
U.S. judge finds that Aetna misled the public about its reasons for quitting ACA - zitterbewegung
http://www.latimes.com/business/hiltzik/la-fi-hiltzik-aetna-obamacare-20170123-story.html
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GiorgioG
I've said it before, we need a single payer system.

Insurance companies and Pharmaceutical companies can more or less dictate the
prices they'll charge because if you're chronically ill, you can't just choose
not to be treated (unless you're ok with dying.)

This behavior should not be surprising. Until the American people get pissed
off enough, we'll continue to have these shenanigans.

~~~
jobu
Single payer would be ideal for most Americans, but those in power (both
government and industry) seem to prefer the high deductible health plans with
health savings accounts.

Unfortunately I don't see high deductible plans working for anyone unless
healthcare providers and pharmacies are required to list all prices up-front.
As it is there's no way for consumers to "shop around" because they can't get
prices for most tests, procedures, or even medications until they bill through
insurance (which can take weeks).

~~~
scotch_drinker
Exactly this. It's a falsehood to think that HSA/HD will cause you to be a
better consumer because you can't be a better consumer when the sellers refuse
to provide price information. We had our first child this year and the
hospital coded some things to my wife and some to my daughter which caused us
to pay two deductibles. I tried to get an itemized breakdown repeatedly from
the hospital and was met with "we can't do that."

Never mind the fact that you can't exactly shop around for places to deliver
when your OB/GYN only has admitting privileges at one hospital. I'm about as
free market as they come but when the providers flat refuse to tell you what
they are going to charge you. Try going to one of those corner ERs, you'll
have to sign a form saying you are solely responsible for all charges but they
sure won't tell you what those charges are until you sign it.

~~~
dpark
Does anyone claim that HD plans make people more savvy consumers? I've always
thought it was a transparent way to make people of moderate means think twice
about any care that could be considered elective. Whether it's a good idea or
not, paying out of pocket for a $3000 procedure might make you question the
need for a CAT scan.

High deductible plans definitely don't make anyone smarter consumers. The
market is opaque and your options are limited to in-network in the best case.

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attaboyjon
On paper, none of the Star Wars movies ever made a cent of profit. On paper,
Google and Facebook had not profits in America.

ACA insurance profit are loss are similar. With enough creative accounting the
business could be made unprofitable to squeeze concessions from the Obama
administration.

Look at all the major insurers stock price since Obamacare began. That will
tell you all you need to know about this story. If you think they are making
all that money because the non-ACA health insurance business suddenly got real
good, I have a bridge to sell you.

~~~
brutus1213
I've heard of these accounting shenanigens. If you are ever faced with a
contract where you get "residuals"/net-profit, how do you protect yourself?

~~~
gamblor956
All of the Star Wars movies made profits for their distributor. The accounting
loss was recorded only in the special-purpose holding company (SPHC) that was
specifically set up to disburse profits to net-profit participants. To ensure
that this type of entity has no profits, all production and distribution
expenses of the studio and distributor are generally charged to this entity,
usually in advance lump sums. The studio and distributor record and are taxed
on their income.

In many cases, any licensing income is earned by a separate but related
company that paid the SPHC for the rights to re-license the film (but usually
the distributor also acquires licensing rights). The SPHC is generally a
profit-participant in the licensing company, but its share of the licensing
profits usually varies based on industry politics (i.e., leverage).

A-listers with sufficient leverage and competent representation can sometimes
participate in the profits...of the distributor. It's not enough to get gross
profits since gross profits take into account COGS/COSS. What you really want
is "first-dollar gross", meaning "gross income" before distributor expenses.

For example, say, "Gravity 2" makes $100m at the box office. That $100m is
first-dollar gross. If WarnerBro's COGS were $80m, gross profits were only
$20m. If Sandra's share of profits was 1% of first-dollar gross, she's looking
at $1m; but if she only had a gross-profits participation, she's looking at
only $200k. If Sandra was a net profit participant, she wouldn't make anything
at all since Gravity Special Purpose Movie-Making Entity has an $X million
dollar loss related to production expenses for making the movie and the
distribution expenses WarnerBros is expensing to it.

[source: I do this. But not for WarnerBros or Gravity, those are just examples
that are easily Googled if you want to follow up with your own research.]

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burkaman
Am I misreading this, or are they forgoing profit purely out of spite? Or I
guess the idea is they could make more profit in the long run if they generate
enough bad publicity for the ACA. These quotes almost seem too on the nose to
be real:

> “I just can’t make sense out of the Florida dec[ision],” the executive,
> Christopher Ciano, wrote to Jonathan Mayhew, the head of Aetna’s national
> exchange business. “Based on the latest run rate data . . . we are making
> money from the on-exchange business. Was Florida’s performance ever
> debated?” Mayhew told him to discuss the matter by phone, not email, “to
> avoid leaving a paper trail,” [the judge] found.

