Thursday, December 13, 2012

Unclear on the concept

Contrary to popular belief myth, the ObamaTax will not "lower premiums by 3000%" Anyone with health insurance has already seen the rate increases (above and beyond medical "trend"), and it's only going to get worse.

Case in point:

"Health insurer Blue Shield of California wants to raise rates as much as 20% for some individual policyholders"

But that's not the point of this post.

This is:

"prompting calls for the nonprofit to use some of its record-high reserve of $3.9 billion to hold down premiums"

Reserves are the "cushion" insurers are legally required to hold back to fund potential future claims. Using them to subsidize current premiums is not only illegal, it is incredibly stupid.

The promise that is the basis for an insurance contract is the one to pay for (legitimate) claims. If those funds have already been spent on premiums (and remember, under MLR at least 85% of those dollars must be spent), where's that "cushion" when it's really needed?

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