Texas’ Largest Insurer to Increase Premiums 60%

An article by Ricardo Alonso-Zildivar of the Associated Press claims Texas’ largest health insurer plans to raise premiums by as much as 60 percent next year. The article assures us few people will be harmed — most enrollees have their premiums capped as a percentage of household income. Thus, it’s actually taxpayers who will get gouged. The article does admit that some people — those who are too wealthy to qualify for premium subsidies — may suffer sticker shock next November when they price their coverage for 2017.

This reminds me that my wife is a self-employed consultant from Texas. Last November when she called her insurance agent he quoted her a $6,750 deductible PPO plan that cost approximately $500 per month for an annual premium of $6,000 per year. A 60 percent increase over $500 is $800 per month. That works out to nearly $10,000 per year for coverage that will likely carry a deductible of $7,000.  Let me see if I understand this arrangement correctly? If my wife enrollees in BlueCross coverage, she will have to spend $17,000 per year before her coverage actually covers anything more than a well-woman visit or an annual physical too rudimentary to actually be of any benefit. If she doesn’t enroll in health coverage, she will have to pay 2.5 percent of our income in penalties. That doesn’t sound like much of a choice.

If the intent of Obamacare was to destroy the market for individual health insurance, the scheme is working perfectly. If its intention was to make coverage affordable, then it’s not working too well.

Comments (30)

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  1. Lee Benham says:

    Time to join the short term revaluation Devon 😄

    • Ronald Greiner says:

      Lee, Ricardo says “few people will be harmed.” Ricardo is confused and thinks everybody qualifies for Obamacare tax credits. Blue Cross in IA and NE are only going up 40% so now that’s a small increase compared to TEXAS!

  2. Ronald Greiner says:

    Devon, you write, “If the intent of Obamacare was to destroy the market for individual health insurance, the plan is working perfectly.”

    YOU hit the nail on the head. The media is saying that United Health Care is leaving the Exchange in CA, IL, FL … The real story that nobody is writing about is that United Health Care is closing up shop on their Individual Medical (IM) division, which is a much bigger story.

    So Obamacare killed the two largest IM companies in the United States, TIME and Golden Rule (United Health Care).

    Devon, you should be the 1st to write about this and inform America. Rate-Review at Healthcare.gov shows that United Health Care is not asking for any rate increases on Individual Medical products which can only mean one thing, United Health Care is closing the Individual Medical division down.

    • Devon Herrick says:

      Republicans are being vilified for trying to stop the cost-sharing reduction subsidies. Yet, if there are two things that doomed the exchanges it has to be: 1) guaranteed issue/community rating; and 2) cost sharing reductions.

      Cost sharing reductions effectively blunt any beneficial incentives from having a plan deductible. I wonder how much more the cost trend is for similar people: a) those with out cost sharing reductions and; b) those who face a deductible. I bet it’s significant.

      • John Fembup says:

        “Yet, if there are two things that doomed the exchanges it has to be. . . ”

        I agree those are doomsday mechanisms for insurance, but I’ve been saying ACA failure is even more fundamental. ACA was doomed because it is an insurance solution grafted on to a medical cost problem.

        Isn’t the problem that too many people cannot access necessary medical care, other than routine stuff? The principal obstacle is the cost of the care. But our leaders told us the problem was lack of insurance.

        As a result the “solution” is ACA, a giant, new insurance mechanism. But ACA does virtually nothing to affect the cost of care; or as our fearless leader put it, to “bend the cost curve”. As long as the cost of medical care rises, so will the cost of insurance. Subsidized individuals may not notice – but when the cost of the insurance rises, the cost of subsidies also rises. To support higher subsidies, the federales must either cut benefits or raise taxes or both. So far, looks like both.

        It’s probably even worse that it looks because, as a consequence of pouring more oceans of tax money into an undisciplined medical care “system” medical costs in fact have an incentive to rise further, and forever. Some solution.

        That’s why I think ACA would have failed even without opponents. It just doesn’t address the problem. The doomsday insurance mechanisms of guaranteed issue and community rating simply hasten the day of doom.

