Tag Archives: Insurance companies

U.S. Insurers Sue Saudis for $4.2 Billion Over 9/11, by Jason Ditz

It’s almost a 100 percent probability this suit gets settled before even the discovery phase. For the Saudis, $4.2 billion is a small price to pay to prevent potentially devestating disclosures. From Jason Ditz at antimedia.org:

Last year’s Justice Against Sponsors of Terrorism Act (JASTA), a bill which allowed Americans to sue Saudi Arabia in US court over their involvement in 9/11, has yielded another major lawsuit yesterday, a $4.2 billion suit filed by over two dozen US insurers related to losses sustained because of the 2001 attack.

The lawsuit is targeting a pair of Saudi banks, and a number of Saudi companies with ties to the bin Laden family, accusing them of various activities in support of al-Qaeda in the years ahead of 9/11, and subsequently having “aided and abetted” the attack.

The biggest target is the Saudi National Commercial Bank, which is majority state-owned. The Saudi government heavily pressured the Obama Administration to block the JASTA last year, threatening to crash the US treasury market if it led to lawsuits, but overwhelming Congressional support still got it passed into law.

While there were more than a few lawsuits already filed in the past several weeks related to JASTA, this is by far the biggest, and most previous lawsuits are still in limbo as the court and lawyers try to combine them into various class action groups.

Historically, US sovereign immunity laws have prevented suits against the Saudi government related to overseas terrorism. With the release of the Saudi-related portions of the 9/11 Report last year, however, such suits were inevitable, and the federal government could no longer protect the Saudis from litigation.

To continue reading: U.S. Insurers Sue Saudis for $4.2 Billion Over 9/11

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U.S. Quietly Drops Bombshell: Wall Street Banks Have $2 Trillion European Exposure, by Pam Martens and Russ Martens

Remember those deadly interlinked financial exposures that almost brought down the global economy in 2008? They’re worse now. From Pam Martens and Russ Martens at wallstreetonparade.com:

Just 17 days from today, Donald Trump will be sworn in as the nation’s 45th President and deliver his inaugural address. Trump is expected to announce priorities in the areas of education, infrastructure, border security, the economy and curtailing the outsourcing of jobs. But Trump’s agenda will be derailed on all fronts if the big Wall Street banks blow up again as they did in 2008, dragging the U.S. economy into the ditch and requiring another massive taxpayer bailout from a nation already deeply in debt from the last banking crisis. According to a report quietly released by the U.S. Treasury’s Office of Financial Research less than two weeks before Christmas, another financial implosion on Wall Street can’t be ruled out.

The Office of Financial Research (OFR), a unit of the U.S. Treasury, was created under the Dodd-Frank financial reform legislation of 2010. It says its role is to: “shine a light in the dark corners of the financial system to see where risks are going, assess how much of a threat they might pose, and provide policymakers with financial analysis, information, and evaluation of policy tools to mitigate them.” Its 2016 Financial Stability Report, released on December 13, indicates that Wall Street banks have been allowed by their “regulators” to take on unfathomable risks and that dark corners remain in the U.S. financial system that are impenetrable to even this Federal agency that has been tasked with peering into them.

At a time when international business headlines are filled with reports of a massive banking bailout in Italy and the potential for systemic risks from Germany’s struggling giant, Deutsche Bank, the OFR report delivers this chilling statement:

“U.S. global systemically important banks (G-SIBs) have more than $2 trillion in total exposures to Europe. Roughly half of those exposures are off-balance-sheet…U.S. G-SIBs have sold more than $800 billion notional in credit derivatives referencing entities domiciled in the EU.”

To continue reading: U.S. Quietly Drops Bombshell: Wall Street Banks Have $2 Trillion European Exposure

 

Obamacare bailouts prove that the law is flawed and lousy, by Diana Furchtgott-Roth

Marco Rubio may be leading a charge that Republicans are not 100 percent useless (“may” is used because one can never be certain about anything politicians do or say). From a guest post by Diana Furchtgott-Roth at theburningplatform.com:

This week, as part of the reconciliation bill, Congress may vote on bailing out health-insurance companies losing money from their participation in the Affordable Care Act exchanges. With an $18 trillion national debt, Congress should stand firm and say no to the bailouts.

