Another Healthcare Insurer Leaves ObamaCare Exchanges
This time it’s Aetna. They’ve just announced that 2017 is the last year they’ll participate in the ObamaCare healthcare insurance exchanges. They will not offer policies for 2018 on those exchanges.
Why? Simple. Last year, in 15 states Aetna lost nearly $700 million on policies issued through said exchanges. This year, they’re predicted to lose nearly $200 million in only 4 states (VA, DE, IA, NE) – obviously, on substantially reduced enrollment.
There’s a term for companies whose business practices consistently lose money by the ton. That term is, “Bankrupt.”
And no, Gruber: this isn’t Trump’s fault. It’s because the whole asinine system is an abomination that is so structurally flawed it cannot possibly succeed.
“Free stuff” – isn’t. Someone, somewhere, pays for it.
And Aetna just said, “Find another patsy.”
Category: "Your Tax Dollars At Work", Barack Obama/Joe Biden, Government Incompetence, Health Care debate
Just another greedy insurance company wanting to make a profit instead of giving all their money away.
The problem is that the left is quick to point out that even with the $700 million + loss in the exchanges, they cleared a Net $2.3 billion in profits and tried to buy out another multi-billion profit health insurance company for $37 billion out of their existing cash funds.
That makes it look like they are greedy insurance company that is trying to undermine Obamacare so they can go back to making $5 billion a year and not cover anyone with a health problem.
Aetna didn’t make anywhere near $5 billion last year.
https://news.aetna.com/news-releases/aetna-reports-fourth-quarter-and-full-year-2016-results/
Their profit was approximately 3.596% of income under GAAP accounting. Seems eminently reasonable to me, if not perhaps a bit low.
And much of that “profit” was, I’m pretty sure, returned to investors in terms of dividends.
A 3.6% ROI isn’t that bad these days, but it’s also not that great.
So did they loose money of make money?
Seems like they are trying to have it both ways.
Like I am going to believe an Insurance Co. is losing money.
More Accountants and Lawyers than you shake a stick at.
Figures Lie and Liars Figure.
Poor, Poor Aetna I guess we will have to hold a bake sale.
40+ Million in Compensation to CEO.
131 Million Golden Parachute in 2015 to former CEO.
BULLSHITTOOOOOOOOOO
They lost money on their ObamaCare exchange business line – to the tune of roughly $700 million. The rest of the company’s operations were profitable enough to cover that loss plus turn a profit overall.
You got a good reason why Aetna should continue to lose $700 million a year doing something they know will lose money?
Businesses don’t exist to provide public services or as jobs programs. If they can’t turn a profit because they can’t make costs come in below revenue no matter what they do in a particular market, the smart businesses depart that market. The dumb ones stay put and go broke.
The ObamaCare exchanges are a market that, in essence, is so structurally flawed that few if any insurers can make a profit. The lack of a waiting period for preexisting conditions and the demographics of the market virtually guarantee that.
https://www.healthinsurance.org/blog/2016/08/25/cry-me-a-river-aetna/
In 2010 – the year Obamacare became law – 24 percent of Medicare beneficiaries were enrolled in Medicare Advantage plans (11.1 million people). This year, 31 percent of the 57 million Medicare beneficiaries are enrolled in MA plans (17.1 million people).
“So, thanks to Obama – and more specifically, Obamacare – Aetna and its competitors are rolling in the federal dough.”
https://www.forbes.com/sites/brucejapsen/2016/10/27/obamacare-woes-aside-aetna-profits-rise-from-other-government-business/#549bd1084bd9
Hondo, you and I also know that profits are projections of what they believe they should make and shortfalls are of those projections. Which are then used to off-set taxes(if they even pay them)on Net Profits.
If I recall the accounting I had to study years ago correctly, a firm’s net earnings are gross income minus allowable expenses. When that’s negative, the business operates at a loss; when it’s positive, the business shows a profit.
The figures in the link I quoted appear to be from Aetna’s SEC-required end-of-year report for 2016. I believe the Securities and Exchange Commission is pretty adamant that numbers in those reports be hard actual numbers, not projections. Firms that “cook the books” can end up in serious trouble, and corporate officers can go to jail as a result. See Enron (and many others) for an example.