  3. Lee Benham says:

    Yep the goal was to kill the individual market. The ACA stopped the migration of insureds from group to individual Plans. Small companies were just starting to understand that giving cash to there employees directly through a tax free HRA plan for premiums only was about 1/2 the cost of group insurance. The ACA made that practice a $36,000 tax penalty and stopped the migration.

    Ron is correct UHC is leaving the individual market except in UTAH. here is the email they sent out.

    After a detailed review of our UnitedHealthcare Life Insurance Company (UHCLIC) Off-Exchange plans, we have determined that we will not offer UHCLIC individual Off-Exchange plans in 2017 except in the state of Utah. These changes reflect our longstanding goal to offer consumers products that are both affordable and financially sustainable.
    If you have clients with 2016 UHCLIC Off-Exchange comprehensive medical plans, they will remain covered until Dec. 31, 2016, as long as premium payments remain current and all other eligibility requirements are met. In states where we will not participate in 2017, we will begin mailing letters to these members in the coming weeks. The letter will provide them with information on when they will be able to choose new plans for 2017.
    Please note these changes do not affect other products within our individual product portfolio. To view marketed products available for quoting and application in states where you are properly licensed and appointed, visit http://www.UHOne.com/Broker and log in to E-Store.
    We will continue to assess the viability of the products we offer on an annual basis, market-by-market, and keep you informed as the health insurance market continues to evolve. We remain an advocate for more stable and sustainable approaches to serving this market and those who rely on it for care. Your business is sincerely appreciated and we are committed to serving our brokers and customers responsibly both now and in the future.

  4. Perry says:

    If the intent of Obamacare was to destroy the market for individual health insurance, the scheme is working perfectly. If its intention was to make coverage affordable, then it’s not working too well.

    I’m starting to believe the intent was to frustrate the public enough for them to demand a single payer or national health care system. It most decidedly was NOT to make healthcare affordable for all Americans.

    • Devon Herrick says:

      Even if you’re a Single-Payer proponent, Medicare for All is unlikely to be effective in lowering costs. The health care industry lobbyists are too entrenched. The only way to reduce spending is to enlist 200 million individual consumers who balk at paying high prices.

  5. john Fembup says:

    The goal of this administration is to kill all private insurance and, along the way, permit such chaos that a majority would demand federal takeover to create some kind of “Medicare for all”.

    Some Democrat legislators were quite open about that goal from the beginning of the debate over ACA.

    This game is barely past the opening moves.

    • Ronald Greiner says:

      The goal is to help the employer-based market and the trillions of dollars that it represents. You can say it is for single payer but you are confused. Nobody is spending billions of dollars for single payer. They spend billions of dollars to keep the employer-based insurance market, a HUGE cash cow, limping along, geez.

      Both Republicans and Democrats are bought off by Blue Cross. Blue Cross in Florida spends more on politics than any other group and they give to both political parties.

      Trust me, it’s about the money.

      • John Fembuo says:

        “Nobody is spending billions of dollars for single payer”.

        Well, Senator, that’s true – when you ignore the one party that certainly is spending billions of dollars for single payer.

        I am amused to learn that, like everyone else here but you, Senator, I am “confused”

        • Ronald Greiner says:

          Ha Ha, All the large insurance companies are spending billions for Obamacare – maybe you can name who is spending billions for single payer John.

          This aught to be good.

          • John Fembup says:

            You don’t see it because you don’t understand its motive.

            It’s the federal government.

            And it’s not “good” Senator. Not at all.

  6. Devon Herrick says:

    The Texas Blues are presumably raising premiums by 60% because of unfavorable risks are causing losses. But won’t jacking up premiums by that magnitude cause more healthy enrollees to drop? It certainly won’t cause the unhealthy ones to bail since they will still receive a net benefit. Maybe, BCBS believes the market demand is inelastic because so many of the enrollees are subsidized.

