Does the health care law regulate insurance companies' greed?

[latebloomer]

I had thought not, which was one of my major objections, but then I came upon the part that says insurance cos must use 80% of their premiums to actually provide health care (rather than fatten administrative salaries, I guess.) If they violate it customers are supposed to get a rebate. Does anyone know the details of this?

On edit- I do realize that this would not help with obscenely large deductibles and co-pays.

[Deep13]

1. Well, it requires a high percentage of expenses be used...

...for actual medical care.

[Statistical]

13. A high percentage of expenses are already used for medical care.

The insurance companies are not completely stupid. Why kill the golden goose. They just cut a cut of the pie. Kinda like mob and "protection money". Taking too much risks killing off the lifetime revenue stream.

[ixion]

2. Nope, which is why I don't qualify it as 'reform'

because it doesn't fix an already corrupt system. To the contrary: it gentrifies it.

[dawg]

3. The law limits insurance company waste ...

They did it right, too. Instead of regulating profits, which can easily be manipulated, the law forces insurance companies to spend a specified percentage of their receipts on actual medical care. As a result, they cannot get around the limitations by paying fat salaries and bonuses to their upper management, fancy trips, etc.

And a future Congress could, if it so chose, raise the percentage and force even more waste out of the system.

Insurance companies should be allowed to make reasonable (but no more) compensation for the administrative services they provide. They are no more or less evil than any other corporation. Corporations are amoral, and will seek to maximize profits using the rules that are in place in the society. It was the rules that "We the people" allowed to exist that were evil.

Thankfully, we have taken a step towards remedying that situation.

[zipplewrath]

4. The game will be in the definitions

There will be intense lobbying to try to "help" the HHS define what qualifies as "medical care expense". I'll be waiting to see the result.

[Wapsie B]

6. However it was lobbyists and corporations themselves who handcrafted those rules.

[RaleighNCDUer]

8. Exactly.

They would not have written the rules that way if they didn't already have methods devised to circumvent them.

[Oregone]

7. All they have to do is make sure the pie is bigger so their little slice keeps growing

This mechanism puts upward pressures on prices in a capitalistic system. You may limit what their slice is, but they negotiate rates and will utlimately determine the overall size of the pie. The amount these companies pay for health expenses is not important to them, especially not anymore. It will become a means to an end to be able to claim more at the end of the day.

[Statistical]

12. Yup that is another unintended consequence.

If medical costs rise 30% then their 20% "holdback" rises also.

The "cap" is feel good and will do nothing. Most companies already meet the cap. I never thought about how it could lead to prices rising.

[Statistical]

11. the "cap" is higher than current waste. It is feel good and does nothing.

It would be like "capping CO2" at 150% of current emissions.
Or requiring future gas mileage to be no worse than 30% less than current standard.

Reed Abelson of the New York Times reports that in 2008, the for-profit average medical loss ratio was 84 percent in policies offered to large employers and 80 percent in policies offered to small businesses. In the individual market, there was an average medical loss ratio of 74 percent.
http://www.newamerica.net/blog/new-health-dialogue/2009/health-reform-medical-loss-ratio-or-just-medical-loss-15773

[Tansy_Gold]

5. The real question is: What is the enforcement mechanism?

On the other hand, the IRS is ready and waiting to enforce compliance on the part of the citizens. An effective and reasonably efficient enforcement infrastructure is in place already for that portion of the compliance. Let me know when the IRS is going to start examining the books of the insurance companies to enforce their compliance.






Tansy Gold

[blueworld]

9. I have posted about this before - the ins. companies can easily manipulate this rule

Wellpoint owns Anthem which requires that I buy my meds mailorder from Wellpoint NextRX. If Wellpoint raises the price of the meds, it will look as if they're meeting the rule while slurping up profits from a different division.

I cannot buy my meds anywhere else but the company store (except for the first time I can use CVS which undoubtedly gives Wellpoint a tribute amount). The insurance companies separate different functions under different business divisions.

They own medical device services, dialysis clinics, pharma distributors, colonoscopy clinics - they not only direct their policyholders to THEIR services, if the independent services raise prices (which they can do anytime they like) it will look as if the insurance companies are meeting the payment ratio requirement BUT IT'S AN ILLUSION.

Every pig farm has more than one trough.

[Statistical]

10. Most insurance companies ALREADY have medical loss ratio of >80%.

The "cap" is feel good PR (or maybe makes it so insurance companies are not even more greedy in the future).

I would be like announcing a new progressive cap on wages (a max wage to complement minimum wages)
"Annual compensation can not exceed $500 million dollars." See now maximum compensation is capped.

Reed Abelson of the New York Times reports that in 2008, the for-profit average medical loss ratio was 84 percent in policies offered to large employers and 80 percent in policies offered to small businesses. In the individual market, there was an average medical loss ratio of 74 percent.

http://www.newamerica.net/blog/new-health-dialogue/2009/health-reform-medical-loss-ratio-or-just-medical-loss-15773
I tried to find original NYT article but couldn't.

At best I would say the "cap" makes it so insurance companies can't get more greedy/wasteful.

[bvar22]

14. In a word.....NO.

The much vaunted "regulations" were the lipstick on the pig we just bought.

http://rawstory.com/2010/01/whisteblower-reveals-health-insurers-game-insurance-bill/