Bottom line: Aetna turned about a 3.596% profit next year. That means its shareholders earned roughly that amount of return on the money they invested in the company – either in terms of increased equity, dividend payments, or a combination of both.
Aetna exists to earn money providing a service.
For any business, regardless of the service, if an activity causes that business to lose money, in order to continue providing a service and earning money for the employees and – where relevant – stockholders that activity will be discontinued.
That Aetna is providing health insurance does not change the equation.
One of the principles of a free market is that no one is forced to sell or buy anything. We enter into an exchange of labor and good to receive something we value.
It makes no difference if it is food (see Venezuela) or health insurance.
Health insurance is not a God-given right. In fact, throughout the world health-care of the quality available in the United States is a luxury beyond the wildest dreams of most people.
I spoke recently with a man who volunteers with a group to provide eye-care to people in various African nations. What those people will put up with (working on their eyes without anesthesia, in the heat) would be deemed intolerable and inhumane here by the spoiled Americans. In their ignorance, they actually expect the doctors to totally remove their eyes, work on them, then replace them in their faces.
We need to remember the truth in the Preamble to the U.S. Declaration of Independence: “We hold these truths to be self-evident, that all men are created equal, that they are endowed by their Creator with certain unalienable Rights, that among these are Life, Liberty and the pursuit of Happiness.”
If we have life and liberty, and the chance to pursue happiness, we are better off than the vast majority of this world’s population.
Crying because someone makes more money, or we cannot get health insurance we’d like, is showing ourselves to be a bunch of spoiled brats.
I don’t see anyone stopping you from starting your own insurance company and paying the executives $125,000 a year.
And now the libs will give us their hue and cry and demand single payer that much louder.
Uh, no. It’s bad enough I have to deal with the DMV, IRS, etc., I don’t need that kind of treatment when I’m in need of healthcare.
I admittedly don’t know a whole lot about the complexity of the health care debate, but from my point of view focusing on single-payer vs. competitive insurance companies is like having a fire in your home and asking whether it’s better to open a window or a door to get the smoke out. The smoke isn’t the primary problem, the fire is.
When I was in chemo a while back, I had to get weekly shots of a red blood cell booster. They cost $6400 each. Yet in Canada, they were, I believe, $98. That is where things need to change to improve the cost of healthcare, and health insurance, for most Americans. And we needn’t even look at other countries’ costs – I remember reading a study that showed huge fluctuations in pricing for the same hip replacement within 50 miles of a Texas city. It’s absurd that the same operation that costs $10K in one place costs $30K in another place that’s just a few miles away.
Another issue that irks me is that some professor in a school can be supported for ten years by NIH grants -public funds!- at a few million bucks a year, suddenly make a great discovery via that funding, and turn it immediately into a private medical company selling something for exorbitant costs, and there’s no real ROI on the vast public investment in that breakthrough. How to balance funding R&D and yet constrain costs isn’t clear to me, but having seen that first-hand it frustrates me.
I guess my point is that the health care ‘system’ isn’t just ‘insurance’, where the debate could reasonably focus on just single-payer vs. a free market, it’s providers, insurance, suppliers, trade, R&D, etc. We deserve a lot better than either side of the political spectrum is giving us. (As in, it’s illegal for someone to cross the border and buy that $98 drug, even if they live 5 minutes from the border. Where is the ‘free market’ in that?)
The reason your treatment cost $6400 in the US and $98 in Canada is simple.
A US firm had to invest approximately $1 billion and 7-10 years in development and approval for that treatment/drug.
Canada on the other hand invested $0 in developing, testing and getting FDA approval. And the Canadian government subsidized the cost for Canadian consumers. So it still cost $6400, only Canadian patients only paid $98.
There’s a small kernel of truth in that -the R&D is expensive, and Canada does subsidize the cost- but the base, non-subsidized costs other countries pay are often either known or inferred from available contracts. It isn’t just Canada that pays less, in Mexico it’s $50. And in Brazil it’s even less.
