Health plans must spend premiums on medical care

[yurbud]

Source: AP

WASHINGTON (AP) — Health insurance premiums should go for actual medical care — not insurers' overhead and profits — the Obama administration said Monday in rules that for the first time require the companies to give consumers a rebate.

The regulation unveiled by the Health and Human Services department calls for insurance companies to spend at least 80 cents of the premium dollar on medical care and quality. For employer plans covering more than 50 people, the requirement is 85 cents. Insurers that fall short of the mark will have to issue their customers a rebate.

Part of the new health care law, the rule is meant to give consumers a better deal. Administration officials said it will prevent insurers from wasting valuable premiums on administration, marketing and executive bonuses. "While some level of overhead costs is certainly necessary, we believe they have gotten out of hand," said Health and Human Services Secretary Kathleen Sebelius.

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Currently, there is no uniform requirement that health insurers spend a minimum share of premiums on medical care. Consumer groups say somewhere between 80 to 85 cents on the dollar represents good value, but many plans spend in the range of 60 to 80 cents.

Read more: http://www.google.com/hostednews/ap/article/ALeqM5ixXwB2IO2Y4unBLy_HRO1ILmeCnA?docId=1281628420a1422e8d58666b2875a129

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I remember when this was a live topic during the debate of the bill and the real question is what is counted as overhead and what can be called the cost of delivering care.

The answer SHOULD be pretty straight forward: checks you write to policy holders and their health care providers should be the 85% and everything else is overhead. Even if enforced that way, I could see the private sector trying to outsource claims processing to India so they can give CEO's hundreds of millions in pay and bonuses.

[mediaman007]

1. Even if the overhead is outsourced, they are still bound

by the 80/85 % rule. If the work was outsourced, I suspect that the premiums would be lower. If the work stays here, they can pay their workers more and increase the premiums.

Can you name a health care item that the Republicans would like to fix? My money is on the 80/85 % rule. They will throw the limits off the instant that they have a president who will agree with them.

[yurbud]

14. usually, when work is outsourced, instead of lower prices, companies pocket the savings

[mediaman007]

17. But they can only keep 15%, maybe they would lower premiums?

[yurbud]

22. I hope so but it depends on legislators and regulators wanting to make it happen instead of just

giving the appearance of control.

[Proletariatprincess]

2. 85% seems pretty modest proposal to me.

95% is more fair...but Im just daydreaming. There will be no restraint at all, IMHO. Nothing will ever stand in the way of Insurance Company profits...at least nothing that this congress will adopt.

[JuniperLea]

3. Profit is blood money...

Health insurance companies as they stand today are nothing but blood suckers. 85% is a good start, and there are plenty of IRS approved description and guidelines as to what is overhead and what is profit.

[JDPriestly]

4. Hopefully, this will improve our healthcare.

It should have been explicitly written into the bill -- in more certain wording than it is. A regulation can be changed by the next administration.

Better yet, at the very least, require all health insurance companies to be run as nonprofits. No shareholders. Nada.

[Hoyt]

5. This has always been one of better features of HCR. Exchanges put further pressure on premiums.

Not as good as single payer or public option, but better than nothing -- which is what we were going to get thanks to the Republicans and a some stupid Democrats.

Sure, enforcement is key. But, that's true in anything.

[thereismore]

6. I just hope they will not devise new ways to label their beaurocratic expenses as health care. nt

[BrklynLiberal]

7. awwwwww wwwwwwwwwww

[AndyTiedye]

8. How Much of Our Premiums Get Spent On Electing Repuglicans?

[yurbud]

15. that's a good argument for public financing of elections or better yet...

make broadcasters and cable companies give a certain amount of time to campaign ads as a condition of holding their license.

[safeinOhio]

9. Even non profits like BC/BS

will have to reform.

[defendandprotect]

10. k/r

[skyounkin]

11. Don't kid yourself-

if this rule isn't enforced and harshly,the insurance comps will do a cost analyst to see if they can shirk the law vs. paying for the care people pay them for.

[leahcim]

12. How a heath insurace company can get around this:

Make only the most expensive doctors "in network" and demand extra tests for everything. If you're only allowed 15% as profit, better make it 15% of a really big number.

Just like how "cost plus" contracts encourage contracts to have lots of "costs".

[Hoyt]

13. Except the Exchanges will help people spot lower cost policies.

With no pre-existing condition exclusions, we can actually shop around for the best deal. That will help keep the lid on premiums.

Again, maybe not as good as single payer or public option, but better than the status quo. Not to mention those who will be covered for the first time.

Too bad we have to wait until 2014 for everything to kick in.

[yurbud]

18. 2014--AFTER the next presidential election. It'a almost like Obama & Congress Dems are

the opposite of Karl Rove--they studiously avoid any exploitable political advantage.

[yurbud]

16. good point

[superduperfarleft]

23. Or cut commissions for insurance agents. n/t

[Yo_Mama_Been_Loggin]

19. But what about the CEO's bonus?

:sarcasm:

[eridani]

20. Cost control by MLR has already been tried by 15 states

It has abjectly failed, because insurance companies fiddle the data any way they like. It takes MONEY to hire enough government regulators to catch them at it.

[cbdo2007]

21. Cool, sounds like we'll get shittier claims payment and customer service now.

Cause you know they aren't going to take any away from the CEO bonuses.