Tag: Losses

Nation’s Largest Health Insurer Will No Longer Participate In Several Obamacare Exchanges Following $1B In Losses

Obamacare Meltdown: Health Insurers Suffer Massive Losses – WorldNetDaily

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The nation’s largest health insurer, UnitedHealth, announced Tuesday it has lost at least $1 billion under Obamacare’s insurance exchanges, and it can no longer afford to participate in a number of states, including Arkansas, Georgia and Michigan.

UnitedHealth is just one of the many health-insurance companies sounding the alarm that they will have to drastically hike premiums in the coming year or consider exiting the individual health-care marketplace in the wake of massive losses sustained over the first couple of years under the rules of President Obama’s signature health-care law.

A report in the Hill newspaper quotes Aetna CEO Mark Bertolini as well as multiple policy experts concluding the current track is unsustainable for the private sector insurance. Furthermore, a report from McKinsey & Company shows insurers lost money in the individual market in 41 of 50 states in 2014.

Galen Institute President Grace-Marie Turner told WND and Radio America she hears the very same thing from health insurance providers.

“I have talked with insurance company CEOs. I’ve talked with people in professional associations,” Turner said. “They’re very worried because they were virtually assured by the Obama administration that the market would have stabilized by now.”

She said this is not only a distress call to policy makers but a warning to consumers that much higher premiums are on the horizon.

“These reports and these announcements and these news stories are really warnings from the insurance industry, ‘Get ready because our premiums are going to have to be much higher if we’re going to continue to participate in the market. And if you tell us that you’re not going to approve those premium increases, we will drop out,’” Turner said.

Turner said insurance companies bought the Obama promise “that there would be enough young, healthy people in the markets to be able to offset the sicker, older people.” But something happened on the way to huge profits guaranteed through the individual mandate.

“The escape hatches [the health-care law] created, the weakness of the individual mandate has meant that they wind up with many more people who are sicker and using many more health care services than anticipated, and the premiums were not set to adjust to that,” Turner explained.

She said the bad financial ideas underpinning the law are being exposed.

“They also thought they were going to get this other money through a lot of risk corridor reinsurance payments as well as the tax credits that people get to purchase premiums,” she said. “So they thought all of those were going to make this a stable market. It’s only a stable market in the sense that the government is propping it up artificially with all these other funds and it’s not enough.”

“The escape hatches [the health-care law] created, the weakness of the individual mandate has meant that they wind up with many more people who are sicker and using many more health care services than anticipated, and the premiums were not set to adjust to that,” Turner explained.

She said the bad financial ideas underpinning the law are being exposed.

“They also thought they were going to get this other money through a lot of risk corridor reinsurance payments as well as the tax credits that people get to purchase premiums,” she said. “So they thought all of those were going to make this a stable market. It’s only a stable market in the sense that the government is propping it up artificially with all these other funds and it’s not enough.”

Turner said insurance companies are also getting crushed by people gaming the system. She said people sign up for coverage, get a lot of expensive health care right away and then cancel their coverage, only to sign up at the same government-guaranteed rate in the next open enrollment period.

She said this whole sea of red ink exposes the fundamental flaws with the law.

“It’s not a sustainable market,” Turner said. “You cannot have government dictating how a market works. Only the market can do that and we’re seeing the failure of government-controlled health care.”

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The insurance industry is likely to elicit few tears from opponents of the Obama health-care law as conservative activists implored companies not to get on board the Obama bandwagon. The industry didn’t listen, but Turner said watching them leave the marketplace is not an option, either.

“We need the private health insurance companies to continue to participate and to offer insurance if we are going to have a private market,” she said. “You don’t want them to fail.”

Turner is hopeful that the issue will get a lot of attention in the 2016 election season. She is confident that despite the rhetoric of some Democratic Party candidates, the American people do not want government-run health care.

“The support for single payer among the American people is as low now as it has ever been in decades,” said Turner, who advocates health competition in the private sector regulated by the states.

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Leftist Nightmare Update: U.S.’s Largest Insurer Reconsidering Obamacare Participation After Near Billion Losses

U.S.’s Largest Insurer Reconsidering Obamacare Participation After Near Billion Losses – Truth Revolt

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UnitedHealth Group, the nation’s largest insurer, is reconsidering its participation in the Obamacare exchanges after reporting near billion losses.

According to figures published at Fortune, UnitedHealth will lose $100 million dollars more than it projected in its financial forecasts for the 2016 Affordable Care Act enrollment numbers. Previous estimates were in the $400 million range, now rising past $500 million.

What’s worse, last year, the company reported $720 million in losses thanks to Obamacare and that number is expected to soar past $745 million in the next year.

“By mid-2016 we will determine to what extent, if any, we will continue to offer products in the exchange market in 2017,” said UnitedHealth President Dave Wichmann.

Wichmann said his company is slowing marketing efforts, withdrawing certain products, and also increasing prices in hopes to offset some of the lost revenue. But as is noted in Fortune’s report, enrollment continues to rise despite these efforts,

Fortune also points out that UnitedHealth can boast $180 billion in total revenue currently, meaning the losses are just “a small fraction of UnitedHealth’s total business.” And currently, the company’s stock prices are up, perhaps indicating that investors aren’t too worried.

