10 February 2014

Love Actuarily

The AOL brouhaha has finally been outed. We think. The company, at least its CEO, hasn't the foggiest idea what insurance means. Hire an actuary or two. I might even volunteer; kind of like a HuffPo contributor. No, while I'm a nice guy (mostly), I'm not a Fellow.
Most large employers are self-insured for their workers' health coverage, given the savings such plans can yield over traditional group insurance. Self-funding means that an employer pays for health care rather than buying an insurance policy for their workers. Such plans now cover 60 percent of private-sector workers with health insurance--an estimated 100 million Americans.

That story doesn't cite an explicit source for the 60% number. But it does make some sense. When I was with Jack Anderson, back in the 1980s, he did just that for the staff; not that the staff numbered more than a dozen. I was only there for a short time, and not a regular staff member, but during staff meetings, Spear would tell folks that they just had to keep pestering Jack to get the money back. Apparently, staff had to pay first and get reimbursed. In the case of AOL, or any such large employer (and AOL ain't all that large, in the wider scheme of things), it appears they didn't get either any, or any accurate, advice from a health actuary.
AOL, the parent of the Huffington Post news site, is a media and Internet company with a workforce that may be younger--and healthier--than most employers'. If so, its annual claims could be even more predictable than a more age-diverse employee pool.

Ignoring the fact that mostly young folks have mostly babies. Babies are expensive, even when not at $1 million a drop. Kids, once down the chute, are too.
Per capita spending on children's health care rose to $2,123 in 2010, an 18.6 percent increase from 2007. Spending on health care for infants and toddlers was disproportionately high. Although children under 3 years comprised 17 percent of the covered child population, 31.4 percent of the total children's health care dollars was spent on them in 2010.

Having the rug rat alone costs a bunch. And, if you're a Right Wingnut of course, then there should be a birth penalty. This from the Family Values & We Don't Want No Birth Control cabal. Irony is lost on such folks.
It's a funny gripe for a number of reasons. First, as The Washington Post's Ezra Klein pointed out, high-deductible health care plans, or "health savings accounts," were a central tenet of Republican health care thinking in the days before Obamacare. The high-deductible complaint is even more hypocritical with regard to pregnant women, given that prenatal care is one of the key issues at hand in the whole Obamacare debate--and one some Republicans have consistently knocked as a stupid benefit.

Keeping 80 year olds alive sedated to Oz for another month is a valid discussion. But the younger set chews up a considerable amount of money. For the AOLs of the world, restricting employment to a class not mentioned in a long time, DINKs (Double Income, No Kids), who don't smoke or drink or do drugs (you know, Mormons that don't breed), is a way to fatten up the bottom line. Folks like me, fur instance.

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