233%+ Increase in Insurance Premiums for 2011

[Liberty's Teeth]

Get ready for this one people. Your insurance premiums are going up at the very least 233%. THIS NEXT YEAR. Why? Because your "representatives" said so. Here is the simple math: For every dollar an insurance company currently takes in 65 cents goes to pay for claims and 35 cents is for operating costs. The new "government mandate" is that 85% of premiums MUST be paid out in claims. Since the 35 cents is a fixed operating cost the insurance companies must now take in 2.33 times the amount in premiums to cover these costs AND pay 85% in claims. Oh, that doesn't include the new 40% tax increase levied upon them. Or the increased coverage they must provide. Get ready to pay 3 times what you pay this year for your insurance. Can't afford it? Who can? I guess you'll have to drop your private insurance and enroll in the government program...oh wait, isn't that what they wanted all along?

CORRECTION- 133% increase- It's just that 233% gets more clicks, and by they are done with the mandated coverage increases, addtional taxes, etc, it WILL be at least 233%

 

[Spot Me 2]

We were supposed do be too dumb to figure that out. Now come along quietly for a ride in this nice box car...

 

[360]

If that happens, I'm screwed. I will officially be working for insurance.

 

[slow1911s]

This is assuming the insurer has a combined ratio of 100% (expense ratio + loss ratio = combined ratio). In this hard market, many insurers have combined ratios over 100% (aka - an underwriting loss). If they turn a profit at all, it is through investment income.

To the OP: how does a 31% increase in the loss ratio (65 to 85) equate to a 233% increase in overall premium? I don't like this crap either, but I don't follow the math.

 

[rambone]

Can you post a link? I want to share the info.

 

[Liberty's Teeth]

Currently, from every dollar an insurance company takes in 65 cents goes to pay premiums and 35 cents goes toward operating expenses. This 35 cents is more or less a fixed cost. The guberment now mandates that 85 cents out of every dollar goes to pay benefits. In order to make the 35 cents that you need to cover your operating expenses AND pay 85% of every dollar you take in towards premiums you would have to increase the former $1.00 premium to $2.33. This gives you your 35 cents to cover operating costs and pays $1.98 out of $2.33 (or 85%) in claims.

 

[Virtus]

Was the plan from the start

The progressives are expecting that to occur. When it does (and it will) then all the Dems and Media will work the people into a frenzy about the "evil" insurance companies taking our money. Of course they will never mention why the companies rose their rates (look at what happened to WellPoint in California). Then they can use that anger to get their ultimate goal, the "Public Option". Same thing happened to the Housing Market, when they force rules on the Banks in the 90's and then the "Housing Bubble" busted so they took them over.

 

[Liberty's Teeth]

Doesn't make sense, does it?

 

[slow1911s]

Currently, from every dollar an insurance company takes in 65 cents goes to pay premiums and 35 cents goes toward operating expenses. This 35 cents is more or less a fixed cost. The guberment now mandates that 85 cents out of every dollar goes to pay benefits. In order to make the 35 cents that you need to cover your operating expenses AND pay 85% of every dollar you take in towards premiums you would have to increase the former $1.00 premium to $2.33. This gives you your 35 cents to cover operating costs and pays $1.98 out of $2.33 (or 85%) in claims.

That doesn't work out. Yes, 85% of 2.33 is 1.98. That premium would go from 1.00 to 1.17, a 17% increase to cover the 35% expense costs.

 

[longbow]

This is assuming the insurer has a combined ratio of 100% (expense ratio + loss ratio = combined ratio). In this hard market, many insurers have combined ratios over 100% (aka - an underwriting loss). If they turn a profit at all, it is through investment income.

To the OP: how does a 31% increase in the loss ratio (65 to 85) equate to a 233% increase in overall premium? I don't like this crap either, but I don't follow the math.

