Consultant on Obamacare: 'Insurers won't be losing a lot of sleep over it'
Taxpayers will largely be picking up the tab for insurance company losses, he says
As the nation scrambles about trying to make sense of health care reform, i.e. "Obamacare," a prominent consultant to health insurance companies, Robert Laszewski says that even if the plan causes insurance rates to skyrocket, "insurers won't be losing a lot of sleep over it." He says that insurance companies won't be bearing the cost of most of their losses. This will be thrown on to the backs of taxpayers, he says. This is one of the aces up the sleeve of the Obama administration.
"Reinsurance Program that caps big claim costs for insurers (individual plans only)," consultant Robert Laszewski explains. "In 2014, 80 percent of individual costs between $45,000 and $250,000 are paid by the government [read: by taxpayers], for example."
While it's unconscionable that the U.S. taxpayers will be bearing the brunt of this, this will occur unless Republicans take action. Obamacare contains a "Reinsurance Program that caps big claim costs for insurers (individual plans only)," Laszewski explains. "In 2014, 80 percent of individual costs between $45,000 and $250,000 are paid by the government [read: by taxpayers], for example."
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Insurance purchased through Obamacare's government isn't full-fledged private insurance. It's a sort of private - public hybrid. Private insurance companies pay for costs below $45,000, then taxpayers picks up the tab that has remained secret until now. Mr. and Mrs. Taxpayer will be responsible for four-fifths of the next $200,000, plus worth of costs.
Using this method, Obamacare takes a major step toward the government monopoly over American medicine fervently wished for by the left.
"The reinsurance program has done and will continue to do what it was intended to do; help attract and keep more carriers in Obamacare than might have otherwise come," Laszewski writes.
Obamacare is being aided by having taxpayers subsidize big insurance companies' business expenses. Laszewski writes that Obamacare also contains a "Risk Corridor Program that limits overall losses for insurers." So insurers not only don't have to pay out all of their costs, passing on their losses to others.
Laszewski provides a couple of examples to help illustrate taxpayers' unwitting generosity toward these "participating health plans" (plans sold through Obamacare's government - run exchanges):
Laszewski provides this disheartening illustration. "[I]f the health plan has costs at 110 percent of the medical cost target [the costs that the insurer expects to accrue], it will be responsible for only 102.4 percent of the target (a 2.4 percent shortfall) - only about a quarter of its losses.
"If the health plan's medical costs come in at 120 percent of the expected claim cost target level, the health plan will only be responsible for 104.4 percent of the target (a 4.4 percent shortfall)-again only about a quarter of its losses."
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