Posted on 10/18/2010 11:32:16 AM PDT by Signalman
NEW YORK (CNNMoney.com) -- Industry experts say more insurers will drop health care coverage or go out of business if they are forced to meet a Jan. 1 deadline that requires them to boost the money devoted to providing care.
The Obama administration is awaiting the recommendation of the National Association of Insurance Commissioners, meeting in Orlando this week, for how and when to implement key changes to the "Medical Loss Ratio" rule.
For example, some plans have a 40% loss ratio. That means individuals could be paying $1 for 40 cents of care.
Beginning in 2012 If insurers don't increase that loss ratio to 80 cents per dollar paid, they will have to give customers a rebate for the difference .
(Excerpt) Read more at money.cnn.com ...
Obamacare-—It’s “Shovel Ready”.
“forced to meet a Jan. 1 deadline that requires them to boost the money devoted to providing care. “
I think, the way I understand this, that this is backwards. Insurance companies are being forced to reduce their operating margins to 20%, which is a little different than being asked to adjust their payouts up to 80%.
I have never in my entire life wanted so badly to vote as I do now. Never.
I read it to mean that for every $1 of insurance sold, $.80 had to be spent on benefits (care.)
The would be 20% gross margin and who knows how little operating income margin. Basically none I would say.
“Beginning in 2012 If insurers don’t increase that loss ratio to 80 cents per dollar paid, they will have to give customers a rebate for the difference.”
Meanwhile, most charities aren’t even close to that figure.
“The would be 20% gross margin and who knows how little operating income margin.”
This is an interesting approach though. Of course it would be unnecessary absent gvt intervention in the economy. But of course our current system of health insurance owes its existence to tax law - and is hence an abboration anyway.
Accordingly, there is little incentive for insurance businesses to trim try to save any money. As long as none of them do, they’re safe.
Insurance is treated as a “must have”. The demand for it is elastic.
While one would think this would yield windfall profits, it’s been my experience in life that instead it usually leads to massive inefficencies instead (eg. excess head count to justify mgmt positions, etc.).
Why not? It’s someone else’s money!
You are correct. It’s not operating margin, it’s gross margin, which for some is being cut to 15%.
Well, lower the thermostat, turn off the outside lights and lay people off, but add more customers and provide them with free stuff!
And when the companies fail due to government mandate, the government will have no choice, regrettably, to take over the health insurance industry to avoid a crisis. Many will be begging the government to do just that, for the children.
This is a combo of the Hegelian Marxist dialectic and the Cloward-Piven strategy of government takeover.
This is probably based on some liberal/marxist professor’s theory about what a operating margin should be in utopia. The same liberal/marxist professor has never been outside the hallowed doors of academia; having never held a real job or much less run a business.
I seem to recall Rush having a woman call in to the show back when the obamacare debate was hot — she worked in the industry and she was all over this ratio business. She said it was designed to destroy small firms and served no other purpose. It would wipe them out and clear the field for the expansion of the Big insurance firms. She was furious and kept saying — “This is pretty obscure stuff: you can’t get people excited about this, but the people in Washington know exactly what they’re doing, and they will get away wth it.”
CHECK: Health insurers’ profits 35th of 53
http://news.yahoo.com/s/ap/20091026/ap_on_bi_ge/us_fact_check_health_insurance
WASHINGTON – In the health care debate, Democrats and their allies have gone after insurance companies as rapacious profiteers making “immoral” and “obscene” returns while “the bodies pile up.”
But in pillorying insurers over profits, the critics are on shaky ground. Ledgers tell a different reality.
Health insurance profit margins typically run about 6 percent, give or take a point or two. That’s anemic compared with other forms of insurance and a broad array of industries, even some beleaguered ones.
Profits barely exceeded 2 percent of revenues in the latest annual measure. This partly explains why the credit ratings of some of the largest insurers were downgraded to negative from stable heading into this year, as investors were warned of a stagnant if not shrinking market for private plans.
more at news.yahoo.com ...
Insurers have lost 2.2% over last year.
On the other hand, the federal government is going to spend 12.4% more next year than this year. good times...
Yes... Lest we forget that this was the plan all along.
I think there is a video of barney Frank saying just that.
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