Sen. Marco Rubio is leading the fight against the bailouts. In a letter to congressional leaders, he wrote: “The reason these health-insurance companies are enduring a financial loss is that ObamaCare is a disastrous law. It broke the promise to lower health-insurance premiums and allow Americans to keep their health care. Now the very architects of this law are attempting to place taxpayers on the hook.”

Last year Rubio limited the bailout of the insurance companies with the ObamaCare Bailout Prevention Act. Some of the provisions were included in last year’s spending bill. The result of the measure was that, in October, the Department of Health and Human Services transferred $362 million to the losing insurance companies, rather than the $2.9 billion that they requested. That’s $2.5 billion more for taxpayers.

The Health Insurance Association of America, under the leadership of Karen Ignagni, lobbied heavily in favor of the Affordable Care Act. Insurance companies shouldn’t get government money now that their bet is going the wrong way.

Insurance companies thought they would have a captive market of young, healthy people who would be forced to sign up for expensive policies with the threat of penalties. But it was a cynical scheme. The premiums from young people, who do not use much health care because they are rarely sick, would be used to pay for the care of the old and the chronically ill. The Affordable Care Act was structured so that younger, healthy Americans would pay for everyone else, even though the young have higher unemployment rates, less disposable income, more student loans and fewer assets.

Little did these insurance companies know that enrollment would fall far short of predictions. Enrollment in the exchanges is estimated by Health and Human Services Secretary Sylvia Burwell to be 10 million in 2016, compared with 22 million predicted by the Congressional Budget Office in May 2013. Insurance companies are not getting enough premiums to cover the costs of treating enrollees.

The problem is that the Affordable Care Act is simply unsustainable, as I predicted in December 2009. It mandates a generous, comprehensive plan that is also expensive. Young, healthy people do not want to sign up because the premiums are far higher than their health-care costs. They rightly do not see why they have to buy a plan with pediatric dental care if they have no children, and mental-health and drug-abuse coverage if they do not need it. Many would buy a simple plan, covering major catastrophic expenses, but such plans are not allowed to be sold on the exchanges. People who are signing up for Obamacare are not the young. They are sicker than average and have chronic health conditions that make them more expensive to insure.

Insurance companies were relying on payments from the federal government to constrain their losses as part of a device known as “risk corridors.” Risk corridors allow the government to bear a portion of the costs if they become too high. Section 1342 of the Affordable Care Act states that the secretary of HHS can reimburse insurance companies if the costs of covering sick people exceed the premiums received. However, the act did not provide an appropriation for these funds. In order for risk-corridor funds to be distributed, Congress has to appropriate them.

Some legislation that includes risk corridors includes an appropriation. For instance, payments for losses under the Medicare Part D plan come from a permanent appropriation from the Medicare Prescription Drug Account. However, the ACA did not include such an appropriation.

Both the Congressional Research Service and the U.S. Government Accountability Office have ruled that a congressional appropriation is required before federal agencies can make risk-corridor payments for losses incurred under the Affordable Care Act.

Enter Rubio, who has figured out that the best way to get rid of the Affordable Care Act is simply to prevent Congress from appropriating the money to pay insurance companies’ losses. If the companies are not reimbursed, they will withdraw from the exchanges. Companies estimate that they will need $2.9 billion next year to stay in business, and they cannot manage without the government subsidy.

To continue reading: Obamacare bailouts prove that the law is flawed and lousy

A new taxpayer bailout to cover up ObamaCare’s failure? by Betsy McCaughey

From Betsy McCaughey at nypost.com:
How dare the Obama administration bail out insurance companies with our money in order to hide ObamaCare’s failures. Thursday, just hours after giant insurer UnitedHealthcare said it’s losing money selling ObamaCare plans and will likely exit the health exchanges next year, the Obama administration quietly promised to bail out insurers for their losses — using your money.

Nearly all insurers are bleeding red ink trying to sell the unworkable plans. Without a bailout, more insurers will abandon ObamaCare, pushing it closer to its demise. A bailout would benefit insurers and the Democratic Party, which is desperate to cover up the health law’s failure. Ironically Democrats (including Hillary Clinton and Bernie Sanders) bad-mouth bank bailouts but are all for insurance-company bailouts. Truth is, it’s a ripoff for taxpayers, who shouldn’t have to pay for this sleazy coverup.

