Not Everyone signing up for Obamacare is paying for Obamacare

Posted by PITHOCRATES - April 6th, 2014

Week in Review

The big question in the Obamacare signups recently released by the Obama administration is this.  How many people have actually sent a payment into their insurance company?  For signing up for health insurance doesn’t mean you have health insurance.  You have to pay for it first.  With ‘first’ being key.  As anyone who has paid a health insurance premium knows.  You pay for next month’s health insurance this month.  That is, it’s cash before delivery.  As the insurance companies need the cash before they can pay any benefits.  This is the way all insurance has worked since the dawn of insurance.  First money goes into an insurance pool.  Then said insurance pool pays insurance claims.  The money must come first.  There’s just no other way for it to work.

So, is the money coming first with Obamacare?  As it turns out, the majority of it is.  At least, according to a leading federation of Blue Cross and Blue Shield health plans (see Blue Cross group sees Obamacare premium payments at 80-85 percent by David Morgan posted 4/2/2014 on Reuters).

A leading federation of Blue Cross and Blue Shield health plans said on Wednesday that it is receiving premium payments from 80 to 85 percent of its new Obamacare health insurance customers.

The estimate, released by the Chicago-based Blue Cross Blue Shield Association, reflects enrollment activity among 35 Blue Cross Blue Shield plans in 47 of the 50 states, including plans sold by WellPoint Inc, from October 1 through February 1…

If the Blue Cross Blue Shield payment rates held true for enrollment across the board, between 5.7 million and 6 million of the 7.1 million would actually be enrolled in coverage.

So that means the Obama administration is overstating the enrollment numbers from 18.3% to 24.6%.  And between 1.1 million and 1.4 million haven’t paid for the Obamacare they signed up for.  Of course, that’s assuming that the 7.1 million were all new Obamacare enrollees into private health insurance plans.  And not those who signed up for Medicaid who will never write a check for their coverage.  Which will not help the insurance companies pay for the expanded benefits mandated by Obamacare.

So the Obama administration’s numbers are suspect to say the least.  As is the continued existence of the private insurers.  For if they don’t get 7+ million signing up for Obamacare (with a heavy concentration of the young and healthy who will file few claims) the cost of caring for the old and sick will bankrupt them.  Of course if this was the plan all along the Obama administration could at least claim something in Obamacare was working according to plan.


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Medieval Barbers, Supplemental Insurance, the Baylor Plan and Blue Cross Blue Shield

Posted by PITHOCRATES - May 28th, 2013

History 101

Barbers once Dressed our Wounds and Bled us when we were Sick

Awhile back one of our most beloved public figures suffered a serious accident.  The injuries required significant rehabilitation.  So he missed a lot of work.  People worried how he was going to pay his bills if he couldn’t work.  Groceries.  Rent.  Child care.  Etc.  Health insurance would pay his medical bills.  But what about that lost income?  What would replace that to allow his life to go on as before during his convalescence?  Thankfully he had Aflac supplemental insurance.  Which would pay his bills until his wings and beak healed.  Allowing the Aflac duck to continue on with his life.  Until he was able to return to work.

For a small insurance premium anyone can buy supplemental insurance.  This will allow them to pay their bills should there be an interruption in their earnings due to an illness or accident.  The Aflac duck probably did not pay for this coverage.  One of the perks of being the face of the company.  And the Aflac duck is fictional.  And fictional entities don’t have bills to worry about during any interruption in their fictional earnings.  But the duck is cute.  And it illustrates what the first health insurance policies actually did.  Replaced lost income.

Health insurance hasn’t been around for long.  For costly hospital stays haven’t been around for long.  Once upon a time you visited the local barber to have a wound dressed after an accident.  Or for a bloodletting when you were sick.  And if you had a toothache.  So he could yank your tooth out of your mouth.  As well as give you a shave and a haircut.  Things that weren’t really that costly.  But if you were a black smith with a lame hand you could go for awhile without being able to earn any income.  And this is what the first use of health insurance did for us.  Like that Aflac duck.  It paid our bills until we were ready and able to return to work.

