Posted on 03/23/2010 12:08:23 PM PDT by cardinal4
Anyone who thought this bill wasn’t about killing the insurance industry had better think again.
One of the existing regulations in the industry is that each company must maintain a 65%-35% balance of cash on hand-the 65% to pay any premiums that come along in a fiscal year. The number was thought up because if a catastrophe caused a number of claims at once, a company needed to be able to pay them. That 65% is mandated by law. The remaining 35% is to pay operation expenses like payroll, training, etcetera. A company that falls below that ratio is considered “unstable” by both state and federal regulators. A rating of instability will invite more audits, fines, and eventually could lead to losing to their license to trade in that state.
(Excerpt) Read more at artoriuscastus.wordpress.com ...
Man - talk about a capitalism killer! This 85/15 provision will strangle the life out of the insurance industry...
I think that's the point. Obama and his minions intend there to be only one insurance provider standing at the end of this.
Just heard this today on Rugyh. Took a whilefor me to understand it.
Also now makes sense that the Dow is up because investors are cashing in before the final collapse.
Sadly, that makes sense too.
Anyone who thinks this bill was about healthcare is a certified lunatic.
I heard it on Rush, too..
How come the insurance companies and pharmaceutical companies planned it out with Obama. Those companies can’t be considered capitalist at all. They want to use the government’s authority to make money. Anyone who thinks that’s capitalism is an idiot.
If you wipe out the insurers, you attack the banks, then you are attacking capital and ALL real estate.
Between this and the inflation, the two measures will bring capitalism as we know it in America to an end with nothing to replace it. The debt that Obama is making America swallow will indenture future generations.
Marxism at work? You betcha.
Nefarious. Traitorous, Treasonous and more!
What I never understood is how people did not “get” that the rules for paying are going to get tougher. You might be able to pay for insurance, but getting through to the staff (which is not going to grow) and the claims folks is going to be near impossible.
And yeah, anyone can join. It will just cost X$ per year MORE for EVERYONE.
This is going to be great.
The federal government is HORRIBLE at the insurance busines. Take so-called "flood insurance" for instance which is ONLY available from FEMA/NFIP. It is not insurance. Not at all! It is a contract between someone and the federal government where in the event of a flood the US Treasury pays the claim. Sure, there is a "premium" paid but it has nothing to do with the risk. If it did the premiums would be HUGE. That is why after storm after storm Congress has to dump BILLIONS in to the federal flood insurance program to prop it up. That comes right out of the treasury which means EVERYONE pays for "flood insurance".
At the end of the day what Obama is after is the CASH FLOW from health insurance premiums. It is a huge amount of money and gives them a way to leverage up even more debt and to bust out this country even more than they already have.
America is being run by the Sopranos!
Uhhh I hate to tell you guys this...but the insurance companies are in on this scam. I went to Blue Cross NC website. They are for universal care. 32 million customers on your dime. All hail..........
that’s depressing. Now we are up against a massive federal government with billions to spend on buying votes, plus the big companies.
But I kind of knew this all along.
it still comes back to an unsustainable cycle..
They will find a way to sustain it. Gov subsidies..10% short? No problem........Notice insurance companies didnt make one peep. Why do you think they were at the White House week before the vote. They told the Gov...leave the public option out.....we got the rest covered.
That's why it has been so funny to listen to these idiot DUmmies crying that this health care bill was a sellout to the insurance industry. Doesn't take much to project out a few years to see that the insurance industry won't stand a chance against this communist regulation.
This entire post is incorrect, totally incorrect.
The 65% was NOT law, each state set the claims reserve ratios. It is 75% in NJ, ~72% in NY, 65% in CT, etc.
The claims reserves ARE used every day to pay out claims. This money does not sit in some bank vault for long.
Increasing the required claims reserves is (mostly) GOOD for the citizen/serf/consumer in our brave new world. When you pay $1000 a month for insurance, $850 will now go to paying out claims, instead of $650 or $720 or $750 as before. The difference between $850 and $650 is taken directly out of the insurance company’s top and bottom line earnings. That means lower earnings and dividends payouts, lowers the ability of insurance companies to sell debt on the market, and increases the long term monopoly of the existing insurance companies over the American serf population due to the new barriers to entry.
The downside is at 85% claims reserves and 15% operational overhead, there will no longer be the customer service Americans have become accustomed to in the last decades. There will be no money available for agent salaries/commissions, brokerage salaries/commissions, internal support staff, claims reviewers, call centers inside the United States, etc.
Insurance companies will strip down to bare essentials, actuaries, accountants, liaisons to medical supply cos and medical facilities management, money and asset managers, lawyers, triage claims adjudicators, lobbyists.
In the future everyone will go to websites like http://www.BenefitMall.com or http://www.Insurance.com , and will be responsible for filing every single piece of paperwork on their own. For additional fees you can call live support or chat onilne with employees making base salary+incentive bonuses. Mistakes filing out forms will result in state and Federal lawsuits, fines, IRS audits and a host of other problems for business owners and individuals. This will also shift the cost of insurance compliance onto the business owners and individuals in this country. It is in effect an unfunded mandate upon every living soul in this country who is paying an health insurance premium, subsidized or unsubsidized.
“When you pay $1000 a month for insurance, $850 will now go to paying out claims, instead of $650 or $720 or $750 as before. The difference between $850 and $650 is taken directly out of the insurance company’s top and bottom line earnings. That means lower earnings and dividends payouts, lowers the ability of insurance companies to sell debt on the market, and increases the long term monopoly of the existing insurance companies over the American serf population due to the new barriers to entry.”
Let me hash that out a bit more:
Today you pay $1000 in premium in your state. The insurance company uses 650 for claims, and 350 for overhead and profit.
(in today’s dollars, so we skip inflation for the example) Tomorrow, you will pay $1000 in premiums and the insurance company will pay 850 for claims, and 150 for overhaed and profit.
OR, between today and tomorrow, the insurance companies lobby COngress and Obama, and get a law passed that allows them to maintain their current $350 overhead and profit for every customer. So they raise premiums....
$350 = 0.15 * X = $2333 per month premium.
Let’s say the insurance industry tightens their belt nation wide and gets closer to the NJ law and through efficiency and squeezing their workforce, get to 25% overhead and profit...
$350 = 0.25 * X = $1400 per month premium.
However, we are calculating the premiums in 2010 dollars, we have to add in 4 years of inflation and premium increases to the theoretical range of $1400 to $2333 a month premium that was the equivalent insurance policy to the 2010 policy costing $1000 a month.
Assuming we don’t have hyperinflation and health insurance companies don’t jack up rates as high as possible between now and 2014 to create as high a base premium rate as possible on day one that the new ObamaCare law goes into effect, (very big assumptions)
1400 * 1.08 * 1.08 * 1.08 * 1.08 = $1904 a month premium in 2014
2333 * 1.08 * 1.08 * 1.08 * 1.08 = $3175 a month premium in 2014
Welcome to the brave new world.
bttt
bttt
Great post..
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