The pressure is building on Republicans in Congress. Industry groups like the American Health Insurance Plans and giant insurers are joining with the Obama folks to lobby ferociously for a bailout.

UnitedHealthcare’s Thursday bombshell rattled investors, health-plan subscribers and ObamaCare partisans. The insurer currently covers more than half a million ObamaCare plan subscribers in 23 states, including New York, New Jersey and Connecticut.

The insurer announced losses of $425 million on ObamaCare plans, and CEO Stephen Hemsley said, “We cannot sustain these losses,” and “we saw no indication of anything actually improving.”

To continue reading: A New Taxpayer Bailout to Cover Up Obamacare’s Failure?

A Complete Farce: Ex-Obamacare Head To Lead Health Insurance Lobby, by Tyler Durden

This is how influence peddling and the Washington revolving door work. From Tyler Durden at zerohedge.com:

If there was any doubt just who Obamacare was created to serve from day one (spoiler alert: it was never America’s population), we now have the answer and it is so simple, even a 5-year-old can get it. Moments ago Politico reported that former Medicare chief Marilyn Tavenner, and the infamous former administrator of the Centers for Medicare and Medicaid Services who was responsible for writing many of Obamacare’s rules and regulations for the insurance industry, only to be fired following the disastrous rollout of the HealthCare.gov enrollment website, has been hired as the new CEO of America’s Health Insurance Plans, the “powerful K Street lobbying group.”

Cited by Politico, AHIP board chairman Mark Ganz in a statement that:”There is no better individual than Marilyn to lead our industry through the increasingly complex health care transformation that is underway. She has the respect and trust of policymakers and stakeholders from all sides, and a personal commitment to advance meaningful solutions for improving access to quality, affordable care for all Americans.”

Well, maybe for some Americans: those who are shareholder or employees of US health insurance companies, which as it now emerges, are the biggest benefactors of Obamacare because from the very beginning, they had their own operative setting up the rules and regulations of the biggest US healthcare overhaul in history to benefit, drum roll, them.

And now the same insurance companies, just to benefit some more, are poised or already in process of hiking insurance premiums across America and crush the spending power of ordinary Americans, those who were supposed to benefit from Obama’s socialized healthcare dream.

The Affordable Care Act has been a mixed bag financially for insurers, said Robert Laszewski, an industry consultant. The expansion of Medicaid and the continued growth of private Medicare plans have been a boon for insurers, he noted. But the law’s new health insurance exchanges have been more troublesome for health plans, many of which are seeking greater rate hikes in 2016.

“They’re getting creamed,” Laszewski said of plans in the exchange business. “Any time you see a rate increase above 7, 8, 9 percent, they’re losing money.”
Actually, that’s bullshit: any time you see a 9% increase (or much more), it means there is cartel pricing in action, and thanks to the Supreme Court’s ruling supporting Obamacare, healthcare is now a tax on Americans and one has no choice but to pay whatever premium incueases are imposed on them.

It gets even more comical:

Tavenner can push the group’s agenda in Congress, but she will face a ban on direct communications with the agency that she oversaw. That restriction shouldn’t present too much of a hurdle to being an effective advocate for the industry, said Meredith McGehee, policy director for the Campaign Legal Center.
It won’t be a hurdle, but in the meantime, Tavenner will be paid about 20 to 30 times more than when we was a mere government lackey (and quite incompetent considering the billions spent to rollout a broken healthcare.gov) available for hire to the highest bidder, unprecedented conflicts of interest notwithstanding.

And just to show how extensive the revolving door is, Tavenner is replacing AHIP’s longtime head Karen Ignagni, who left the group to run EmblemHealth, a big New York insurer. Her departure was soon followed the announcement that UnitedHealth Group, the country’s largest insurer, would leave AHIP.

So for any 5 year old who are still confused: the insurance industry wrote the rules of Obamacare, and is now set to profit from it, which incidentally was obvious to anyone who has been following the stock prices of publicly traded insurance companies, which if the recent merger mania is any indication will shortly roll up into one monopoly enterprise, thus concluding Obama’s dream of a single-payer health system.