~~~
gleb
ACA was designed to drive consolidation. Because large companies are easier
for the government to control.

Source - ACA author: [http://www.wsj.com/articles/i-was-wrong-about-
obamacare-1469...](http://www.wsj.com/articles/i-was-wrong-about-
obamacare-1469997311) (How I Was Wrong About ObamaCare: The law’s drafters
wanted consolidation)

Which why, all of a sudden, all the hospitals are buying each other, and
insurance companies are buying each other.

It seems Aetna felt that the government didn't live up to its side of the
bargain.

~~~
burkaman
Ok, but on its own that doesn't make sense as a business decision. Assuming
they are profit-driven businesspeople, they either they thought their best
option was to try and sabotage the ACA, or they really thought this would work
as a negotiation tactic, which seems absurd.

~~~
gleb
Why does it seem absurd as a negotiation tactic? They use what leverage they
have against the government.

~~~
burkaman
I don't know, does this kind of thing usually work? I don't really know
anything about this, but it just seems sort of obvious that Aetna is in a much
weaker position than the US government and can't possibly strongarm them that
easily. But I guess if the prospect of making the ACA look like a failure is
part of the leverage then it makes more sense.

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kapauldo
There are 2 simple things we can do to fix health care. First, make it like
public school. If you want to pay for private school, go ahead, but health
care should be socialist like school and sewage. 2nd, make it illegal for the
AMA to limit the number of doctors admitted to med school. Its a cartel that
reduces supply.

~~~
wyager
> First, make it like public school.

We can learn from our mistakes there and, if we really feel we need to make
medicine socialized (as opposed to deregulated like the excellent private
healthcare in Mexico or India), we can at least do it on a voucher-based
system. Everyone gets $x tax money a year to spend on medicine, and you can
choose where to spend it.

~~~
Gracana
What if you need more than you're allowed?

~~~
wyager
What if you need more than the government is willing to spend on you in the
"public school" scenario?

I had a longer, more detailed response, but I realized that what you asked
isn't really a fair question. In the end, the answer is "you die", and by
elaborating on that it made it sound like I agreed that this _isn 't_ an issue
in socialized medical care.

~~~
Gracana
I figured you'd want to say more about it because that obviously doesn't work.
But.. OK.

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AdmiralAsshat
TIP: If you're having trouble viewing the page because of the pop-up telling
you to turn off your adblocker, Click the little 'i' by the address bar
(Chrome only) and disable Javascript for the site.

~~~
noobermin
And there is reader view for firefox users.

------
mhurron
A company lying to further it's goals, well I never!

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tptacek
Note that both things can be true: that Aetna lost money in the individual
marketplace (which would square with the experiences of other insurers in
guaranteed-issue markets) and that their tolerance for loss was sharply
influenced by support for their proposed merger.

~~~
azdesertbuddha
Even if this was true, which the article states it is not, isn't that the
point of insurance? To spread the risk and cost across a geographic or
demographic populace while making a reasonable, but steady profit?

