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In other news: Dozens of insurance companies got 8.1 million signups and got the tax payer to fund the marketing campaign and the website that brought the custo

In other news: Dozens of insurance companies got 8.1 million signups and got the tax payer to fund the marketing campaign and the website that brought the customers to their doors. These insurance companies should be grateful but instead are being dicks about it. The U.S. government should bill the health insurance companies for the cost of the websites.

tedsanders 12y ago
In the insurance market, the quality of your customers matters more than the quantity. It's not like McDonald's, where every customer is profitable. So to me, it's not clear that insurance companies should always be grateful for more customers.
- refurb 12y ago
  Exactly! The gov't is the one who is mandating people sign up. Insurance companies are providing plans through exchanges. If the people who sign up are mostly sick or old (adverse selection), then the premiums the insurers set for 2014 are going to be inadequate. Next year they'll raise them to cover the costs and insurance companies will be blamed for being "greedy". That's what the insurance companies are afraid of.
  - anigbrowl 12y ago
    But we already know that hasn't happened, with 28% of enrolees being the coveted 'young and healthy' demographic.
    - refurb 12y ago
      The administration's target was 38.5%! The 28% is a bit concerning since you want young people paying in but not taking much out. [1] http://www.bloombergview.com/articles/2014-04-21/are-obamacare-s-latest-numbers-good-news-or-bad http://www.bloombergview.com/articles/2014-04-21/are-obamaca...
  - EpicEng 12y ago
    Insurance companies are fortunate to even exist under this scheme. There is certainly much I do not know about this industry, so correct me if I'm wrong, but isn't their primary function one of assessing risk? When the entire populous is forced to pay for some sort of health coverage, where does the insurance company continue to provide value?
    - refurb 12y ago
      I think the issue is that since the penalties for not signing up have been delayed, not everyone is signing up. If only the sickest ones sign up, you're in trouble!
      - EpicEng 12y ago
        Yeah, I realize they're having a problem with that, though I'm not sure what they expected. Young people don't exactly jump at the chance to pay for something they don't want on a deadline.
jrochkind1 12y ago
And, not just a marketing campaign, but a legal mandate for all citizens to become customers or face fines!
jjoonathan 12y ago
The insurance companies are whining because the exchanges force them to actually compete. This will put strong negative pressure on their margins. The extra volume won't come close to making up for their losses. Before the exchanges and the standardized tiers of care, plans were very difficult for consumers to quantitatively compare. Most consumers didn't bother, so insurance companies were able to differentiate themselves with advertising and "fluff features" (easy) rather than by cutting costs and increasing efficiency (hard). Not only did consumers pay for the higher margins that came from fluff-differentiation, but they also never benefitted from competition over efficiency. The setup was good for insurance companies and bad for consumers. Now the party is over and the insurance companies are upset that their cash cow has been slaughtered. Good riddance.
- fennecfoxen 12y ago
  Bah. Say what you like about the old model, but you can't really call what the insurance companies have been mandated to do under the ACA "competition" -- you can barely call it insurance anymore.
  - jjoonathan 12y ago
    Why don't you think exchanges are competitive? I put forward a detailed argument about why I think they increase competition. I'd appreciate a response in kind. Also, why do you think "you can barely call it insurance anymore"? It used to be that insurance companies in the individual market were allowed to invent excuses to dump their expensive customers and then they were allowed to raise their prices if the customer wanted back in. Basically, the individual insurance market degraded into "pay the full price of any chronic condition you have." I wouldn't call that insurance, I'd call that pay-as-you-go-with-a-middleman. Now that they actually have to provide the "peace of mind" that they sell, I think the argument is much stronger for calling them insurance companies. So, basically, the opposite of what you said.
    - fennecfoxen 12y ago
      You seem to imply that insurance companies dumped people after they developed an expensive condition. But that's a load of FUD, as dumping a customer like that's been illegal for decades. Which isn't to say that you could get someone else to pay for your pre-existing conditions before. That's genuinely new. Anyway. There's no health insurance market anymore. There's a pre-paid healthcare services market which we call "insurance", with a nearly uniform price guaranteed to all (variance in prices regulated by the government), a very specific government-mandated bundle of services that it must provide, a government-mandated maximum profit margin, and a government mandate that the services be purchased. So if that's your picture of healthy "competition" in a market... well, I guess you're entitled to that opinion but then I kinda wonder what you must think about the rest of the tech startups that get discussed around here.

