U.S. Politics: The Bipartisan Dismemberment of the VA

[all swedes are racist]

https://www.washingtonpost.com/news/post-nation/wp/2016/08/18/justice-department-says-it-will-end-use-of-private-prisons/

US Justice Dept says will end use of private prisons over the next five years. 

Thats... kind of a big deal. 

[Swordfish]

8 minutes ago, R'hllors Red Lobster said:

https://www.washingtonpost.com/news/post-nation/wp/2016/08/18/justice-department-says-it-will-end-use-of-private-prisons/

US Justice Dept says will end use of private prisons over the next five years. 

Thats... kind of a big deal. 

it's a great start, for sure....

[Mr. Chatywin et al.]

They never should have existed in the first place. 

[Altherion]

Here's something most people (including myself) probably did not see at the time: the Affordable Care Act has given the insurance companies an extra means of leverage against the government. One of the big ones (Aetna) wanted to purchase another (Humana) thus reducing the competition. When the Department of Justice objected to this on anti-monopolistic grounds, Aetna warned that if the merger was not approved, they would reduce their ACA coverage. When the merger was indeed denied, Aetna followed through on its threat. Given that the biggest insurer (United Healthcare) had already announced earlier this year that it is leaving most ACA exchanges, it's not clear how many options will be left in many states.

More generally, it will be interesting to see what happens with ACA in the long term if all of the insurance companies decided that some of the exchanges simply aren't profitable and abandon them altogether. Somebody obviously has to pay, but it's not clear who as it will be quite difficult to get more money from Congress and many of the individual insurance buyers simply don't have the funds (i.e. if the insurers jack up the prices, people will have no choice but to go without insurance and pay the penalty).

[Swordfish]

4 minutes ago, Altherion said:

Here's something most people (including myself) probably did not see at the time: the Affordable Care Act has given the insurance companies an extra means of leverage against the government. One of the big ones (Aetna) wanted to purchase another (Humana) thus reducing the competition. When the Department of Justice objected to this on anti-monopolistic grounds, Aetna warned that if the merger was not approved, they would reduce their ACA coverage. When the merger was indeed denied, Aetna followed through on its threat. Given that the biggest insurer (United Healthcare) had already announced earlier this year that it is leaving most ACA exchanges, it's not clear how many options will be left in many states.

 

I take some exception to your wording here.

Aetna's conmtention was ALWAYS that they needed the merger to be profitable in the exchanges on the individual market.  they've lost a couple hundred million bucks on those exchanges, so I'm not surprised they are pulling out.

 

Quote

More generally, it will be interesting to see what happens with ACA in the long term if all of the insurance companies decided that some of the exchanges simply aren't profitable and abandon them altogether. Somebody obviously has to pay, but it's not clear who as it will be quite difficult to get more money from Congress and many of the individual insurance buyers simply don't have the funds (i.e. if the insurers jack up the prices, people will have no choice but to go without insurance and pay the penalty).

These are the exact kinds of problems people were raising about the ACA from teh start, and which were simply poo pooed away by the rank and file supporters.

it's a compounding problem because a lot of the people you are referring to who won't be able to afford the premiums and opt for the penalty instead are exactly the kind of people that are required to make the system work without pre ex.  namely, young, healthy adults who are less likely to actually need the coverage.  And indeed, that's exactly what we are seeing.

 

 

[SkynJay]

7 minutes ago, Swordfish said:

I take some exception to your wording here.

Aetna's conmtention was ALWAYS that they needed the merger to be profitable in the exchanges on the individual market.  they've lost a couple hundred million bucks on those exchanges, so I'm not surprised they are pulling out.

Aetna showed profits last year and in financial statements released this year.  When is the plunge into the red suppose to happen for them?

Eh, perhaps Medicare for all is coming sooner than I even hoped.  I am sure that threat will cause the insurance companies to refind their list profits.

[NestorMakhnosLovechild]

6 minutes ago, SkynJay said:

Aetna showed profits last year and in financial statements released this year.  When is the plunge into the red suppose to happen for them?

Eh, perhaps Medicare for all is coming sooner than I even hoped.  I am sure that threat will cause the insurance companies to refind their list profits.

Surely our understanding of business is a little more complex than this, no? Aetna has a number of different  products that it sells. You know - diversification and all. Selling individual insurance on the private marketplace is just one of those products. The claim is not that Aetna, overall, is not profitable - in fact, the reality is just the opposite. Aetna had a good year. The claim is that a particular product - these particular lines of coverage in eleven or so states, are not good product lines for Aetna, and they're going to pull out of these markets and pull those products. 

