ObamaCare Medicaid Expansion expands Medicaid to 15.9 million of our nation’s poorest, including 9 million children by means of expanding CHIP (Children’s Health Insurance Program). However, this aspect of healthcare reform is in jeopardy in some states due to the states’ ability to opt out of Medicaid expansion. Twenty-four States have already opted out of Medicaid expansion leaving 5.7 million Americans without proper healthcare. Find out more about ObamaCare Expanding Medicaid.

ObamaCare cuts $716 billion (gross) in Medicare and Medicare Advantage related spending and reinvests it back into both Medicare and other aspects of the Affordable Care Act.

The Affordable care Act does more than just make cuts to Medicare, it provides a wide array of improvements for seniors. Some major reforms include closing the Medicare Part D “donut hole” and providing better quality preventive services to seniors. Read More On Obamacare and Medicare and How it affects seniors.

ObamaCare (the Affordable Care Act) contains new taxes including a fee for not obtaining insurance, as well as tiered cost assistance based on income. For those who get cost assistance their coverage will cost between 0%-9.5% of their income for the cheapest plan. Folks without access to cost assistance may end up paying more, in part due to ObamaCare’s new rights and protections, and in part due to the ever rising costs of premiums.

The bottom line is that while the ACA aims to give more people access to affordable, quality health insurance and it succeeds in many ways, but that doesn’t mean everyone will pay less. In general the less you make, the less you pay. Regardless of if you will pay more or less, the quality of health insurance you receive has new, benefits, rights and protections making it a better quality health health insurance. After all, what good is health insurance that drops you when you get sick, drops you when you use too much, or denies you for being sick in the first place?

As for our costs as a country and cost beyond health insurance, the Affordable Care Act does address the growing cost of health care, but it’s main focus is on reforming and expanding health insurance. Unless we as a nation address the root causes of health care costs a meaningful way the costs and taxes associated with healthcare will continue to put a burden on Americans, regardless of the law. Check out our health care facts to understand more about why we need to reform not only health insurance, but health care spending.

Under the Affordable Care Act, every legal resident of the United States of America will be able to shop for health insurance in their State’s online Health Insurance Marketplace (sometimes known as a exchange). The “ObamaCare Exchanges” are online marketplaces where Americans can shop for regulated health insurance and low-to-middle income Americans can get cost assistance.
Open enrollment is the only time you can get covered and apply for cost assistance without qualifying for a special enrollment period.
Using the marketplace any American can research every available policy and choose the right one for them and their family. The cost of your health insurance through the marketplace depends on your income, so only those making less than 400% of the Federal poverty level will be able to use cost assistance to obtain free or low cost health insurance. If you have access to affordable employer based coverage you won’t be able to get cost assistance. If you are eligible for Medicare, you can’t buy a private insurance policy and won’t use the marketplace to get coverage.

Obama Care (The Affordable Care Act) does not create private or public health insurance, it expands and improves public health insurance options like Medicaid and Medicaid. The ACA also creates subsidized and regulated marketplaces where Americans can buy private health insurance using group-buying power.
Although the expansion of Medicaid and cost assistance (both of which are subsidized by taxpayers) have gotten some criticism for being “hand outs to those who don’t want to work,” that criticism is mostly unfounded. The truth is, most of the newly insured will be working poor families who could not previously afford health insurance and those with pre-existing conditions who were previously “uninsurable” or priced out of insurance. Those who do not want to, or cannot work already have access to Medicaid in most cases. Its myths and half-truths like these that inspired us to create this facts site.

You must obtain and maintain minimum essential coverage throughout the year, get an exemption, or face a tax penalty for each month you go without coverage. In the individual and family market major medical coverage that counts as minimum essential coverage can only be purchased during open enrollment. Open enrollment for 2015 is Nov 15, 2014 through Feb 15, 2014.
In most cases if you already have health insurance you like, you can keep it (although some plans are being phased out by 2017, see grandfathered health plans). For many low to middle income Americans, insurance is more affordable due to cost assistance and Medicaid Expansion. However, those making above 400% of the federal poverty line may find themselves paying more for coverage and may want to see private health plan options out-side of the marketplace. Regardless of what you pay we all enjoy the new benefits, rights, and protections offered by Obamacare.