    Regardless of its motives, I don’t see this saving the exchange system in Texas from descending further into an adverse selection death spiral.

  7. bob hertz says:

    Note to Lee Benham:

    The practice you mention of giving tax-free cash to employees to buy their own insurance was indeed a good solution for some small companies.

    However I do not think it was a material threat to the group insurance industry, which covers over 150 million people if you count self-funded plans.

    The cash out would work best if you had employees who were about the same age and family size. Before the ACA, the cash out would only work if you had healthy employees.

    The individual and small group markets are damned important to the insureds of course, and get a lot of attention in this blog, which is fine.

    However, these markets are small potatoes to the insurance industry as a whole. United Health will walk away gladly, and Texas Blue Cross will just make itself unattractive since I do not think that Blue Cross carriers can walk away.

  8. Barry Carol says:

    Before the ACA exchanges started up, one of the large insurers told a group of investors that the average per member premium from its individual insurance business was about $250 per month or $3,000 per year. Roughly 18-20 million people nationwide bought health insurance in the individual market. If that company’s experience was typical, it implies that the total market size was $54-$60 billion in annual premium revenue at that time. If we had a federal high risk pool to cover the unhealthy and already sick at a cost of $15K per member per year and possibly more and it was paid for by a surcharge on underwritten individual medical insurance plans, and even if only five million people needed to access the high risk pools, it could easily double the cost of the underwritten insurance vs. what it would be without the surcharge. Other research shows that guaranteed issue plans cost roughly twice as much (94% to be exact) as underwritten plans. Self-funded employer plans and full risk group plans already cover their unhealthy and already sick members so the surcharge wouldn’t apply to them.

    So the issue that the freedom loving libertarians who want healthy people to be able to buy inexpensive underwritten health insurance plans refuse to face is how do we cover the unhealthy and already sick and how do we pay for it? If we cover them at all, they want someone else to pay for it but not them. I haven’t seen the issue addressed in any credible way by republican alternatives to the ACA either. So it goes.

    • Ronald Greiner says:

      Barry, Bob has told us that 100% of his insured clients that get cancer and get too sick to work are slammed on a short term COBRA for insurance TERMINATION and Bob laughs all the way to the bank. Bob needs Obamacare so that what he does is less deadly.

      Barry, you want Bob to collect the premiums for years on employer-based health insurance but when the workers get too sick to work you want people who purchase Individual Health insurance to pay all of the medical bills. Why do you think this is smart?

      Barry you are so lost you said that you have never heard of a sick employee losing their health insurance because of ELIGIBILITY requirements. You think disability payments pay for medical expenses, which they don’t.

      Barry, what Bob does selling employer-based health insurance is deadly for those who get cancer and can’t work his magic 30-hours-per-week requirement. Barry get out your calculator and put in it – 100% – that is the number of Bob’s clients that lose their insurance after a short COBRA when they have no hair and are too sick to work. Bob needs Obamacare so his insurance is not so deadly.

      Of course you and Bob love Obamacare because you want to keep terminating sick peoples’ insurance because it’s a huge cash cow no matter how many young women have to die.

  9. Lee Benham says:

    Barry I understand what you are saying and I’m trying to understand your thinking. Please answer this question. What is healthcare? Is it a service performed?

  10. Allan (formally Al) says:

    Ron, you are of course correct. The most pitiful cases I have treated are those socially responsible hard working Americans that always carried health insurance. Suddenly they develop an illness and lose their employer-sponsored care. There is COBRA if they can afford it, but too frequently they can’t and if they can their illness might outlast COBRA. They are left out in the cold, but the ideologically minded can’t seem to understand this problem. They do understand how to tax those people to pay for those that don’t carry insurance and don’t work. Those people have placed the working middle class under the gun with finger in place while they blame those that believe in free markets and personal responsibility. They also close their eyes to many of the solutions provided saying they don’t exist.

