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Do premiums matter under PPACA?

As a small claims payor I am always keeping my eyes open for experienced claim processors by searching resume boards. The last few months I have seen a large number of adjusters that used to work for Anthem. Normally you don't see adjusters leaving the large carriers as they pay great and have better benefits and retirement opportunities. Seeing a couple let alone a dozen is rare. In speaking with a few of them I was told they outsourced their claims processing to the Philippines and India. This got me wondering what this foretells of the future.

If you're a carrier and you're locked into 15% of revenue, do you spend that money on claims adjusters to control your claims cost, and thus reduce your revenue...

...or do you auto-adjudicate as many claims as you can, 70-80%+, then outsource the remaining claims to some low cost foreign country?  They won't do as good of a job (meaning they will pay more in claims then they should) but that actually increases their revenue, a perverse reward for a job poorly done.

This has been the Medicare model for decades and resulted in the most inefficient and fraud ridden program in the country. But if no one is directly paying the bill who cares? Medicare beneficiaries pay a minute fraction of the actual cost of their benefits so they don't care if 10%+ is lost to fraud. If the majority of the exchange members are going to be subsidized they won't mind either. The only people that would care are workers actually paying federal taxes, a minority when it comes to voting.

From the anecdotal evidence I have seen so far, it appears private insurance is adopting the worst qualities of Medicare already, before the exchanges even start.

For claim processors, 60% of expenses going to salaries is normal; if you drastically reduce that the business goes from low margin commodity to very profitable very quickly.

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