Open Enrollment Under the Affordable Care Act

Under the Affordable Care Act most private insurance must be obtained during the marketplaces annual open enrollment period. Open enrollment periods protect insurers from folks simply waiting until they get sick to be covered and helps enforce the mandate and keep premium costs down. You won’t be able to get most types of private coverage outside of open enrollment without qualifying for a special enrollment period. Other insurance types like Medicaid and CHIP (which is 365) have unique open enrollment periods.
To comply with the law for 2014 you needed to get coverage that started by May 1st, 2014 to avoid the fee. Open enrollment for 2015 starts November 15th, 2014 and ends February 15th, 2014.
If you miss the annual open enrollment period, you may still have options. Individuals may qualify for special enrollment period outside of open enrollment if they experience certain qualifying life events. Learn what to do if you missed the ObamaCare deadline.

When Barack Obama became president he began trying to pass the 2009 with the Affordable Health Care for America Act. This was followed by The Patient Protection Act, which culminated into the Patient Protection and Affordable Care Act 2010 (PPACA), or for short, “the Affordable Care Act” (ACA). After several changes, President Barak Obama signed the Affordable Care Act into law on March 23, 2010.

The Health Care and Education Reconciliation Act

Other, less-discussed aspects of ObamaCare are the health care related sections of the Health Care and Education Reconciliation Act of 2010 and the Student Aid and Fiscal Responsibility Act, which were signed into law along with the Patient Protection and Affordable Care Act. The PPACA itself also includes amendments to many existing U.S. laws and includes new rules and regulations called for by the law but written afterwards.

The concept behind ObamaCare was an individual mandate to obtain insurance, coupled with subsidies for private insurance. The concept was first put forth by The Heritage Foundation, a politically conservative think tank. Their idea was that this was an acceptable alternative to the single-payer initiative, “Medicare for All,” being proposed by the Clinton Administration. Since that time health care reform was proposed and expanded upon by both parties until it was implemented in Massachusetts by then-Governor Romney. During the 2008 elections, health care reform became a major plank on the platform of the Democratic party.

The Patient Protection and Affordable Care Act was nicknamed “ObamaCare” due to it being promoted by President Barack Obama. The term started becoming common back in 2009 (before the final legislation was even in place) and was widespread by the time the law was signed on March 23rd, 2010.
Although it was originally used as a pejorative term meant to pit opponents of the President against the law, it has since been embraced by the President and supporters of health care reform. When polled more people support the Affordable Care Act than ObamaCare, despite them being the same thing.
Like “HillaryCare” in the 90’s or “RomneyCare” in Massachusetts, “ObamaCare” is a simple name for a complex issue. Get more Obamacare Facts on health care reform under the Affordable Care Act.

Let’s take a look at some of the specific things ObamaCare does to reform the American healthcare system and how these reforms can benefit you, your family, and your business.

First off, Obama Care includes new benefits, rights and protections that:

• Prohibit insurance companies from dropping your coverage if you get sick or make an honest mistake on your application.
• Eliminate pre-existing conditions and gender discrimination so you can’t be charged more based on your health status or gender.
• Let young adults stay on their parent’s plans until 26.
• Protect against unjustified rate hikes and give you more rights to appeal insurance company decisions.
• Close the Medicare Part D ‘donut hole’ and keep Medicare strong for years to come.
• And much, much, more.

Secondly, ObamaCare includes provisions to expand coverage and make it more affordable by:

• Creating Health Insurance Marketplaces where low-to-middle income americans can compare plans and get lower costs on health insurance. There are three ways to get lower costs on the marketplaces: Tax Credits for lower premiums, Cost Sharing Reduction subsidies for lower out-of-pocket costs, and Medicaid. Cost assistance is only offered through your state’s marketplace, or on the official Health Insurance Marketplace HealthCare.gov.
• Expanding Medicaid to 15.9 million Americans to help “cover the gap” between those who qualify for cost assistance through the marketplace and those who qualified for Medicaid under previous Medicaid guidelines.
• Mandating large employers to provide coverage via the employer mandate and providing tax credits for small businesses who offer their workers coverage via the Small Business Health Options Program (SHOP).
In return for the new benefits and expanded coverage: • ObamaCare mandates that everyone who can afford it must obtain and maintain health insurance (known as minimum essential coverage) throughout the year starting in 2014, get an exemption, or pay a per-month fee on their year end Federal income taxes.
• Coverage can only be obtained during an annual open enrollment period. Annual open enrollment periods very by insurance type.

