Here’s section 2714 of the health care reform bill.
(a) In General- Each health insurance issuer that offers health insurance coverage in the small or large group market shall provide that for any plan year in which the coverage has a medical loss ratio below a level specified by the Secretary (but not less than 85 percent), the issuer shall provide in a manner specified by the Secretary for rebates to enrollees of the amount by which the issuer’s medical loss ratio is less than the level so specified.
Unless I am mistaken, this means that medical insurers will be forced to pay out 85% of premiums collected as either losses (claims) or as rebates to customers.
So, private medical insurers will only be able to use 15% of all premium collected for operating expenses, such as salaries, rate dvelopment, claims processing, etc. But is 15% of income from premiums enough to keep a business afloat?
Director Blue writes:
Why would a loss ratio that permits only a 15% administrative margin for insurers cause companies to fail? Consider that the administrative expenses include collecting premiums; processing and paying claims; monitoring patient care; staffing customer service functions; paying costs to state and federal regulators; paying sales agents; and general overhead (rent, power, heat, light); etc.
I repeat: No company has ever survived with a loss ratio approaching 85%.
What are we to make of Obama’s claim that we could keep our health plan if we liked it, in light of this new evidence? If what Director Blue has argued is true, you will be depending on the federal government for health care. You will have no choice. And whatever they tell you to do, you will do it. They will be the sole provider of health care for you and your family. This is how liberty dies – to thunderous applause.
What the Democrat’s health care bill means to you
Director Blue also has a post up about what the Democrat health care bill means to you, in 90 seconds.
The CBO now estimates health bill spending at $3 trillion over 10 years. Since the CBO historically underestimates expenses, assume massive new deficits for a country that can ill afford them.
You’ll be required to buy a ‘qualified’ health plan. A family earning $102K a year will pay $1,700 a month in premium and out-of-pocket expenses. ‘Willful’ failure to buy a plan will result in a fine of up to $250,000 and ‘imprisonment of up to five years’. Illegal immigrants are exempt from fines and imprisonment.
Every business in America must provide a ‘qualified plan’ for employees and pay 72.5% of the cost. Failure to do so results in an 8% payroll tax.
Read the rest. I would think that some people who worked for medical insurers voted for Obama. Actually, one of the strongest Democrats I know actually left our company recently to go work for a medical insurer. He said that health care was a safe industry during a recession. He’s going to learn the importance of studying economics if this bill passes.
How the Democrats got endorsements from the AMA and AARP
One last thing. ECM also sent me this article on how the Democrats were able to get endorsements from the AMA and the AARP.