One only needs to look at the recent issue with the Epi-Pens here to see that something for which the R&D was already completed, and costs recovered, suddenly had its costs skyrocket. And why? Not because of subsidies or R&D, but because the company could. Because our laws don’t make it easy to introduce competitors, and our ‘free market economics’ only extends as far as the border — in a true free market, I should be able to buy from other suppliers (but importing medicine like that is illegal), or competing products (but they’re not approved by our horrendously slow and political FDA process).
I mean, unless you’re claiming the already-developed EpiPen required a 535% increase in cost over a 7 year period due to ‘R&D’?
Another recent example is a company in the EU that developed a chemo drug then intentionally destroyed some of its supply in order to drive up prices.
This would be like running a for-profit fire department, getting calls for two fires, slashing the tires on one of your firetrucks so you can only reach one…. and then asking the two people with burning buildings to bid on who gets help, with the highest bidder winning and the lower one dying or losing their home.
And of course, the answer can’t possibly be to remove some of the extreme, time consuming, and in many cases unnecessary regulatory burden. Why, that would be just horrible! I mean, the cost of healthcare might even come down! Can’t have that, can we?
I hope the sarcasm above was obvious.
You’re not going to get any real disagreement from me on that. Sure, I think there are some issues where regulation helps… but by and large it’s an overly complicated, inefficient mess.
I like to think we’re capable of striking a far better balance than we’re doing now. And both sides of the aisle are culpable for this shit.
I still bear a grudge against AARP. I was just cursing those traitorous rats this morning when one of their commercials came on the TV.
The AARP and the AMA have both held ridiculous positions of no substance regarding health care. I wonder if anyone over at the AMA has yet to this day actually read the ACA
AARP has morphed into a leftist/old-hippy/socialist-loving PAC.
When my sainted mother-in-law was getting the AARP magazine, it was filled with conservative-sounding articles. When, during the same period, we started getting AARP sample magazines, it was all leftist propaganda.
AARP is a two-faced hypocritical cesspool organization.
I’ve noticed a similar sea change in Readers’ Digest.
AARP is first and foremost an insurance broker. Their support of Obamacare stems from the fact that they can offer programs to fill the gaps left by federal regulations. It creates a market for them.
True, I suppose. But they sell themselves as an advocate for senior citizens. In that capacity they appear to advocate for leftist policies in many areas.
They make their money as insurance brokers.
Two insurance agents founded AARP as a way to develop leads. Smart marketing but disingenuous.
The commercial I referred to was one in which one of the AARP’s founders was said to have started the company b/c she found a retired teacher living in a chicken coop. I kid you not. Laughed my ass off. And I’ve got this bridge that’s a surefire money maker…
Don’t teachers currently get their retirement and full social security payment? I seem to remember a conflagration occurred when it was suggested they should receive a reduced Social Security amount.
I don’t know. What I do know is that the AARP founder story is a bunch of bullshit.
Undoubtedly
Even if it were true….the cause would likely be extreme circumstance not attributable to a lack of retirement income/resources in the teacher population.
I’ve retired as a computer programmer for a school district, getting teachers retirement – and I do not get full Social Security. They consider the money I put in during the 20 years I spent in other employment to be a “windfall” and reduce my payment under a “windfall elimination” program.
And this year I find out that despite what the teacher’s retirement accountants have said in every annual report for 20+ years, we are underfunded and our benefits are possibly going to be reduced.
Windfall my left foot. Both the Feds and the State are screwing the teachers like a cheap teenage whore.
Is that nationwide?
and just curious…how many years did you put in, what is the retirement percentage, is it taxed by the state and the fed and do you receive a COLA. Just wonder how is compares to military retirement.
I retired after 24 years so I get 60%, NC doesn’t tax me, but the fed does and our COLAs have been very small or nonexistent under the Obama administration.
ID SARC – I put in 20 with the school district – ages 40-60. I began working at age 17 and until I was 30 paid into Social Security – 23 years.
I am back in a job paying into SS a lot more than SS is ever going to pay me. I am also paying into Medicare while having to pay for Medicare – which I cannot avoid because I’m over 65.