We’ve only just scratched the surface:

• In the years since it’s become a law, the Affordable Care Act has already made a big difference in our country by providing new rights and protections to more than 100 million Americans and has helped to reduce the uninsured rate.
• The above is only a portion of what the law does. See other new benefits, rights and protections, get a summary of each provision in the Patient Protection and Affordable Care Act, read the Full text of the Affordable Care Act for yourself, or browse our site to find out more about the countless other things ObamaCare does.

The Affordable Care Act (ACA), officially called The Patient Protection and Affordable Care Act (PPACA) and sometimes called Obama Care, is a US law that reforms both the healthcare and health insurance industries in America. The law increases the quality, availability, and affordability of private and public health insurance to over 44 million uninsured Americans through its many provisions, which include new regulations, taxes, mandates, and subsidies.

The law also works to curb the growth in healthcare spending in the US, which has been rising at an unsustainable rate, among other things. Obama Care is the unofficial name for the Patient Protection and Affordable Care Act (PPACA), although it has sometimes called the Affordable Care Act (ACA) for short. 

Insurance is a way of spreading or sharing and the financial risk. The scheme of the insurance date’s rear to the days of the Romans but it was not official. It is a simple theory, a huge number of community pay into a fund or pool. While one of them undergoes an unexpected misfortune, he or she is compensated by the fund. The payout is called a benefit. Health insurance pays part or all of your expenses when you see a health care professional use time in the hospital or purchase the covered health care services and products.

Public and Private Health insurance

Canadians have access to both public and private health insurance plans. These insurance plans are given by regional and territorial governments and insurance companies that sell policies to individuals and to employers the unions and associations that act as group insurance sponsors.

Financial service companies especially insurers need few operating assets to generate revenue but are required to hold equity capital at levels sufficient to support their operations. For that reason unlike the non financial service firms for which turnover ratios are calculated relative to assets insurers’ turnover is more appropriately evaluated relative to equity.

Turnover ratios inform on earnings quality for numerous reasons. The low revenue ratio may recommend that equity is overstated either because the insurer understated its liabilities or contra assets (loss reserve, liability for future policy benefits, tax valuation allowance), over capitalized expenditures (including operating expenses) or understated amortization or write downs (investment assets). Low turnover ratio may as well imply that the insurer does not use its equity efficiently.

This ratio, which reflects net asset turnover, is measured as follows:

For service companies employee skills are a particularly important resource. Accordingly the efficiency of this resource as measured using average revenue per employee is an important performance metric. The ratio of recurring revenue to the number of employees also informs on the value of human capital. Recurring revenue is calculated by subtracting realized gains and losses from reported revenue.

Recurring Revenue per Employee is measured as follows:

Where reserve development is the current year adjustment to the prior year’s reserve. Inferences made using this ratio are typically based on its time series properties such as the average value, trend or standard deviation over recent years.

The primary expense recognized by PC insurers is losses and loss expenses. Measuring this expense involves significant uncertainty and discretion which often results in a large measurement error. Over time as losses are paid and new information is obtained insurers revise the estimate of total incurred losses and this adjustment called reserve development; it is included in the reported losses and loss expenses. Because the adjustment is both unrelated to current coverage and quite volatile, some analysts exclude it from the losses and loss expenses when analyzing underwriting profitability.

This ratio is measured as follows:

Still considering the time series properties of the reserve development ratio is informative. To the extent that measurement error in loss reserving is correlated over time, past adjustments to the loss reserve inform on the precision of the reported cost of current coverage. Compared to other insurers an insurer with a sequence of positive adjustments to the reserve may be more likely to understate the losses and loss expenses associated with current coverage and an insurer with a history of large adjustments may be more likely to have large error in the reported cost of current coverage. Moreover even if loss recognition for current coverage is adequate to the extent that adjustments of inadequate past reserves are applied gradually, examining the time series of the reserve development ratio may help predict future development with respect to past coverage which will be included in the future reported losses and loss expenses.