tedsanders 12y ago

In the insurance market, the quality of your customers matters more than the quantity. It's not like McDonald's, where every customer is profitable. So to me, it's not clear that insurance companies should always be grateful for more customers.

refurb 12y ago
Exactly! The gov't is the one who is mandating people sign up. Insurance companies are providing plans through exchanges. If the people who sign up are mostly sick or old (adverse selection), then the premiums the insurers set for 2014 are going to be inadequate. Next year they'll raise them to cover the costs and insurance companies will be blamed for being "greedy". That's what the insurance companies are afraid of.
- anigbrowl 12y ago
  But we already know that hasn't happened, with 28% of enrolees being the coveted 'young and healthy' demographic.
  - refurb 12y ago
    The administration's target was 38.5%! The 28% is a bit concerning since you want young people paying in but not taking much out. [1] http://www.bloombergview.com/articles/2014-04-21/are-obamacare-s-latest-numbers-good-news-or-bad http://www.bloombergview.com/articles/2014-04-21/are-obamaca...
- EpicEng 12y ago
  Insurance companies are fortunate to even exist under this scheme. There is certainly much I do not know about this industry, so correct me if I'm wrong, but isn't their primary function one of assessing risk? When the entire populous is forced to pay for some sort of health coverage, where does the insurance company continue to provide value?
  - refurb 12y ago
    I think the issue is that since the penalties for not signing up have been delayed, not everyone is signing up. If only the sickest ones sign up, you're in trouble!
    - EpicEng 12y ago
      Yeah, I realize they're having a problem with that, though I'm not sure what they expected. Young people don't exactly jump at the chance to pay for something they don't want on a deadline.

jrochkind1 12y ago

And, not just a marketing campaign, but a legal mandate for all citizens to become customers or face fines!

jjoonathan 12y ago

The insurance companies are whining because the exchanges force them to actually compete. This will put strong negative pressure on their margins. The extra volume won't come close to making up for their losses. Before the exchanges and the standardized tiers of care, plans were very difficult for consumers to quantitatively compare. Most consumers didn't bother, so insurance companies were able to differentiate themselves with advertising and "fluff features" (easy) rather than by cutting costs and increasing efficiency (hard). Not only did consumers pay for the higher margins that came from fluff-differentiation, but they also never benefitted from competition over efficiency. The setup was good for insurance companies and bad for consumers. Now the party is over and the insurance companies are upset that their cash cow has been slaughtered. Good riddance.

fennecfoxen 12y ago
Bah. Say what you like about the old model, but you can't really call what the insurance companies have been mandated to do under the ACA "competition" -- you can barely call it insurance anymore.
- jjoonathan 12y ago
  Why don't you think exchanges are competitive? I put forward a detailed argument about why I think they increase competition. I'd appreciate a response in kind. Also, why do you think "you can barely call it insurance anymore"? It used to be that insurance companies in the individual market were allowed to invent excuses to dump their expensive customers and then they were allowed to raise their prices if the customer wanted back in. Basically, the individual insurance market degraded into "pay the full price of any chronic condition you have." I wouldn't call that insurance, I'd call that pay-as-you-go-with-a-middleman. Now that they actually have to provide the "peace of mind" that they sell, I think the argument is much stronger for calling them insurance companies. So, basically, the opposite of what you said.
  - fennecfoxen 12y ago
    You seem to imply that insurance companies dumped people after they developed an expensive condition. But that's a load of FUD, as dumping a customer like that's been illegal for decades. Which isn't to say that you could get someone else to pay for your pre-existing conditions before. That's genuinely new. Anyway. There's no health insurance market anymore. There's a pre-paid healthcare services market which we call "insurance", with a nearly uniform price guaranteed to all (variance in prices regulated by the government), a very specific government-mandated bundle of services that it must provide, a government-mandated maximum profit margin, and a government mandate that the services be purchased. So if that's your picture of healthy "competition" in a market... well, I guess you're entitled to that opinion but then I kinda wonder what you must think about the rest of the tech startups that get discussed around here.