 

[Swordfish]

16 minutes ago, SkynJay said:

Aetna showed profits last year and in financial statements released this year.  When is the plunge into the red suppose to happen for them?

Eh, perhaps Medicare for all is coming sooner than I even hoped.

You should look a little closer at the financial statements.  

We are talking about the individual market here, not the company overall.  the whole purpose of that merger was to manage their hemorrhaging on the individual market/aka 'exchange'.

 

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 I am sure that threat will cause the insurance companies to refind their list profits.

 

What does this even mean?

 

[SkynJay]

2 hours ago, NestorMakhnosLovechild said:

Surely our understanding of business is a little more complex than this, no? Aetna has a number of different  products that it sells. You know - diversification and all. Selling individual insurance on the private marketplace is just one of those products. The claim is not that Aetna, overall, is not profitable - in fact, the reality is just the opposite. Aetna had a good year. The claim is that a particular product - these particular lines of coverage in eleven or so states, are not good product lines for Aetna, and they're going to pull out of these markets and pull those products. 

 

Your condescending tone is such a welcome relief.  It surely is the best way to foster further discussion on the board.

They threatened to pull out if the merger didn't go through, they followed through forgoing short term profits for hopes of a long term gain.  There is nothing wrong with this from a business sense but call it what it is.  They pulled out of Pennsylvania where they lost.. negative 13 million on the individual market last year (yes I love playing with double negatives, I find it mildly amusing).  They claimed a 19.6% revenue on premiums.  They stayed in four states and pulled out of two with projected positive earnings so it isn't that they pulled out full stop. 

Three months ago they were talking about expanded into more states but without the merger they instead pulled out; with the CEO backtracking on his 'good investment' comments in less than a financial quarter.

I have no problem with Aetna making a business decision here.  But it is quite possible this was more political than not, something Swordfish took issue with in the OP of this little thread.  Aetna was treating the exchanges as a positive long term investment, then decided it was better used as political leverage. 

Swordfish:  I have no idea what I was trying to say there.  The first sentence is exactly what I mean, the second is gibberish even to me.  Sorry, I lost whatever thread of thought I had on that one.

 

[The Anti-Targ]

7 hours ago, R'hllors Red Lobster said:

https://www.washingtonpost.com/news/post-nation/wp/2016/08/18/justice-department-says-it-will-end-use-of-private-prisons/

US Justice Dept says will end use of private prisons over the next five years. 

Thats... kind of a big deal. 

A Republican president is likely to reverse that course. It seems like private prisons are an important pillar of right wing ideology which exists in several countries.

[all swedes are racist]

27 minutes ago, The Anti-Targ said:

A Republican president is likely to reverse that course. It seems like private prisons are an important pillar of right wing ideology which exists in several countries.

Yeah, even if not, the majority of the private prisons are state institutions (or contracted with states DoCs, or whatever) but still a hopeful and historic step in the right direction

eta: would be nice if this, along side the mother jones article that seems to have precipitated it, will push more governors/states to follow suit

[ThinkerX]

5 hours ago, Altherion said:

Here's something most people (including myself) probably did not see at the time: the Affordable Care Act has given the insurance companies an extra means of leverage against the government. One of the big ones (Aetna) wanted to purchase another (Humana) thus reducing the competition. When the Department of Justice objected to this on anti-monopolistic grounds, Aetna warned that if the merger was not approved, they would reduce their ACA coverage. When the merger was indeed denied, Aetna followed through on its threat. Given that the biggest insurer (United Healthcare) had already announced earlier this year that it is leaving most ACA exchanges, it's not clear how many options will be left in many states.

More generally, it will be interesting to see what happens with ACA in the long term if all of the insurance companies decided that some of the exchanges simply aren't profitable and abandon them altogether. Somebody obviously has to pay, but it's not clear who as it will be quite difficult to get more money from Congress and many of the individual insurance buyers simply don't have the funds (i.e. if the insurers jack up the prices, people will have no choice but to go without insurance and pay the penalty).

No great surprise to me.  I maintained right from the start that the funding plan for the ACA relied heavily on 'smoke and mirrors.'  You want to make health care affordable - attack health care costs directly, at the source, with draconian price controls.  Combine that with Medicaid for all, and if need be, double or triple the relevant tax already coming out of everybody's paycheck.

 

Meanwhile, lucky me.  My ACA marketplace insurer got shut down by the state this January, slithered back into business without bothering to tell me (at least not till I got the triple bill in May), and pulls out for good come years end.  That leaves a grand total of one insurer in the ACA marketplace for my state, and they've already announced steep rate hikes.  Combined with the high deductible's, I find the policy mostly useless even though its touted as one of the better ones.