The company I work for had a CR of .89 in 2009

 

[5.56'aholic]

That doesn't work out. Yes, 85% of 2.33 is 1.98. That premium would go from 1.00 to 1.17, a 17% increase to cover the 35% expense costs.

your missing the part where 85% has to be paid out, so 85% of 1.17 would be $0.99, leaving only $0.18 profit to cover an operating cost of $0.35

 

[Panama]

I posted this in a different thread, but here it is again.

Our Anthem Health Insurance policy on my wife and I, we are both thankfully healthy, (I am 56, she is 48) last month we were paying $600.00 per month for a $2500.00 deductible on each of us, so in a worst case scenario we could be $5 grand on the hook.
Oh but wait.........
This month, we are now paying, for the same policy, $755.00 per month!

That is $9060 bucks a year, $755 a month, $174.23 a week, $24.89 a day, $1.04 an hour, EVERY HOUR EVERY DAY and we can still get hooked for $5000.00 if we need to use it!

Now obviously we are going to be making some changes, real soon!

And this is just the beginning, I am certain it is going to get worse!

Obamacare, ain't it grand!

 

[slow1911s]

your missing the part where 85% has to be paid out, so 85% of 1.17 would be $0.99, leaving only $0.18 profit to cover an operating cost of $0.35

Good catch. And, see that math now (not sure where I was before, sorry).

I still don't see premiums going up 233%. If 85 cents of every premium dollar is used to pay claims, then what I see happening is surcharging the additional 20 cents needed to cover expenses (assuming they run at a 100% combined ratio before the surcharge).

If I dig up any industry info on this, I'll post. There are options, and none seem too good.

 

[Spot Me 2]

Good catch. And, see that math now (not sure where I was before, sorry).

I still don't see premiums going up 233%. If 85 cents of every premium dollar is used to pay claims, then what I see happening is surcharging the additional 20 cents needed to cover expenses (assuming they run at a 100% combined ratio before the surcharge).

If I dig up any industry info on this, I'll post. There are options, and none seem too good.

The 233% also include the new heavy taxes, and higher level of coverage these companies will have to pay and provide, that get directly passed on to us.

 

[Liberty's Teeth]

The point is that it is impossible. The companies cannot operate on 15%. They go bye-bye. Hello Obama care.

 

[Lonnie]

I wonder how long it will take before my family plan will go through the roof and the company I work for drops it for the "public option"?

 

[5.56'aholic]

better yet, what do you think will happen to the wages of all these people who will now have healthcare provided they actually work? That new tax on business is going to be taken directly out of their hourly salary. We will see a huge drop in salaries come the next few years, so much so that minimum wage will be the norm in many jobs.

 

[Shadowbeach]

.

 

[Liberty's Teeth]

The plan is when new premiums come out towards the end of the year and, Holy Sh&t Batman, they have gone through the roof, up 200 or 300% the ONLY option will be....

I'm from the government and I am here to help!

Seriously, this is the plan all along. Why introduce a "single payer" system when it is sooo politically toxic no one would have the guts to pass it? Just prance out a horse of a different color. The end result is the same. They could put in the bill that the gov., effective immediately, is the only insurance option available and all insurance companies are immediately disbanded or you can write a 2,500 page list of rules and regulations, fines, fees, taxes, etc. if followed make it absolutely impossible to stay in business for six months. Your only option is to double, triple, quadruple premiums.

When the insurance companies do this the outcry of the sheeple will be deafening. The majority of Americans, who constantly dip toilet paper in water and wonder why their fingers poke through, won't be able to put two and two together and will run strait to the tit of Heir Obama. He will stand in front of the teleprompter and decry the evil greedy insurance companies are trying to rape the American people. He will point at the camera with his bony finger and that empty scowl and scold the executives, as if they are dimwitted school children and put them in front of the Polit bureau, I mean Congress. If they show up in anything better than a 73 Vega they will be found guilty and suffer a virtual hanging at the hands of CNN. Then with his chesire smile he will lead the witless right into his sticky web.

By this time next year there will be no option but a public option.

 

[djl02]

closed