The reserve development ratio can be calculated using either information from the Loss Reserve Development schedule or from the footnote disclosure of the Reconciliation of Claim and Claim Adjustment Expense Reserves.

The combined ratio and its components measure the underwriting profitability of insurance companies. Policy holder share ratio is not worth mentioning for the PC insurance industry overall constituting less than one percentage point in recent years. The loss ratio is the mainly significant element fluctuating between 50 and 70 percentage points. In compare the loss expense ratio and the underwriting expense ratio are quite stable constituting about 12 and 26 percentage points respectively.

The loss ratio and loss expense ratio are often aggregated together and referred to as the loss and loss expense ratio or simply the loss ratio. Conceptually the loss and loss expense ratio should indicate the average cost of insurance protection per each dollar of net premiums earned during the period. However losses and loss expenses reflect not just the cost of protection provided during the year but also the adjustment to the previous year balance of the loss reserve. This adjustment is due to changes in loss estimates (the net redundancy / deficiency) and accrued interest on discounted reserves such as settled workers’ compensation. In addition unlike the premiums which reflect current dollars, losses and loss expenses generally measure undiscounted future payments. This causes an overstatement of the loss and loss expense ratio, particularly for long tail liability lines. Therefore, a potentially more informative measure of current profitability can be calculated by undoing the impact of changes in estimates and discount amortization related to prior year reserves from the losses and loss expenses, and discounting losses and loss expenses related to current period coverage. This can be done using loss development disclosures.

The combined ratio and combined ratio components are defined as follows:

The underwriting expense ratio measures operational efficiency in underwriting. Particularly this ratio represents the percentage of a company’s net premiums earned that went toward underwriting expenses such as commissions to agents and brokers, state and municipal taxes, salaries, other operating costs and employee benefits. A substitute calculation of underwriting expense ratio is to divide the SAP measure of underwriting expenses by net premiums written. This metric compares underwriting expenses to net premiums written rather than earned because SAP treats policy acquisition costs as an expense rather than amortizable cost.

Different lines of business have intrinsically differing underwriting expense ratios. For example boiler and machinery insurance which requires a corps of skilled inspectors is a high expense ratio line. Completely not underwriting expense ratios for group health insurance are quite low. Because the underwriting expense ratio is an important determinant of overall profitability and insurers attempt to set premium rates at levels adequate to generate profits, differences in the underwriting expense ratio across business lines imply opposite differences in the loss ratio. This correlation however is far from perfect. High underwriting expense ratio may be offset by a long tail which allows insurers to generate significant investment income. Of course realized profitability is generally different from expectations.

The combined ratio reflects both the cost of protection and the cost of generating and maintaining the business. When the combined ratio is under 100% underwriting results are considered profitable; when the combined ratio is over 100% underwriting results are considered unprofitable. However as mentioned above the combined ratio understates true underwriting profitability by measuring losses undiscounted. Stated differently the combined ratio does not reflect the investment profits that insurers generate on the float.

Net premiums written is equal to direct insurance and reinsurance assumed during the period less reinsurance ceded. In the circumstance of analyzing profitability this ratio measures the efficiency with which the insurer uses its capital resources to generate business insurers with relatively low ratios are not fully utilizing their capital. However a relatively low underwriting leverage ratio is not always bad. Aggressive underwriting may lead to significant losses especially in soft markets. Also, insurers with low leverage ratios have more room for growth without having to dilute existing shareholders. Importantly the leverage ratio also measures the company’s exposure to pricing errors in its current book of business. Potential losses due to under pricing of policies are related to the amount of net business written while policyholder surplus measures the cushion available to absorb such losses.