  11. Lee Benham says:

    What Ron is saying is correct. One of my first clients back in 1993 owned a small Mom and Pop used car dealership in Valley Nebraska. They had a small group health plan through principal at the time. The owners wife was diagnostic with cervical cancer. The owner decided he would like his wife to spend the rest of her days in Scottsdale enjoying the sun. He sold his business and moved to Scottsdale. Guess what happened they day he sold his business. Because he was no longer working 30 hours a week his insurance was terminated. There also was no Cobra available because the business was gone. The group was also less than 25 people and didn’t qualify for a cobra extension. This small business owner was devastated financially because of the eligibility clause..Sadly the eligibility clause is in every group health and life policy I have ever read. This is the main reason I have refused to ever sell a group sponsored insurance plan. I have seen first hand how it can financially ruin a family.

    • Allan (formally Al) says:

      The defenders of group sponsored insurance due to tax law can never respond satisfactorily to this problem in a direct manner. Their ideology gets in the way.

      • Ronald Greiner says:

        Al, this is what Bob Hertz, who sells employer-based health insurance, will change the subject, — “Ron, people with individual insurance could also lose their coverage when they were too sick to work– namely, by being unable to pay premiums. You and I have both seen people who were too poor for COBRA (or not offered it), and then too poor to pay for whatever individual insurance was offered them.

        I will maintain firmly that ACA subsidies have helped laid-off sick persons, first through guaranteed issue and through either tax credits or the expansion of Medicaid.

        But right away I need to say that this does not make me a total cheerleader for the ACA. I am very open to arguments that there might have been better ways to accomplish what has been cited in the preceding paragraph.

        You have a bias against the ACA, but you seem determined to state that it has done no good whatsoever. That I protest.”

        I told Bob that he is incorrect. I think that Obamacare makes his employer-based insurance less deadly.

        I signed up 2 MDs in 2002 and they both got cancer. Lucky I was their insurance agent instead of Bob. One had bone cancer that cost $2.6 million and his treatment took longer than COBRA’s 18 months. He lived in a bubble for 6 weeks – twice. Bob thinks his insurance should be terminated because he wouldn’t pay his premium. Bob is incorrect and he was not terminated because of non-payment of premium.

        I took these MDs off of a group that they had to work full time, performing their regular duties, to keep their insurance. The 1st thing that the anesthesiologist did was have a stroke during his 1st surgery. Will they let you continue working after a stroke?

        • Allan (formally Al) says:

          “You have a bias against the ACA, but you seem determined to state that it has done no good whatsoever. That I protest.”

          Quite the contrary Ron, I have stated that the ACA promoted certain conservative ideas so not every idea is terrible even though the results are. In fact, Greg Scandlen who used to write some of the health alerts on this blog wrote and described “Three Conservative Ideas Buried within Obamacare”. These ideas were promoted by free-market economists for years and I am in total agreement. In particular, 1)“Breaking the tie between employment and health insurance,” 2) “Tax credits for individually-purchased health insurance.” and 3) “High-deductible health insurance.” (http://healthblog.ncpa.org/three-conservative-ideas-buried-within-obamacare/ http://thefederalist.com/2014/07/15/three-conservative-ideas-buried-within-obamacare/) Some people have benefited from the ACA, but on the whole the ACA has caused far more harm than good and that harm will increase exponentially with time.

          Of course I have a bias against the ACA. Off the cuff I can’t think of a law that was as poorly written and backassed as this law. Stupidity reigned as this hybrid law was written and continues as the law is changed. It’s supporters need to look deeply at the law in its entirety, not just the superficial parts that make them erroneously believe everyone is insured and thereby gets appropriate medical care.

        • Allan (formally Al) says:

          “You have a bias against the ACA, but you seem determined to state that it has done no good whatsoever. That I protest.”