Early Health Insurance didn’t pay for Hospital Stays or Medical Procedures but replaced Lost Income

Early hospitals bore little resemblance to what we have today.  In fact, most people preferred to stay out of them.  Choosing to recuperate at home.  The American Civil War killed over 600,000 Americans.  More than half of those were from disease.  Those wounded in battle feared the hospital.  Where you went to die.  Often by infection as surgeons went from one amputation to another without changing their bloody aprons or washing their hands.  This was in the 1860s.  Which isn’t that long ago.  There are people alive today whose grandfathers were born during the American Civil War.  Who were born into a world where surgeons still did not know that they should wash their hands before sticking them into someone’s body.

Medical care may not have been that good in the 1860s but we already had health insurance.  Introduced around 1850.  Thanks to the rise in rail and river transportation.  Which in their early days weren’t all that safe.  Hurting a great many people.  Brakemen fell off of moving cars.  And lost hands coupling cars together.  While steam boilers had a tendency to explode.  In fact, the greatest maritime disaster in U.S. history happened when a steam boiler exploded in the bowels of the S.S. Sultana in 1865 on the Mississippi River.  The American Civil War had just ended.  And the Sultana was carrying emaciated and frail Union POWs home after their release from Confederate prison camps.  Happy to be free.  And anxious to go home.  How sad that after all they had gone through that they would die not on the battlefield.  But on the voyage home.  The explosion killed 1600-2000.  A greater death toll than when the Titanic sank.

As the Industrial Revolution modernized the United States people got hurt in the machines of the Industrial Revolution.  Like brakemen losing hands.  And people getting hurt in boiler explosions.  Causing people to miss work as they healed.  Where they were unable to earn a living to support their families.  This is what our early health insurance did.  It didn’t pay for hospital stays or medical procedures.  You paid for that.  The health insurance replaced your lost income until you were able to return to work.

The Baylor Plan was a Prepaid Health Care Plan that gave School Teachers 21 Days of Hospital Services

But health care soon rose above the level of medieval barbers/surgeons yanking out our teeth.  And draining blood from sick people.  By the early 1900s medical skills and knowledge greatly improved.  We learned the importance of washing our hands before putting them into someone’s body by the late 1800s.  Making hospitals no longer the infectious deathtraps they once were.  We started taking x-rays.  Monitoring blood pressure.  Used newly developed medicines.  Medical training improved.  We developed standardized treatments for disease.  And procedures for emergency medical care.  People stopped fearing hospitals and stopped trying to avoid them.  They now sought them out when they were afraid of dying.  Not seeing them as houses of death.

All of this reduced supply as it took more training and equipment and licensing to become a doctor or to open a hospital.  And increased demand as people wanted to get better from what ailed them.  Low supply and high demand made health care, of course, expensive.  People were enjoying getting better.  But they sometimes had trouble paying their bills.  Something Dr. Justin Ford Kimball noticed.  School teachers having trouble paying their hospital bills.  So he developed the Baylor plan in 1929.  At the Baylor University Hospital in Dallas, Texas.  Participating teachers paid 50 cents a month.  In exchange they received up to 21 days of hospital services per year.  This brought in a steady stream of income to the hospital throughout the year.  And provided piece of mind for the teachers knowing that for a small manageable fee (i.e., a premium) they could go to a hospital when they needed to.

The Baylor plan was successful.  Other hospitals followed suit.  Health insurance spread.  Hospitals gained a steady source of income.  And people insured themselves from large financial losses by paying a little every month so they wouldn’t have to pay a large hospital bill at one time.  The system worked well.  For everyone using a given hospital didn’t get sick or injured and consume health care services at one time.  While the small premium everyone paid could pay for the few who did.  Hospitals then worked together to produce health insurance plans that could be used at more than one hospital.  In 1939 the American Hospital Association set the standard for these plans.  Plans that met the standard were called Blue Cross plans.  These separate plans merged in 1960 and became Blue Cross.  Physicians and surgeons also sold prepaid plans.  These plans merged into Blue Shield in 1946.  And in 1982 Blue Cross and Blue Shield merged into what it is today.  Blue Cross Blue Shield.  One of the largest providers of health insurance today.


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