scrubbedexpat099

Brokers need to use the same systems.

Do you know for certain that there are Brokers out there looking to take on individual Obamacare customers?

RoadWarriorFromLP

The insurance agent who sold my current plan to me is now selling ACA policies. (He doesn't have much choice if he wants to stay in the health insurance business, and thanks to ACA, pre-existing conditions won't prevent him from earning a commission.)

Again, I don't understand the hysteria. You do really seem to enjoy whining about it.

RoadWarriorFromLP

When did using a telephone to call an insurance agent become leftist?

Michael

Once the ACA web sites are fully operational, I suspect brokers would be happy to be able to get a 6% commission.

When people can compare prices and plans on a web site and get guaranteed approval, there will no longer be any need for a broker just like what happened to travel agencies who used to get about 20% to book an airline ticket. Now travel agencies get a flat $10 and some airlines such as Southwest and Jet Blue won't even pay that amount and require travelers to book through their web site.

I suspect you are correct that brokers used to get 20% and probably another several percent annually if the policy is renewed. All that did was raise the cost of health insurance. I'm sure that brokers don't like the new system but once plans are standardized, easy to compare, and guaranteed approval through a web site there will be little need for a broker especially since the ACA web sites don't charge the insurance companies any commission.

Also insurance companies profits will also likely be squeezed since they will now have to compete on price since it will eventually be easy to compare plans.

Although many conservatives claim that the government is taking over health care, ACA should eventually make the free market system for health care work more effectively and at a lower cost. The next big and more difficult challenge will be to figure out a way to make health care providers competitive.

scrubbedexpat099

I agree, not an obvious business area to want to gear up to serve.

The Exchange in Colorado charges a fee to Insurance Companies. Seems like the bulk of the initial financing was through Federal grants, which taper away, they need the numbers signing up to generate income from the fee they collect from Insurance Companies.

I did wonder about that, when I looked at mine it was one Insurer no matter what plan, if you have one or say two Insurers picking up the majority of the business because they are slightly cheaper and the margins anyway are small how do you keep a market going?

The Government is the player anyway, I see the Wal Mart in a small town scenario, snuffs out all opposition.

Michael

Since there are many unknowns about costs, some health insurers have priced their policies high according to the high end of their risk analysis while others have priced at the low or medium level of this risk analysis. Because of the lack of understanding of the risk, the federal government will subsidize 50% of any health insurance company losses purchased through ACA for the first 3 years. After the 3 years, it is assumed that insurance companies will know how to price policies correctly.

For insurers that have the many customers, they should be in a better position to analyze data to determine the best pricing policy to make a profit and still keep it's customer base. If they price too high, the free market should kick in bringing other companies to the market to undercut those prices.

Also as you stated in an earlier post, some companies are applying price pressure on medical providers which was never done before by insurers (except refusing to pay for procedures). Now that they need to provide standardized policies and still make a profit so they are now trying to control the cost of medical providers. I suspect in the short term this may possibly disrupt the close ties between health insurers and medical providers but in the long run, someone has to try to control the cost.

scrubbedexpat099

I would be fascinated to see what assumptions they used to produce premiums, how could you factor in the web site failure? I had seen mention of Federal Reinsurance but did not know the details.

How easy is it for an Insurer to enter the market? One problem I can see is that with most Insurance there is a spread of renewals throughout the year, you can modify your product and prices. Here there is essentially one selling opportunity and you have to one chance to get your pricing right and then you are locked in.

I think Insurers have always had agreed rates, there is a degree now of more price competition I think.

If you have lots of Insurers and lots of Health Care providers you should have a relatively free market.

The Front Range of Colorado is like that, in the rest of Colorado not so, usually only one local Hospital and not that many Doctor choices.

sir_eccles

Until they decide it's too hard to compete on price and start buying out each other and merging into one single giant insurance company.

scrubbedexpat099

Same goes for Health Care providers, my local Surgery was taken over by a chain, I wonder how long the Pharmacy will survive, the Supermarkets seems to be creaming off the day to day business.

With the added complexity and regulations makes sense, for a small operation the costs are overpowering and you have no clout.

Michael

Except for an event (birth of a child, loss of company provided insurance, new immigrant, etc.), there is open enrollment at the end of each year after the first year. Therefore I suspect over 90% of the policies will be written during the last couple of months each year.

Therefore health insurance companies should be able to apply with the ACA exchanges to provide coverage for that year if they want to enter the market to have access to over 90% of the customers.

scrubbedexpat099

i am not sure if I got my point across

You are an Insurer, next year you want to enter the Obamacare Market. You know what your competition is currently charging, you do not know what they will charge next year.

They have the advantage of an existing customer base and data they have collected.

Let us say they have sorted the web site issues so all a potential customer has to do is log in and see how much all the say Silver policies are and that most people will and will shop on price.

So you have a lot of up front costs and the result is you either get a lot of business or not very much. Id=f you get a lot of business you have to have the systems in place to handle it, if you do not get much business you have to wait a year before you can adjust your prices..

Thinking about it more, seems to me that it would be better if you had a State Agency to handle all the admin, bill paying etc and that the Insurer role was purely financial.

Michael

Why would you need an insurer since that plan appears to be the same as a "single payer" system except there is a middle man to get their cut of the premiums charged? This would upset conservatives just as much as a "single payer" system.

I'm all for a "single payer" but conservatives (even in the democratic party) would never allow that to happen.

Michael

I'm not sure that would be bad. Currently there are 38 Blue Cross companies in the US. 30 are independent companies that operate in only one state and another 8 are multiple state companies (Anthem/WellPoint, Wellmark, Highmark, CareFirst, Premera, The Regence Group, etc.) for a total of 65 affiliates/companies.

They were organized that way since each state had different regulations and each affiliate needed it's own lawyers and staff to create and administer policies. Now that ACA has standardized policies (can vary slightly but must follow federal guidelines), the large expense of having 65 affiliates each with it's own staff should be less necessary.

Also if a company has national coverage like AETNA, they should be able to provide more "in network" providers throughout the US and be able to exert more price pressure on medical providers.

scrubbedexpat099

It is quite common for Insurers to contract out certain elements of their product.

I was thinking of some examples, for example large groups. If you were a very large Employer you might back some Insurance to protect against unexpected variances in either your total claims or for example if you had one or more major claims. You would also contract out the administration of your plan or certainly those elements where you do not have sufficient presence to handle in house effectively.

scrubbedexpat099

It is one of those areas where each State sometimes seems like a separate Country

Colorado does not allow chain Liquor Stores, so you have a few mega stores around Denver. Trader Joes is moving in, I believe they sell wine etc, no idea how they are going to manage. Sams sub let to an individual operator.

Obviously it would make sense to have one country wide operation. Not the case.