And just like that, the corporations win again.

http://www.zerohedge.com/news/2015-07-15/complete-farce-ex-obamacare-head-will-head-health-insurance-lobby

Thanks Obamacare——-Predatory Medical Cartels Getting Even Bigger, from The Wall Street Journal

An entirely predictable—and predicted by many of its critics—result of Obamacare. A replay of this movie is coming soon to a Net Neutrality theater near you. From The Wall Street Journal editorial page, via davidstockmanscontracorner.com:

The five largest commercial health insurers in the U.S. have contracted merger fever, or maybe typhoid. UnitedHealth is chasing Cigna and even Aetna; Humana has put itself on the block; and Anthem is trying to pair off with Cigna, which is thinking about buying Humana. If the logic of ObamaCare prevails, this exercise will conclude with all five fusing into one monster conglomerate.

This multibillion-dollar M&A boom is notable even amid the current corporate-financial deal-making binge, yet insurance is only the latest health-care industry to be swept by consolidation. The danger is that ObamaCare is creating oligopolies, with the predictable results of higher costs, lower quality and less innovation.

***

The business case for the insurance tie-ups among the big five commercial payers, which will likely leave merely three, is straightforward. Credit is historically cheap, and the insurers have built franchises in different areas that could be complementary. As for antitrust, selling coverage to employers doesn’t overlap with, say, managing Medicaid for states. (Expect some of the Blue CrossBlue Shield nonprofits to hang for-sale signs soon for the same reasons.)

More important, the economics of ObamaCare reward scale over competition. Benefits are standardized and premiums are de facto price-controlled. With margins compressed to commodity levels, buying more consumers via mergers is simpler than appealing to them with better products, to the extent the latter is still legal. Synergies across insurer combinations to reduce administrative overhead and other expenses also look better for shareholders.

The mergers reflect the reality that government—Medicaid managed care, Medicare Advantage and the ObamaCare exchanges—is now the artery of insurance profits, not the private economy. The feds “happen to be, for most of us now, our largest customer,” Aetna CEO Mark Bertolini said this month at a Goldman Sachs conference.

Mr. Bertolini added: “So there is a relationship you need to figure out there if you’re going to have a sustained positive relationship with your biggest customer. And we can all take our own political point of view of whether it’s right or wrong, but in the end-analysis, they’re paying us a lot of money and they have a right to give us some insight into how they think we should run our business.” Such domestication is part of ObamaCare’s goal of political control, and it may well be that only fewer, larger and more centralized insurers can survive financially.

To continue reading: Thanks Obamacare

http://davidstockmanscontracorner.com/thanks-obamacare-predatory-medical-cartels-getting-even-bigger/

They Said That? 5/22/15

From Clare Krusing, a spokeswoman for America’s Health Insurance Plans, an insurance industry group:

“This year, health plans have a full year of claims data to understand the health needs of the [health insurance] exchange population, and these enrollees are generally older and often managing multiple chronic conditions. Premiums reflect the rising cost of providing care to individuals and families, and the explosion in prescription and specialty drug prices is a significant factor.”

The Wall Street Journal, “Health Insurers Seek Big Increases,” 5/22/15

Ms. Krusing was explaining why insurers across the country are asking for steep rate increases, in one case over 50 percent. As the article explains:

Insurers say their proposed rates reflect the revenue they need to pay claims, now that they have had time to analyze their experience with the law’s requirement that they offer the same rates to everyone—regardless of medical history.

Anyone with a basic understanding of economics, or with some plain old common sense, knew forcing insurers to offer the same rate to all would lead to adverse selection: the sickly would sign up, the healthy who were supposed to subsidize their medical care would stay away. This is precisely what is happening. Consumer “advocates” say this is all insurance company posturing, but one insurer, BlueCross BlueShield of Tennessee reporting losing $141 million from health exchange plans, “stemming largely from a small number of sick enrollees” (there’s that adverse selection thing). The insurer says its proposed rate 36.3 percent increase would only allow it to operate on a break-even basis. That of course, assumes no further adverse selection after the increase, a questionable assumption.

Cheryl Fish-Parchman, an “advocate for the health law,” demonstrated in one sentence that she probably does not have the intelligence to understand either the convoluted ACA, or adverse selection and the insurance companies’ case for rate increases. She said: “We are really wanting to see very vigorous scrutiny.” SLL is in that small camp who believe that what one speaks and writes reflects the quality of one’s thinking. If Ms. Fish Parchman had said: “We want to see vigorous scrutiny,” SLL would have credited her with more intelligence.