotD:  What incentive do insurance companies have in getting the health care providers to lower their costs when the insurance model is for profit?   Set the percentage cap wherever you'd like, because they will always make more regardless as long as health costs stay high.

I am not sure I understand (with regard to your questions about profit). Gross profit exists in all industries - including the service industry. It isn't limited to manufacturing, where it would calculated as selling price minus cost of goods sold. I would substitute the cost to provide the service. I am not an accountant or anything like that, so my understanding is rudimentary.

As far as why they should receive any profit - I suppose because they are for-profit companies. This is why this approach is flawed.

[Non-RedNeck Westsider]

I am not sure I understand (with regard to your questions about profit). Gross profit exists in all industries - including the service industry. It isn't limited to manufacturing, where it would calculated as selling price minus cost of goods sold. I would substitute the cost to provide the service. I am not an accountant or anything like that, so my understanding is rudimentary.

As far as why they should receive any profit - I suppose because they are for-profit companies. This is why this approach is flawed.

Ha.  That's ok, after re-reading it, I only understand it because I know the point I'm trying to make. 

Bored, inside on a Sunday = free typing as I think.