If I work the extra 7-ish years it would take to make 30 into SS, I’ll be in my 70s. but I’ll also get to retire from my current job. With my two retirements SS will again declare that I have too much money and refuse to give me anything substantial in the way of payment.
It’s a scam, has always been a scam, and will continue to be a scam until we beat some sense into our Congress-critters and make them quit stealing our money.
Not that I have any strong feelings about it, you understand.
Yes, it is, Sarc. I qualified for the “Windfall Elimination Provision” when I started drawing SS. I draw a pension from the PD, and my SS is cut in half, even though the quarters I earned to qualify for SS was either before or after I retired from the PD.
“If you paid Social Security tax on 30 years of substantial earnings you are not affected by the Windfall Elimination Provision (WEP).” Source SSA
Link: https://www.ssa.gov/planners/retire/wep-chart.html
Define “substantial”.
When I was 17-18 working as a short-order cook for $0.90/hour for a 40 hour week (during school days!) what I paid in was substantial to me. But those muckers in the Beltway will claim it was not. Nor the poverty wages I earned while working my way through college, while supporting a growing family.
I would bet that if I were to retire in my 70s with 30+ years of paying into SS they will discount enough of my earnings as “not substantial”. If I’m wrong, I’ll gladly give you the amount I am not expecting to receive from SS, every month for the rest of my natural born days.
Graybeard. The term substantial earnings is defined as an amount equal or above the amounts shown in the table to be found through the link I provided.
Graybeard: I think this is the web page 2/17 intended you to see. It explains what one must earn to qualify for a Social Security “credit” (1 quarter of substantial earnings for Social Security purposes). For years before 1978, that amount was generally $50 per quarter. SSA converted to annual about then; the table in the webpage covers from 1976 forward.
https://www.ssa.gov/oact/cola/QC.html
Back in the 1970s and early 1980s, you didn’t have to earn much to qualify. An annual earned income of between $250 and $410 (the exact amount varied by year) was all that was required from 1976 to 1985 (inclusive).
I have said this before and will continue to hammer it home. Insurance companies are required by law to maintain a cash pool from which they pay claims. A loss of nearly one billion dollars related to a crappy marketing venue drains that cash pool and makes payment of YOUR valid claims more difficult.
It doesn’t matter if it’s your house, car or your health insurance, the cash pool still has to be there. No company that wants to stay in business can do so if it can’t make a profit. You ought to know that by now.
I fail to understand why the idea of making a profit is so evil to anyone. No company, big or small, can stay in business unless it can show a profit that allows it to expand, hire more people, and create more jobs and provide retirement plans to employees. I don’t understand why you think that is so evil, when it is not.
Because “Capitalism,” Ex. The Great God Marx said so!
Capitalism provides jobs, TOW. Marx provided hot air and gulags.
I have no problem with companies making a profit, but I think there are questions of ethics when it comes to how they do that. For example, there were plenty of examples of insurance companies finding reasons to drop people who had paid in for years as soon as those people developed some expensive condition. And they’d do this legally, because on page 47, section 4, in 7-point font, you didn’t initialize in triplicate ten years prior on some form. If the company didn’t do that, they’d lose money, so they’re ‘making money’ (or more technically, ‘saving money’) by doing that, but it’s pretty damn unethical, I think.
There’s also a number of people who feel that health care should be like police & fire department. They’re not for profit and don’t check to see if you bought fire insurance before sending out the truck to put out the fire consuming your home. If private industry is always better, should the fire department be commercialized and require people buy fire insurance? What about police? Do they only respond to people who buy ‘police insurance’, or do they serve the community because taxes (and fines) pay for their services?
Again, I have no problem with companies making a profit, and I admit (above) that I don’t know enough about the whole health care system, but it seems to be that there’s plenty of reason to be reasonably frustrated with how we do health care, and think that solutions which work elsewhere -yes, often with higher taxes, but maybe lower total cost?- might also apply here. Come to think of it, I believe President Trump recently praised Australia’s single-payer system, didn’t he? 😉
You can be a pro-jobs capitalist and yet still question how we approach health care here, I think.