 

My take, regardless of the BS propaganda to the contrary, the ACA is in dire danger of collapse.   

[Martell Spy]

http://www.vox.com/2016/8/18/12520820/public-option-health-care-obamacare

There's a simple fix for Obamacare's current woes: the public option

[Swordfish]

16 hours ago, SkynJay said:

Your condescending tone is such a welcome relief.  It surely is the best way to foster further discussion on the board.

 

This is astounding, given the tone of your initial reply, and doubly so given that not only was your response condescending, it was also mostly wrong.

 

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They threatened to pull out if the merger didn't go through,

Indeed.  because, as i said, they were hemorrhaging money.

 

Quote

 

Quote

There is nothing wrong with this from a business sense but call it what it is.  They pulled out of Pennsylvania where they lost.. negative 13 million on the individual market last year (yes I love playing with double negatives, I find it mildly amusing).  They claimed a 19.6% revenue on premiums.  They stayed in four states and pulled out of two with projected positive earnings so it isn't that they pulled out full stop. 

 

And?

 

Quote

Three months ago they were talking about expanded into more states but without the merger they instead pulled out; with the CEO backtracking on his 'good investment' comments in less than a financial quarter.

Indeed.  One excellent way to expand?  merge with a company that is already in that market.

Without that....

 

Quote

I have no problem with Aetna making a business decision here.  But it is quite possible this was more political than not, something Swordfish took issue with in the OP of this little thread.  Aetna was treating the exchanges as a positive long term investment, then decided it was better used as political leverage.

 

Quote

Aetna was treating the exchanges as a positive long term investment,

 

indeed.  And then that turned out not to be true,.  If you actually read the letter, they lay out all the reasons this was the case.

 

Quote

then decided it was better used as political leverage. 

You are entitled to your opinion.

but this just isn;t the way companies operate.  if they legitimately thought there was profit there without the emrger, they;d be there.

What are you suggesting is their motivation to pull out of profitable markets now that the merger is already denied?  That's cutting off your nose to spite your face, and it just isn't how companies operate.

And it's not like Aetna is the only one pulling out of these exchanges.  You can hand wave away these issues as big businesses behaving badly, buit that;s not a credible argument given the actual facts and financials at hand.

Here's the actual letter:

 

http://big.assets.huffingtonpost.com/AetnaDOJletter.pdf

 

Quote

At the outset, it is important to note that Aetna has been a steadfast and strong supporter of the developing public exchange business and the Administration's efforts to expand healthcare to all Americans. The President asked us to take a long-term view when this law went into effect, and, unlike many others, we have stayed the course and worked constructively to make the public exchange market work. The acquisition of Humana puts Aetna in a significantly better position to continue and expand its support.
Unfortunately, a challenge by the DOJ to that acquisition and/or the DOJ successfully blocking the transaction would have a negative financial impact on Aetna and would impair Aetna's ability to continue its support, leaving Aetna with no choice but to take actions to steward its financial health. These contemplated actions would include the actions discussed below.
Although we remain supportive of the Administration’s efforts to expand coverage, we must also face market realities. Our customers expect us to keep their insurance products affordable and continually improving, and our shareholders expect that we will generate a market return on invested capital for them. We have been operating on the public exchanges since the beginning of 2014 at a substantial loss. And although we have been working to improve our operations over the last 2 ½ years, we are challenged to get to break even this year and it will be some time before we recoup our investment (including a return on invested capital in the exchange business). As we add new territories, given the additional startup costs of each new territory, we will incur additional losses. Our ability to withstand these losses is dependent on our achieving anticipated synergies in the Humana acquisition.

 

Quote

As many market observers have noted, the exchanges have succeeded in reducing the ranks of the uninsured, but they face significant uncertainty as to their economic viability over time, due to lower than initially expected enrollment, a population that is older and sicker than initially projected, an inadequate risk mechanism, and other regulatory issues and uncertainties. Making our position in the exchanges tenable means we need to price and design our coverage in a way that appeals to exchange beneficiaries while also managing the risk and generating a market return on the capital invested. This business is sustainable only if we have the financial capacity to take on unexpected changes in the public exchange environment and to use capital to invest in new markets.