While this might not have as big an impact on a giant corporation, it is yet another example highlighting Obama’s “like your doctor, keep your doctor” lie as health care providers continue to pass on losses to their customers.

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Democrats To Reimburse Insurance Companies Up To 80% On Obamacare Losses (Video)

Breaking: Democrats To Reinburse Insurance Companies Up To 80% On O-Care Losses (Video) – Gateway Pundit

This must have been one of those backroom deals we heard so much about…

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Stuffed inside the Obamacare law passed by Democrats (with no Republican votes) is a provision that will reimburse insurance companies up to 80% of their losses due to Obamacare.

Melissa Francis reported on FOX News:

“Marco Rubio has been out highlighting the fact that there is this ‘risk corridor’ where written into this law that nobody read is this idea that is insurance companies have 3% higher costs than they estimated as a result of who’s in these pools, they can recoup 50% of that money from the government, from you and me. 8% higher than what they estimated, they can recoup 80%! …This bailout of the insurance companies is the next big thing we’ll all be talking about.”

And, here we thought Democrats hated insurance companies.

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Sen. Marco Rubio (R-Fla.) is reportedly offering legislation that would repeal the provision altogether, arguing it raises the possibility of an insurance industry “bailout.”

Click HERE For Rest Of Story

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Big Surprise… Fannie Mae And Freddie Mac Masking Billions In Losses

Fannie, Freddie Masking Billions In Losses, Watchdog Finds – Zero Hedge

As is well-known by now, one of the main reasons why the Fed’s hands are tied when it comes to the future of QE, is the dramatic drop in the US budget deficit which cuts down on the amount of monetizable gross issuance (read Treasurys) and for which a big reason is that the GSEs have shifted from net uses of government cash to net sources. So in what may be the best news for Bernanke, and/or his successor, we learn that according to a report written by the Federal Housing Finance Agency (FHFA) inspector general and reviewed by Reuters, “Fannie Mae and Freddie Mac are masking billions of dollars losses because of the level of delinquent home loans they carry.”

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A financial entity, government-backed or otherwise, masking the true sad state of its balance sheet? Say it isn’t so. Alas, it is. Reuters has more:

The report, written by the inspector general for the Federal Housing Finance Agency and reviewed by Reuters, said the FHFA’s timeframe for mortgage finance companies Fannie and Freddie to have up to two years to recognize the cost of mortgages delinquent at least 180 days was “inordinately long.”

The change in the accounting treatment of these delinquent loans potentially could require Fannie and Freddie, which have rebounded to enormous profitability in the past two years as the housing market recovered, to “charge off billions of additional dollars related to loans,” the inspector general’s report stated.

For now the FHFA claims the losses are manageable…

The FHFA, which regulates Fannie Mae and Freddie Mac, said the two are on track to implement the new standards within the next two years, and in a letter sent to the inspector general said it views the potential losses “to be reasonable.”

The majority of Fannie Mae and Freddie Mac’s losses are a result of guaranteeing mortgages that defaulted during the housing crisis. Fannie and Freddie have reduced their funds reserved to cover potential losses on bad loans due to the strengthening housing sector and higher home prices.

The FHFA noted the new accounting methods would involve “changes in a significant policy,” and as a result require a lengthy implementation period. The regulator consulted with Fannie Mae and Freddie Mac and has allowed the mortgage companies until Jan. 1, 2015, to make all of the adjustments, which will be rolled out in stages. The inspector general’s office said in the report, dated Aug. 2, that Fannie and Freddie have not publicly disclosed the accounting changes.

…But the watchdog is not happy and is demanding a quicker implementation:

The report called on the FHFA to require Fannie and Freddie to conduct the changes at a faster pace, with the inspector general primarily concerned with loss estimates that are realized in Fannie and Freddie’s public financial statements.

Obviously using a flawed methodology to count cash flows is beneficial to the bottom line and as a result, both Fannie and Freddie posted massive profits in the past quarter, which also resulted in dividends flowing into the US Treasury. Which worked great at a time when the US in turn, was also masking its true sad budgetary state and was pushing to delay the debt ceiling fight, facilitated by the additional inbound cash from the GSEs.

However, now that we have “moved on”, the Taper is just around the horizon and the latest debt ceiling fight follows just after, and the Fed is actively thinking of permissive factor to untaper, especially once stocks plunge following the gradual reduction in monthly flow by the Fed and the realization that Bernanke may be pulling the training sheels, forcing the GSEs to “suddenly” admit their true state. What this will achieve is to change the direction in fund flows, and Fannie and Freddie will once again start to enjoy the benefit of tens of billions of inbound cash flows (i.e., a resumption of the old bailout regime) from the Treasury, which will be just what the Fed ordered, as this will have to be funded by more Treasury issuance, more Fed monetization, a return to the old $85 Bn/month in equity flow, more centrally-planned stock prices, and so on.

In other words, with the Taper already actively being priced in (although certainly not fully) for a catalyst on when the Untaper talk will start, look for the GSEs to return to their old sorry shape. That will be the warning light for when Fed will be actively contemplating how to boost monetizable deficit funding once more.

Click HERE For Rest Of Story

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