I understand your viewpoint, but the diagnostic equipment that is so wonderful frequently costs more than a lottery mega-jackpot. That’s one of the reasons health care costs have risen to much and the reason that premiums have risen along with them.
You get overcharged for every single thing. It isn’t only human medicine that has rising costs. Taking my silly stray cat to my vet to get her spayed will cost me $225, unless I take her to a shelter where they offer a low-cost spay-neuter program.
Wasn’t their merger blocked in January of this year because a judge decided that their withdrawal was basically a threat to allow the merger?
I thought I read that the judge determined many of the locations they were pulling out of were the very locations identified as having no competition should a merger with Humana be green lighted.
They are a private company free to do what they want. I’ve dealt with Aetna in the past, as a client of mine and as a consumer of their insurance. I can’t say I much care if they survive or don’t never found them to be particularly useful either as a client of mine or a consumer of theirs.
P.J. O’Roark had the best quote as Obama care was being hammered ot. He said: ‘If you think healthcare is expensive now, wait until it’s free.”
Neither Obamacare or Trumpcare does anything about national healthcare costs. The only difference is who pays those costs. Under Obamacare rich people and young people pay slightly more of their share to subsidize old people and sick people. It also limits prices for insurance companies so that people cannot be as easily priced out of coverage. Since the incentive for insurance companies is to only have young healthy people on insurance. Trumcare shifts the costs burden back toward sick people and old people and removes pricing limits. Making it more likely that people can be priced out. Especially for preexisting cobditions (which is where the bull of the 24 millions comes from). Neither plan solves the underlying issue of exorbitant healthcare costs in the US. They just spread the costs to different people. Healthcare does not function correctly in a market. Consumers simply do not have the the negotiating power and information to shop around for the best prices for their healthcare services. I cannot price a new kidney nor would I have any power to force a lower price through negotiation because the seller knows my life depends on the kidney and there is not alternative product and they and their competitor service providers are not going to quote me a sticker price for the service for me to even know how much I will pay going in. Neither Trumpcare or Obamacare solve the powerless of consumers in the healthcare market. And without consumer power and completion there is nothing to keep prices in line. Health insurers function as a surrogate for consumers in the marketplace. They have the power to negotiate prices for services with service providers and consumers can shop around for insurers creating surrogate competition. However, insurers do not have the same incentives as consumers of health services. Consumers want to live longer and as functional as possible. Insurers want the highest profits. Lowering service costs is one way to increase profits. Which aligns with consumer interests. However, others do not. Insurers want chronically sick or terminal patients to die quickly with the least services possible.… Read more »
Healthcare -does- function inn a market, when a market is permitted. The problem is that folks, like you, demand that the market be “adjusted” to do what you want,and assign costs to those you prefer to pay. That is no longer a market, that is a command economy. The providing of healthcare is a highly skilled trade. The development and deployment of medicines and devices is -hugely- expensive. The folks involved expect to be well paid for their above-average skill set, education, work, etc. “Life” tends to be very, very valuable to the owner, so the services that prolong it get bid up fast. And when you separate the cost from the recipient, you break the market just like any other case where someone decides to buy votes by removing costs form the beneficiaries. And the slight-of-hand by the Solcialist types is that the Morgan they break the market by asssinging winners and losers, separation cost form consumer, the more they complain the remaining “market” doesn’t work, so break it more! Single payer! because Socilaism will finally work in the exception called medicine! Bullshit. Costs are sky high in our system because their is an active effort to make some folks pay more for others to benefit. “No one can be turned away form an ER” means the hospitals have to jack up prices elsewhere, or go broke and close. Medicines cost more here because they can get more here. This allows the makers to deal with cost-restricted other markets. Force the USA to resemble Canada, and no more research or new stuff. No profit? No progress. No one who can do this stuff is going to work for semi-slicked pay rates. But again and again and again the “state control of the means fo production” (Socialists AKA slavers) demand -more- control to fix all the crap -they- broke, with their premier demands for central control. And down goes the spiral. So Zampolit, you are the cause of the problem, not the cure. Bald faced lies wont change it. But your sort always double down instead of discovering facts. Your… Read more »
