According to HHS, the new rules requiring health insurance companies to spend 80 to 85 percent of each premium dollar on medical claims or programs designed to improve health will result in nine million people receiving an average of $164 in the form of a rebate in 2012 from those companies that do not meet the new requirement in 2011. Isn’t it a bit curious that the push has been for competition and yet we don’t think people are smart enough to select the lowest cost plan, but rather we need to reimburse them for selecting a higher cost plan, assuming of course that the insurance company with a low loss ratio is a higher cost plan.
Coincidentally, today I received an e-mail from the President touting the changes in loss ratio rules. It is amazing how changes in rules such as this can have such a magnificent impact on your health. Take a look at what the President says:
Good afternoon,
Over the past few years, many Americans have seen their health insurance premiums skyrocket, while the quality of their health care declined. One of the reasons I pushed so hard to pass health care reform this year was to make sure that American consumers get what they pay for when it comes to their health care.
Today, we’re launching a new provision of the Affordable Care Act that does exactly that. Next year, insurance companies will be required to spend at least 80 percent of the health insurance premiums you pay on your health care, instead of overhead costs like advertising and executive compensation. If they don’t, they will be required to give you a rebate or cut your premiums starting in 2012.
I asked Nancy-Ann DeParle, the Director of the Office of Health Reform here at the White House, to break down what this means for you and why it’s so important:
This new rules will make our health care marketplace more transparent and ensure you get the best value for your premium dollars. And it is just one of the many parts of the Affordable Care Act that are already making our health care system stronger. Here are just a few ways the Affordable Care Act is helping you and your family:
- HealthCare.gov. This new website helps you find private health insurance coverage that’s right for you and your family and now allows you to compare pricing for the options available to you. In 2014, there will be many more affordable private plan choices.
- Patient’s Bill of Rights. Insurance companies can no longer place lifetime limits on your care. If you’re a young adult under the age of 26, you can stay on your parents’ plan, and if your child has a pre-existing condition, insurance companies can’t deny his or her coverage.
- Pre-Existing Condition Insurance Plan. If you have a pre-existing condition and are having a problem finding coverage, the Affordable Care Act created a special insurance plan just for you.
- Help for Small Businesses. If you’re a small business owner, you may be eligible for tax credits to help provide insurance for your employees.
- Free Preventive Care. If you’re purchasing a new plan, you’ll get preventive care like cancer screenings, well-baby and well-child check-ups, and blood pressure or diabetes tests for free.
These aren’t just talking points. These changes are saving people’s lives and saving you money, and we will continue our work to implement this landmark law and make our health care system better for all of us.
Sincerely,
President Barack Obama
Did you know that the quality of your health care has declined in recent years (I added the bold to the President’s text so you would be sure to focus on that claim)? Do you believe that telling insurance companies they must spend a certain amount of premiums on claims will raise the quality of health care you receive? If you believe that I feel sorry for you.
Don’t hold your breath for your share of the pie, just as is the case with the so-called Cadillac tax on overly generous health plans the tax is unlikely to be paid, it appears likely that rather than subject itself to these rebates insurance companies will simply spend more on the ancillary services permitted under the regulations or cut other costs. Keep in mind that if the relatively few insurers below the required ratio do actually pay the refund it is a whopping $13.66 a month which I guess you can use to talk to your doctor about raising the quality of health care you receive. And yes, it is the doctor you talk to about the quality of your care, not the insurance company.
P.S. Notice also the latest shot taken at executive compensation. Some executives may be paid more than they worth (just like politicians), but the fact is that executive compensation has an insignificant impact on your premiums.
Related Articles
- HHS Releases Final Medical Loss Ratio Regulations (blogs.wsj.com)
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