Don’t get me wrong. I still remained firmly committed to Universal, single payer health care for all Americans, administered like Medicare, but organized around pay for result, not pay for service. That said, not everything about the PPACA (usually noted as the ACA) is bad. One of the law’s best features takes effect on the first of next month. When the bill passed, the naysayers accused that the final regulations on this item would be tailored to fit the needs of Big Insurance. The naysayers were wrong.
Aaaaand, the fuse has been lit. Insurers are not happy. Not even a little bit. What they feared most about the Affordable Care Act — more than insuring people with pre-existing conditions, more than leaving children on their parents’ policies until age 26, more than having to lift lifetime caps, more than any of those things — was the limited Medical Loss Ratio (MLR).
The PPACA limits the "padding" between actual claims paid and premium collections to 15% for large groups and 20% for individuals and small groups. Any excess the insurer has must be refunded to insureds by the end of the year for which the MLR is determined. Everyone scoffed at the time over these limits, figuring the regulations would be broad and wide enough for insurers to run through the loopholes.
But no. Final rules were issued last week and insurers didn’t get anything they wanted. Via Rick Ungar [propaganda delinked] at Forbes:
This is the true ‘bomb’ contained in Obamacare and the one item that will have more impact on the future of how medical care is paid for in this country than anything we’ve seen in quite some time. Indeed, it is this aspect of the law that represents the true ‘death panel’ found in Obamacare—but not one that is going to lead to the death of American consumers. Rather, the medical loss ratio will, ultimately, lead to the death of large parts of the private, for-profit health insurance industry.
Why? Because there is absolutely no way for-profit health insurers are going to be able to learn how to get by and still make a profit while being forced to spend at least 80 percent of their receipts providing their customers with the coverage for which they paid. If they could, we likely would never have seen the extraordinary efforts made by these companies to avoid paying benefits to their customers at the very moment they need it the most.
Ungar’s logic at the end is a little bit wrong. The current MLR, just for perspective, is about 40-45%. That means for every dollar paid toward health coverage, only 60 cents or so goes to actual health costs. The rest is considered overhead — agents’ commissions, big CEO salaries, and of course, that shareholder profit that benefits those with the money to actually buy shares in these companies. Medicare, on the other hand, has a very low overhead attached to it — about 7-8%, because it is in the business of providing medical benefits, and not making a profit or paying CEOs handsome salaries.
The only reason for insurers’ efforts to deny benefits was simply to boost up the bottom line, and in many cases, the only reason for big premium hikes was also to boost that bottom line and the profits distributed to shareholders. Now insurers will find themselves in the business of actually paying for medical benefits. The regulations, by the way, do not allow them to include agents’ commissions in their "medical expense" column… [emphasis added]
Inserted from <Crooks and Liars>
I’d go a little further than calling Ungar a little bit wrong. I call it lying through his teeth to disseminate Republican propaganda.
The author’s estimate of Medicare overhead seems high. According to the CBO, it’s more like 2%.
Kudos to the Obama administration for standing up to tremendous insurance industry pressure and delivering what the plan promised.
Now, to the greedy corporate criminals of Big Insurance, who have been screwing us for years, Happy New Year!
16 Responses to “Something Good About Obamacare”
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There is still the republican house and the obstructionist senate who will some way or another get them their profits back. After all the entire Health Care Industry including Pharmaceuticals are MAJOR campaign contributors and E. Warren is not there to advise what’s his name to not veto any change to the regulation. But then there is always Giethner still to look out for the Wall Street aspect of them.
Mark all those things are true, except that Warren’s replacement is Warren’s pick, although HCR is out of his and Geithner’s demesne.
This seems like very good news. It’ll be amazing if it stands for the reasons that TWM states (and I hope he’s wrong). I wish all of the folks on Obama’s side would stop referring to the plan as “Obamacare,” though. It is a pejorative originated by the Teapublicans. We don’t need to carry it along, do we? We could call it “Universal Healthcare,” although it isn’t universal YET!
Caity, I often call it Obamacare for two reasons. First, sat PPACA, and you hear ‘huh?’. Second, calling it Obamacare draws Republicans like flies, and they need to understand this the most.
I agree that we should have ” Universal, single payer health care for all Americans, administered like Medicare, but organized around pay for result, not pay for service.”
I’m wondering if we will get refunds because of these “limits”. My premiums went up 45% last year which put a big dent in my fixed income.
Patty, next year and beyond, if your insurance company does not spend 80% (or 75% depending on the type of policy), the company will be required by law to refund the difference.