I’ve been saying since 2009 that Obamacare was never designed to ‘work.’ The intention of Obamacare is to inculcate into the minds of the American people that one of the essential functions of the Federal government is to ensure that every person has access to health care. And all the discussion about repealing or replacing Obamacare has been done with the assumption that it is, in fact, the role of the federal government to ensure that everybody has health care. And that, in turn, means that it is only a matter of time before we have nationalized single-payer, because once we adopt the notion that providing health care for every American (or ensuring they have access to it – which is effectively the same thing) is a proper function of the Federal government, Nationalized Health Care/Socialized medicine/Single Payer (call it what you want, it all means the same thing) is inevitable. What will happen is that big insurers will either drop out of the Federal system (as Aetna has) or will increase their premiums so high (in order to cover the costs that they now have to assume) that their customers will go screaming to the government to “DO SOMETHING!” about rising premiums. Congress can then either (a) take over the big insurers themselves, making them de facto government agencies, and raise taxes to pay for their operations, or (b) give every American affected by the higher premiums a subsidy – again, paid for by taxes, or (c) just put everyone on Medicare/Medicaid and – you guessed it – raise taxes in order to pay for that. Like it or not, this is the only way to deal with the “free rider” problem with health care. Once everybody gets taxed to pay for health care there won’t be any free riders because EVERYONE will be paying. The downside will likely be that the general quality of health care will go down for those who can’t afford to buy supplemental “platinum” policies. In essence, Nationalized health care/single payer/socialized medicine will basically put every American (except those who can afford to opt… Read more »
No. Roughly 47% of America will be paying for everyone. If it’s not well below 47% by then – or already.
Even non-taxpayers will pay because they will be purchasing goods and services from people who do pay – and the cost of those goods and services will have the cost of paying taxes factored in.
Just like renters pay property taxes indirectly (because part of their rent goes to pay the property owner’s taxes), people who don’t pay Federal income tax still pay monies that end up in the treasury. 😉
Net effect is that business pass along taxes tot he consumer, as yet another cost of doing business.
Put a 50 cent tax on gas, and Joe Commuter pays it, not MegaOilCorp.
Put a tax on profits, and Jane Shopper pays it, not BigBoxCorp.
Etc.
And anyone with political “pull” gets to petition for a tax rule that let them structure their finances to minimize. Noah Nobody just pays it, directly or indirectly.
The key mistake is saying “Hey! We should vote for -that- guy to pay the way for these other folks cover there.” That is just strong-arm robbery by committee. At least the garden-variety mugger has stones enough to face his victim and take his chance on a reversal of fortune.
” It’s because the whole asinine system is an abomination that is so structurally flawed it cannot possibly succeed. ”
The system’s architects didn’t design it to “succeed.” It has always been just a bridge to more and more government takeover, leading ultimately to the “single payor” holy grail.
Couple of points.
1. Canadian Health Care system ? I trained there. Universal care available.. inability to access that care the rule. I saw symptomatic cardiac surgery patients being cared for in the ER hallways due to “no room at the Inn”.They come down to Cleveland Clinic for care.
2. Obummercare was a flawed “top down” inflexible model which relied 100% on the young and “walking well” to front the billions to pay for the care of sick seniors (aka pre existing conditions). Millenials said “screw that idea” (easy to understand) and they took the fines which were cheaper since they work at Starbucks P/T anyway.
3. I think the ACA was designed to fail and in the following melee (with HRC at the helm) single payor would be more palatable. Why not, IT’s FREE !!
4. The “pre existing conditions” issue will be the biggest issue to deal with (none doing it so far). The rest is actionable with market, practice changes & improvements like a preventive focus, virtual communications and at times, virtual care via skype ot I Phone, less hospital warfare with, hospice and flexible health insurance plans based on age, health status and various needs. List goes on.
5. BTW, the American Medical association has gone form a paltry 40% membership in 1990 to the mid teens now as they , as well as AARP joined Obamacare early on hoping to gain relevance, influence and yes…money
CAPT Bones USN (ret)