Quote

Should the deal be blocked the challenges will be exacerbated as we are facing significant unrecoverable costs including carrying costs of the debt required to finance the deal that are projected to be from now to the end of the year, and significant unrecoverable transaction and integration costs. We currently plan to cover the above costs, as well as invest in capabilities, improve benefits, pass savings through to members and customers and expand our business using the more than a year in synergies we expect to obtain through the transaction. If we are unable to close the transaction we will need to recover those costs plus a breakup fee and an estimated in litigation expenses if the DOJ sues to enjoin the transaction. At our last Board meeting in June we discussed these issues. The Board has asked us to put in place contingency planning to mitigate the impact of a failed merger, including any required changes in our businesses and investment strategy. In addition, as part of our normal Board Audit Committee review process, we were asked by the Audit Committee of the Board in April to prepare a review of the performance of our public exchange business. This is scheduled to be presented to the Audit Committee on July 22.

Our analysis to date makes clear that if the deal were challenged and/or blocked we would need to take immediate actions to mitigate public exchange and ACA small group losses. Specifically, if the DOJ sues to enjoin the transaction, we will immediately take action to reduce our 2017 exchange footprint. We currently plan, as part of our strategy following the acquisition, to expand from 15 states in 2016 to 20 states in 2017. However, if we are in the midst of litigation over the Humana transaction, given the risks described above, we will not be able to expand to the five additional states. In addition, we would also withdraw from at least five additional states where generating a market return would take too long for us to justify, given the costs associated with a potential break-up of the transaction. In other words, instead of expanding to 20 states next year, we would reduce our presence to no more than 10 states. We also would not be in a position to provide assistance to failing cooperative exchanges as we did in Iowa recently.

 

Quote

Finally, based on our analysis to date, we believe it is very likely that we would need to leave the public exchange business entirely and plan for additional business efficiencies should our deal ultimately be blocked. By contrast, if the deal proceeds without the diverted time and energy associated with litigation, we would explore how to devote a portion of the additional synergies (which are larger than we had planned for when announcing the deal) to supporting even more public exchange coverage over the next few years. (b)(4)

The reality is that our continued ability to participate in the public exchanges under the ACA is ultimately dependent on our ability to continue to invest in the market development of exchange plans in terms of both startup costs and losses. As outlined above, those investment decisions cannot help but be impacted by a failed merger with Humana.

 

if you want to credibly make the case that this is purely political posturing, then you are gonna need to address some of the actual reasoning they are laying out, because they make a pretty compelling case, IMO.

 

 

[Swordfish]

9 hours ago, Martell Spy said:

http://www.vox.com/2016/8/18/12520820/public-option-health-care-obamacare

There's a simple fix for Obamacare's current woes: the public option

This isn't a fix, so much as a shifting of these issues to 'underneath the rug'.

[NestorMakhnosLovechild]

17 hours ago, SkynJay said:

Your condescending tone is such a welcome relief.  It surely is the best way to foster further discussion on the board.

They threatened to pull out if the merger didn't go through, they followed through forgoing short term profits for hopes of a long term gain.  There is nothing wrong with this from a business sense but call it what it is.  They pulled out of Pennsylvania where they lost.. negative 13 million on the individual market last year (yes I love playing with double negatives, I find it mildly amusing).  They claimed a 19.6% revenue on premiums.  They stayed in four states and pulled out of two with projected positive earnings so it isn't that they pulled out full stop. 

Three months ago they were talking about expanded into more states but without the merger they instead pulled out; with the CEO backtracking on his 'good investment' comments in less than a financial quarter.

I have no problem with Aetna making a business decision here.  But it is quite possible this was more political than not, something Swordfish took issue with in the OP of this little thread.  Aetna was treating the exchanges as a positive long term investment, then decided it was better used as political leverage. 

OMG! Don't tone police me! If you can't deal with the righteous condescension engendered by my lived experience, that's your problem. For sure! 

There is no dispute that Aetna's individual marketplace policies are, on the whole, net losers for the company. They're not profitable. In fact, most of the states they sell in are not profitable. It's true that their lives in Pennsylvania were profitable last year, but the reality is - they weren't  actually that profitable because Aetna isn't doing that much business in Pennsylvania in the individual health care exchanges in first place. In fact, Aetna only served about 31,000 Pennsylvanians on the individual insurance marketplace, about 6% of the state's individual health insurance market. This, by itself, undercuts the idea that somehow Aetna's decision to pull out is some kind of grand political threat designed to undercut Obama or Hillary or the Democrats or whomever it is that the far-fringed conspiracy-minded left thinks it is that corporations hate at the moment. Aetna is a big deal in a number of other states - but it's not that big of a deal in Pennsylvania. Aetna's pullout is not imperiling the Pennsylvania marketplace. For comparison's sake, in April of 2016, UnitedHealthcare announced that they were  pulling out of the individual marketplaces entirely after 2016 citing over $1 billion in losses for 2015 and 2016 on individual policies.  In contrast to the 31,000 Pennsylvanians covered by Aetna, UnitedHealthcare's Pennsylvania exchange enrollment was just over 65,000 in 2015. Highmark, one of Pennsylvania's larger individual marketplace insurers, lost $773 million through 2015 on its individual marketplace plans.  Highmark is now asking for a 48% (!) premium rate increase in order to stanch the bleeding.

