Holy shit. Be prepared for the consumer to get screwed on your healthcare advantage programs.

[moniss]

144. In the insurance industry they have a phrase

"buying the business". The insurance industry is all about cash flows. Premiums in and claims paid out. So when they see a huge potential pool of cash, in this case the normal payments people had been making for Medicare, they develop schemes to get that money coming their way as much as possible. So what they do is come up with a sweet looking program of benefits at a reduced cost to woo people over to them. They may price this ridiculously cheap compared to their actual cost but they will also begin to hassle getting claims paid or deny coverage at all. Meanwhile those non-stop ads are telling you all about how you can get this great program for a savings to boot. They're spending money to woo people over especially because they know that moving back to Medicare may be difficult especially if your health changes.

"Buy the business" means your monthly payments are the business they are buying. They want that cash flow. So after they run the program for a certain time they begin to cut benefits, raise premiums and ramp up their efforts to not pay claims. They have all kinds of people employed to figure out all the numbers and make their scheme hum right along. They crunch the numbers for how much the scheme will cost year to year versus how much "business" will come their way and you can make book that they have all kinds of graphs and charts showing them where the lines start to get close to each other and they have it planned out what to cut, how to cut it, how to present it to the public and they have their forecasts for how many people will leave them, how many will be somewhat trapped because of health changes etc. This is what they do all day long. Crunch the numbers, forecast and come up with "plans" for how to maximize the money grab and minimize the cash out the door for claims.

They used to do this with homeowner's insurance. They would select really stable suburbs with newer homes and they would offer dirt cheap premiums for the homeowner's insurance in those zip codes. They would do it to get a "foot in the door" to try and get people to switch their car insurance, life insurance etc. The banks etc. do it now with offering people $200 if they will bring their checking account over even if you're opening a "no fee" account. They'll get a certain amount of other business from a certain number of people and they have it all "crunched" so their numbers go in their favor after awhile. For example I was thinking of opening an account with Fidelity a couple of years ago and so I went to their web site and saw they were offering $500 for opening a new account. No minimum deposit and no minimum balance required. You got the $500 after like 6 months or the first year if I remember right. I couldn't believe it and so I called them and they said it was totally on the level. They want those investment funds on the books and the account holders will be there to market other products to. "Buying the business". They appear to give something for almost nothing but it's not like that really. To them they are not deceptive they are just making an "offer". It's like the grocery store that runs a coupon to give away a free bottle of ketchup with a $10 purchase. They're not really giving anything away because they just raise the prices slightly on other things to make up the cost.