~~~
tptacek
I want to be clear that I'm not saying Aetna should have left unprofitable
markets; I think, for instance, that it would be reasonable to require that
any insurer wishing to offer group coverage in a state also offer individual
market coverage.

But the claim Aetna is making is that, at least in some of the markets it
abandoned, it was making a net loss on insurance contracts.

~~~
milliondollar
This a million times over. Aetna makes huge money in the group business. By
allowing insurers to take all the healthy people in group business, but
absolving them from taking the sick people in a market, you essentially create
smaller pools of "unprofitable" customers. But essentially it is a giant
subsidy to the group insurance providers.

------
MR4D
Shameless misdeed by a greedy corporation.

That being said, I fail to understand one thing about those who propose a
single payer system (and I mean this with all sincerity): If we cannot afford
to pay for doctors, hospitals, and medications, how can we afford to pay for
doctors, hospitals, medications, plus a bureaucracy to manage all of it?

To me, "negotiating" better deals doesn't work. As a single payer system,
that's just a rephrasing of "price controls".

It seems game theory could be put to good use here, as life is effectively a
single round game where many (most?) participants will spend everything they
can for the game to not end (i.e. extend their lives and postpone their
death). This one attribute seems destined to really challenge insurance of any
kind (including single payer) given the large aging demographics in the US
(aka "Baby Boomers").

~~~
antisthenes
> If we cannot afford to pay for doctors, hospitals, and medications, how can
> we afford to pay for doctors, hospitals, medications, plus a bureaucracy to
> manage all of it?

The same we are doing it now. Do you think the insurance companies are not
bureaucracies? A regulated monopoly is the most efficient form of bureaucracy,
because of efficiencies of scale.

Also, insurance companies still generate profits, profits that can directly go
towards health care, instead of being used as an investment cushion or for god
knows what.

Also, having every single person under 1 health care umbrella is a systematic
reduction in risk, which further lowers costs.

------
thephyber
I was pretty sure the news orgs I was following pointed this out at the time
the merger was approaching its conclusion.

I'm glad a judge with access to more information that the average news
consumer was able to make a judgement and reduce the uncertainty around the
claims (both Aetna's and the news coverage).

------
mcheshier
Wake me up when charges are filed.

~~~
burkaman
I don't think this is really illegal. What would it be, libel against the
Obama administration or something?

------
ddp
I'm for universal healthcare but the ACA _is_ collapsing in many states. I
happened to ride back to Santa Fe with the CEO of Blue Cross of Omaha who told
me that BC/BS of NM lost $100m on the ACA in 2015. That's a lot of money for
anyone to lose. He believed there were a few relatively simple fixes that
would go a long way to bring some sanity to the system. And let's face it, tax
penalties are not the way to achieve health coverage for all Americans. Boo on
Obama for not even bothering to try for Universal Healthcare...

~~~
bojl
>Boo on Obama for not even bothering to try for Universal Healthcare...

He tried to include the public option but it only had 59 votes to the 60
required to pass it

~~~
venomsnake
You only need 51 votes. If Democrats really cared they could have just sit in
the senate until the republican speakers collapsed. And it would have gotten
to a vote.

It may have taken a couple of days but whatever.

Edit: Can anyone explain the downvotes please? A filibuster can be overcome by
just siting and listening to the other side until they can no longer speak
from exhaustion.

~~~
maxerickson
They can trade off speaking during the filibuster.

Say only 20 of the minority decide to be completely intransigent. How many
weeks do you think it will take to exhaust them when they each only need to
speak for ~9 hours a week to maintain the filibuster?

~~~
venomsnake
They don't have the right to leave the senate hall I think. So I do think they
will have to make number one and two from time to time. The answer also is as
much as needed.

~~~
maxerickson
The Senator that _has the floor_ can't leave the Senate. They can leave if
they aren't holding the floor.

So 52 weeks later, maybe you compromise to get some things done (or maybe
sooner)?