There's plenty of evidence suggesting that, as many critics of the Affordable Care Act feared, the people signing up for health care on the individual health care exchanges are way sicker than the average health care consumer and are using up far more services than expected. Aetna's been lucky in Pennsylvania, but the continued risk of operating in Pennsylvania, where they are making a minimal profit on only a little bit of business doesn't make sense, especially when other providers like UnitedHealthcare are leaving and flooding the market with 60,000+ unprofitable potential new clients, and competitors like Highmark are going to be shedding their own sick people because they are going to face rate hikes of almost 50%. 

 

 

[Martell Spy]

Quote

This isn't a fix, so much as a shifting of these issues to 'underneath the rug'.

 

No, it's not a complete fix, but is a fix. We likely need to expand the subsidies for low income people who don't qualify for Medicaid, for example. And the current problems with Obamacare in certain states have made a stronger argument for the public option. There are problems with certain state groups. The law is working great here in Washington state because we have a large and somewhat prosperous population. We have sick people here, they just get absorbed into the group. 

It's a bit like pre Obamacare for people that didn't have healthcare through a job or Medicare and Medicaid. Healthcare wasn't working well for those people. They were being left out of all the large groups with bargaining power. 

shifting these issues underneath the rug is exactly what the Republican party is doing. They refuse to offer a real plan with real numbers. They are refusing to govern.

[DireWolfSpirit]

I think a high percentage of U.S. workers are in denial over the amount they are paying for the healthcare they are getting. Disdain for taxes is regularly complained about, but for some odd reason among a lot of workers they are less outraged over this burdensome amount of pay they never see because its dedicated to healthcare in the compensation package. Ive spoke with numerous workers in the past who arent even aware of how much of their total compensation package is dedicated to healthcare coverage. They dont even realize what they never see. To them its a hidden cost, I think this goes a long ways towards explainng why the outrage is not as great as you hear over taxes, they see those numbers on their paystubs more regularly, its more transparent. 

I think the countries problems from exhorbitant healthcare costs are as great or greater than our issue of over taxation. Its like invisible straws breaking the collective camel herd. And I still maintain your average worker under estimates the diverted amount of his/her compensation that goes for that exhorbitantly expensive healthcare coverage.

[Altherion]

9 hours ago, Triskan said:

I do wonder whenever there's a story about how ObamaCare is going what exactly the haters think they're winning, and this Aetna thing is a prime example of that.  If you're keeping a daily ledge on how the law is going I would agree that it's not "good" that Aetna is dropping out of a lot of markets (laying off the issue of to what extent it was a political rather than business decision).  But what do haters think is going to happen?  A cascade of every insurer dropping out and a future President signing a bill to repeal the law?  Seems extremely unlikely. 

People that hate on government health care hate on ObamaCare almost to a rule when in might just be their last, best chance to avoid government healthcare.  The world is a twisted place.

Why do you think that the lack of ACA coverage will lead to government health care? It's not at all obvious to me that this will be the case: just as repealing ACA requires effectively passing a new law, so does adding a government option. I'm actually not at all sure what will happen. For example, even now there is one county which lacks any insurers for 2017. This is the first one and it will almost certainly be fixed (the article notes that another insurer is moving in), but, with pretty much equal certainty, it won't be the last. What happens when the government requires people to do something (on pain of a tax penalty) which it is literally impossible for them to do?

[OnionAhaiReborn]

6 minutes ago, Altherion said:

Why do you think that the lack of ACA coverage will lead to government health care? It's not at all obvious to me that this will be the case: just as repealing ACA requires effectively passing a new law, so does adding a government option. I'm actually not at all sure what will happen. For example, even now there is one county which lacks any insurers for 2017. This is the first one and it will almost certainly be fixed (the article notes that another insurer is moving in), but, with pretty much equal certainty, it won't be the last. What happens when the government requires people to do something (on pain of a tax penalty) which it is literally impossible for them to do?

The solution to this has been to offer broad exemptions. Obviously that doesn't solve the problem of people being unable to get health insurance, but they are not likely to be hit with a tax penalty on top of that.