          Quite the contrary Ron, I have stated that the ACA promoted certain conservative ideas so not every idea is terrible even though the results are. In fact, Greg Scandlen who used to write some of the health alerts on this blog wrote and described “Three Conservative Ideas Buried within Obamacare”. These ideas were promoted by free-market economists for years and I am in total agreement. In particular, 1)“Breaking the tie between employment and health insurance,” 2) “Tax credits for individually-purchased health insurance.” and 3) “High-deductible health insurance.” (http://healthblog.ncpa.org/three-conservative-ideas-buried-within-obamacare/ http://thefederalist.com/2014/07/15/three-conservative-ideas-buried-within-obamacare/) Some people have benefited from the ACA, but on the whole the ACA has caused far more harm than good and that harm will increase exponentially with time.

          Of course I have a bias against the ACA. Off the cuff I can’t think of a law that was as poorly written and backassed as this law. Stupidity reigned as this hybrid law was written and continues as the law is changed. It’s supporters need to look deeply at the law in its entirety, not just the superficial parts that make them erroneously believe everyone is insured and thereby gets appropriate medical care.

  12. Barry Carol says:

    Ron – So just to clarify, are you saying that the insurance policies you sell come with waiver of premium clauses if you get sick? If so, how much does that cost? What happens if you don’t get sick but lose your job and can no longer pay the premium and then get sick later? Your example of the MD’s who got cancer is classic cherry picking. They presumably had substantial savings and investments allowing them to continue to pay their premium. What would have happened if they were secretaries or factory workers? The fact is that for the vast majority of people, their job is the source of their cash flow from which they pay their bills. There have been press articles recently stating that as much as half the population couldn’t cover an unanticipated $400 bill for a car repair, home repair or medical bill without putting it on a credit card, borrowing from a friend or family member or selling an asset if they had anything to sell.

    Employer provided insurance isn’t perfect though I suspect that the number of people who lose their health insurance because they get too sick to work is tiny compared to the 155 million lives that have employer coverage. In the meantime, the employer insurance pays for lots of sick family members including very expensive premature birth cases. At the same time, how many people with IM coverage lose it because they can’t work anymore and can no longer afford to pay the premium and don’t have sufficient savings or investments to cover it?

    By the way, I know that disability policies aren’t health insurance but they do provide a source of income for those who can no longer work. That income stream can help to pay the bills including the cost of health insurance. Many, if not most, large employers provide that as well as part of compensation.

    • Ronald Greiner says:

      Barry, I never said waiver of premium.

      Bob Hertz told you 100% of his clients lose their insurance if they are too sick to work. Lee Benham who is an agent says that is correct. Allan, an MD, says his sick patients will be sick even when their short term COBRA in TERMINATED.

      YOU say you have never heard of an employee losing insurance for the last 40 years.

      Everybody on this post says you are wrong but you will defend sick employees losing their insurance from employers. Barry that is deadly but you don’t care as long as you get your tax dodge for employer-based insurance. YOU say that people who purchase Individual Medical should not get the same tax dodge because it is not paid for. YOU are a heartless person Barry.

      Maybe your wife’s health insurance should be terminated because you say, “There have been press articles recently stating that as much as half the population couldn’t cover an unanticipated $400 bill for a car repair…”

      waiver of premium, stop changing the subject. YOU Obamacare lovers need Obamacare because employer-based health insurance, and the people who sell it like Bob, is too deadly.

      YOU also think that the people who pay for Individual Medical should pay for all of the terminated employees. That is really sick and selfish Barry.

  13. Lee Benham says:

    Sad how an article written way back in 1991 lays out everything we are talking about and the politicians still have not been able to see the light.

    http://www.leebenhamassociates.com/file/b69f2088b54df678f8d1d93cfbe2938c

  14. Barry Carol says:

    “and the politicians still have not been able to see the light”

    And why exactly do you think that is?

  15. Lee Benham says:

    health care also health·care (hĕlth′kâr′)
    n.
    The prevention, treatment, and management of illness and the preservation of mental and physical well-being through the services offered by the medical and allied health professions.

    Healthcare is not a right. Healthcare is a service preformed by professionals . If healthcare is a right then plumbing, electricity,legal and any other service should be considered a right.

    If healthcare is a right then how come assisted living or long term care is not a right?

    Services are not a right and should not be subsidized or mandated in any way.