The rule I learned when the Health Plan was being debated and the insurance giants were fighting tool and nail : ” If the insurance companies don’t want it ; I do ” Now I learned that rule and how to apply it from a relative in that industry; Let the Insurance companies scream– they already have moved most of their accounts overseas— Let them account for the number of jobs that have been outsourced—The banking/ financial industry has nothing on the insurance companies in how they misuse funds– to give their CEOs huge salaries and bonuses– my premiums also went way up— The insurance companies trying to get ahead of this rule– that may I remind you , they knew was coming– no surprise to them at all-
‘ If the insurance companies don’t want it ; We do ” —
Very well said, Phyllis. The opposition is the biggest proof there is.
I hope Rick Ungar is right about one thing — “…the medical loss ratio will, ultimately, lead to the death of large parts of the private, for-profit health insurance industry”.
It is time for the insurance companies to stop profiting off of the pain and suffering of the American People. It should be a strictly non-profit business if not a solely run government operation.
Jerry, insurance companies stayed well within an 80% MLR, before Republicans started deregulating the industry in the 1980s.
From the Declaration of Independence — We hold these truths to be self-evident, that all men are created equal, that they are endowed by their Creator with certain unalienable Rights, that among these are Life, Liberty and the pursuit of Happiness.
From Wikipedia — The Declaration justified the independence of the United States by listing colonial grievances against King George III, and by asserting certain natural and legal rights, . . .
With what is going on in the US today, it is time to take back the heritage that has been shoved aside. In the 1700’s, the founding fathers were dealing with a non apologetic British king and a British Parliament that felt it made the rules and it had the control. Well fast forward 235 years and substitute Big Business (banksters, for profit healthcare companies, big pharma etc) for King George III and the British Parliament.
Now take ownership of the words from the Declaration of Independence. “We hold these truths to be self-evident, that all men are created equal, that they are endowed by their Creator with certain unalienable Rights, that among these are Life, Liberty and the pursuit of Happiness.
What is one of the main OWS points — the income inequality in the US. I heard a Canadian statistic today that the income of the top 10% of Canadians is 10 times greater than the income of the bottom 10%, and that has risen from 8 times greater in the early 1990’s. While actual figures were not given for the US, it was noted that the difference was much greater. Even Canada was above the average of the 30 nations included in the comparison. If all men are created equal, where is the income equality? If all men are created equal, why is there not more equality in the races?
Life, Liberty and the pursuit of Happiness — “. . . inalienable Rights, . . .Life. . . “. It would seem to me that the founding fathers treasured the life of the individual, but can we say that about the insurance companies and big pharma? With so many people unable to afford healthcare and drugs needed for life, it seems that for profit healthcare and big pharma are standing in the way of the intent of the founding fathers.
This is probably a stretch, but it came to me as I was reading the article. I live in Canada and we have universal healthcare. I remember years ago when there were discussions about going to a US system, Ralph Nader told Canadians not to be so foolish (obviously before his “republican days”). Tommy Douglas (Kiefer Sutherland’s grandfather) was regarded as the father of Canadian universal healthcare and made sure that it was in place nationally. In British Columbia where I live, we have something called Fair Pharmacare. The Province negotiates a price from big pharma for medications, and that’s it. Every citizen in BC has access to most of the drugs they need, part of which is covered under Fair Pharmacare. The deductible is based on income — the higher the income, the higher the deductible you must pay. So once you pay the full deductible, your drugs are “free”. Because I have several chronic diseases, without Fair Pharmacare, I would pay almost $5,000 per year. But with Fair Pharmacare, and because I am currently unemployed, I pay about $500 for the year.
Jerry Critter said “It should be a strictly non-profit business if not a solely run government operation.” and I agree. The US government needs to step in to healthcare to make it universal, non-profit and affordable. The US government needs to step in and deal with big pharma and get costs down on drugs so that everybody can afford them. That is the only way I can see of reducing the stress on people and promoting life.
Lynn, great analysis. Here the top decile makes approx, 80 times what the bottom decile makes.
Obama was once asked why he no longer supported single payer (he had supported single payer until he got elected to the Senate). He said, “That would be great, if we were starting from scratch, but we are not.”
WE SHOULD START FROM SCRATCH.
His solution to the health care problem, is to not only keep the private health care insurance system we have now (with all its abuses and overcharging) but to force all Americans to pay into that system. That’s not a progressive idea, at all.
The purpose for the mandate, and the very small penalty fore those who opt not to comply is so that the people who opt not to get health care coverage, and then go to emergency rooms,. will be paying something for their care. The republican alternative is to turn them away, which is less progressive. Obama also said that he prefers single payer, but knew he had no chance to get it. But you’re right. Starting over with single payer would have been better. Which Republican do you expect to help with that?
It’s silly to assume that because I don’t like Obama’s bill, I prefer Republican ideas. I’m again, talking about expecting better.
but whatever you say
That’s not at all what I meant. My point was that we should not reject what we could get, because we couldn’t get what we both want.