Posts Tagged pre-existing conditions

UnitedHealth, Aetna & Humana — exit exchanges

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Insurance companies now have found a way to deny insurance because of pre-existing conditions, as a group.  This is nearly insane.  Any first year lawyer would realize the following:

  • It is not legal to kill a person so it is not legal to kill a group of people.
  • It is not legal to run a red light so it is not legal to run a group of red lights
  • It is not legal to deny insurance because of pre-existing conditions so it is not legal to deny insurance to a group with pre-existing conditions.

It took a few years since the ACA was enacted for insurance companies to realize the subsidized insurance exchanges have poor people, disabled people, and people who can’t work because of illness — they have, surprise, surprise, PRE-EXISTING CONDITIONS.

Now, after years of huge windfall profits, several large insurance companies have decided not to sell insurance to the group of people who purchase on the insurance exchanges.  Why do we need a Supreme Court decision when any cop knows it’s a crime.  Where do large companies like health insurance companies and Volkswagen get the idea they are entitled to do business as they please?

The insurance companies who have decided not to participate in the health insurance exchanges are listed below with the financials as reported on Yahoo.  They are not hurting, revenue last quarter is better than the same quarter last year.

Insurance company UnitedHealth Aetna Humana
Ticker UNH AET HUM
2015 Revenue (Billions) $176.10 $61.65 $54.53
Operating Margin 6.61% 8.18% 4.17%
52 wk price change $14.38 -$3.14 -$5.33
Quarterly revenue (yoy) 28.2% 5.4% 2.0%

A surprising twist to this story was reported by David Belk:  big insurance companies avoid risk by having the companies they serve “self-insure”.  Meaning, the companies (like a cable company or a hospital or an RV company) take the risk, put up the money, and let the “insurance company” just do the paperwork.  For the eight largest health insurance companies only about 30% of their business actually has financial risk — the rest is “self-insured”, otherwise called Administrative Service Contracts (ASC).

So now the picture is clear — insurance companies avoid risk.  They want someone else to take the risk and they are very skilled at shifting the risk to others.  The question is whether the U.S. really needs these paper shufflers skimming profits?

The simple answer is no.  Congress needs to level the playing field for insurance companies — if they sell insurance they must sell insurance on the exchanges.  Unless insurance companies can take the risk of health insurance exchanges they need to be replaced with a single payer system.  Colorado will decide this question on a ballot in 2016 — they have the right question, hopefully the people will choose the single payer system.

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