Health Care Bill - Text of H.R.3590 as Engrossed Amendment Senate: Patient Protection and Affordable Care Act -... OpenCongress Beginning not later than January 1, 2011, a health insurance issuer offering group or individual health insurance coverage (including a grandfathered health plan) shall, with respect to each plan year, provide an annual rebate to each enrollee under such coverage, on a pro rata basis, if the ratio of the amount of premium revenue expended by the issuer on costs described in paragraphs (1) and (2) of subsection (a) to the total amount of premium revenue (excluding Federal and State taxes and licensing or regulatory fees and after accounting for payments or receipts for risk adjustment, risk corridors, and reinsurance under sections 1341, 1342, and 1343 of the Patient Protection and Affordable Care Act) for the plan year (except as provided in (i) with respect to a health insurance issuer offering coverage in the large group market, 85 percent, or such higher percentage as a State may by regulation determine; ‘(ii) with respect to a health insurance issuer offering coverage in the small group market or in the individual market, 80 percent, or such higher percentage as a State may by regulation determine, except that the Secretary may adjust such percentage with respect to a State if the Secretary determines that the application of such 80 percent may destabilize the individual market in such State.
85% or 80% is a permissible loss ratio. That is what percentage of premium needs to go toward claims. The balance, 15% is for admin, and in the case of for profits, profit. While rebates have not been a practice in a past, insurance companies running less than 80 - 85% permissables generally end up in front of the states insurance commissioner, pretty fast. Too low a permissable for a group generally results in lower rates and too high a permissable results in large rate increases. Sometimes, bad cases run in excess of 100% permissable. It does not take much of a medical disaster in a smaller group for this to happen. That is when a huge rate increase affects everyone, it is simply the money required to get the permissable back to 85 or so %, While to the layman, this may sound big, as in the case with most of Washington's stuff, it will result in VERY LITTLE real money changing hands. The impact will come via rate reduction or more likely slowing the rate of rate increases. Don't see how this is bad. And it certainly is not significant. Again, this crap is one of about 200 million reason why I bailed and took a life of relative poverty rather than play insurance kabuki. hwr
The CBO Warns on Too-High Medical Loss Ratio Requirements - Business - The Atlantic Quote: One of the more quixotic amendments to the Senate health care bill has been Jay Rockefeller's insistence that companies get their medical loss ratio to 90% or higher--i.e., spend 10% or less on administrative costs. I've already outlined why I think this is misguided. A number of liberals I know think that this was merely an opening bid to secure, say, 85%. But I doubt it will even go there. Over the weekend, the CBO released a very strange memo indicating a hitch that I, certainly, was not expecting: if you drive the MLR higher than 80%, the CBO is going to stick the health insurers on the federal budget Quote: I should note, in passing, that the CBO memo also kind of indicates that these MLRs would, um, pretty much devastate large swathes of the health insurance industry, as well as potentially causing costs to spiral out of control as companies slashed the administrative overhead dedicated to controlling them.
Squeezing out Private Health Plans | The Heritage Foundation Quote: The Senate health care bill passed on December 24 does not contain an explicit “public option.” It does, however, still include provisions that could put private health plans out of business. Specially, the bill would: * Give federal regulators the power to define minimum benefit packages; * Specify by law the minimum amount that health plans must spend on medical claims; and * Impose new taxes that will not count toward those minimums. These three particular provisions could combine to make it impossible for private health plans to simultaneously meet all of the bill’s requirements, thereby allowing appointed officials, by accident or intention, to create regulatory “squeeze” that could, if taken far enough, put private health plans out of existence. This might make a government-run public “option” appear necessary to respond to an artificially created “crisis.”