Underwriting leverage is measured as follows:

Where net gains (losses) is the sum of realized gains (losses) plus the change in unrealized gains. Investment return has the two mechanisms: investment yield and net capital gains. Unlike the investment yield which reflects risk and historical performance the investment return measures current performance. However this measure has its own short comings. Gains and losses are often due to unpredictable market fluctuations in interest rates or other macro variables and not to superior performance. The related gains and the losses are extremely volatile and are typically transitory. In addition to the extent that insurers engage in asset liability management gains or losses on investments are at least partially offset by unrecognized gains or losses on liabilities.

The investment return is measured as follows:

Recurring ROE (Return on Equity) is a summary measure of recurring profitability from all business activities. Recurring income excludes One Time Items and so Recurring ROE (Return on Equity) is more persistent than ROE (Return on Equity). Moreover if One Time Items are really transitory or at least substantially less persistent than Recurring Income, Recurring Return on Equity ROE may facilitate more precise predictions of future ROE (Return on Equity) than ROE (Return on Equity) itself. Accordingly the relationship between equity value and profitability should be stronger when profitability is measured using Recurring ROE (Return on Equity) instead of ROE (Return on Equity).

One Time Items which are removed from comprehensive income available to common share holders in measuring recurring income, generally include other comprehensive income extraordinary items, income from discontinued operations, impairment charges, asset write downs, restructuring charges, realized gains and losses, and other items which are deemed to be relatively transitory, net of related income taxes. For essentially all insurers, a primary source of transitory items is realized gains and losses on investments. For PC insurers a potentially large transitory item is also included in the losses and loss expenses. In addition to the current cost of coverage, losses and loss expenses include the adjustment to the previous year balance of the loss reserve. This correction is comparatively momentary because it reflects the impact of changes in estimates.

Recurring ROE (Return on Equity) is measured as follows:

The same arguments that motivate most analysts to exclude transitory items from earnings, lead some analysts to exclude AOCI (Accumulated Other Comprehensive Income) from book value when measuring ROE (Return on Equity) or the price to book ratio. For insurers, AOCI (Accumulated Other Comprehensive Income) often cause significant volatility in ROE (Return on Equity), similar to the effect of transitory earnings items on reported income. Still excluding AOCI (Accumulated Other Comprehensive Income) is problematic for the following reason. A primary motivation for the removal of transitory earnings from reported income is that they are optional, that is management might have deliberately engaged in the transactions that generated those items. Thus, excluding transitory earnings items provides a measure of non discretionary real earnings. In contrast removing AOCI (Accumulated Other Comprehensive Income) actually makes the resulting book value discretionary. For example selling a security with unrealized gains reduces AOCI (Accumulated Other Comprehensive Income) and increases ex-AOCI book value but does not change total book value.

Another more legitimate argument for the exclusion of AOCI (Accumulated Other Comprehensive Income) from book value is that excluding AOCI (Accumulated Other Comprehensive Income) mitigates distortions caused by the mixed attributes model historical cost and fair value currently used. Specifically most insurers’ investments are classified as available for sale and reported at reasonable value with unrealized gains and losses incorporated in AOCI (Accumulated Other Comprehensive Income). In contrast, the reserves liabilities that these investments are expected to settle are generally not marked to market. Because the values of investments and reserve liabilities are positively correlated, the inclusion of unrealized investment gains and losses in AOCI (Accumulated Other Comprehensive Income) causes an artificial volatility in book value.

The operating ratio measures a company’s overall operational profitability from underwriting and investment activities. This ratio excludes other operating income and expenses capital gains and losses and income taxes. An operating ratio greater than 100% suggests that the company is unable to generate profits from its underwriting and investment activities.

The net investment income ratio measures the income contribution of the float. Because the float results from insurance activities this component of income should also be considered when evaluating the profitability of insurance operations. However the net investment income ratio and accordingly the operating ratio often provide a poor indication of current profitability. Net investment income is earned primarily on funds obtained in prior years. Thus for growing companies net investment income understates the contribution of the current float and vice-verse for insurers experiencing a decline in the insurance book. Changes in the average tail of the policies or in investment opportunities add further noise. Therefore a better approach for evaluating the income contribution of the float is to estimate the extent to which the current losses and loss expenses are overstated.

The operating ratio is defined as follows: