Monday, November 22, 2010

Obamacare Puts the Squeeze on Health Insurance

The Spectator informs us that HHS has finally spoken with regard to the MLR (medical loss ratio) guidelines for health insurance companies. The MLR dictates how much of every premium dollar health insurance companies must spend on claims.

On the surface this may sound nice but in practicality it is smoke and mirrors.

When you consider that health insurance is marketed in (at least for now) a free market where carriers are free to set prices for their product, it would seem foolish for a carrier to arbitrarily attempt to mark their product up more than their competitors. But the folks in DC and the media would have you believe just that.

The decreed loss ratio's are 80% for individual major medical and 85% for group health plans. But this comes with a hidden price.

These requirements were at the root of the controversy that arose in September over McDonald's having to drop 30,000 workers from its health plans. Eventually, they were granted a waiver from the requirements. But a lot of businesses won't receive a waiver, meaning that insurers will have to stop offering some policies, and many of them will decide to exit the individual market entirely, due to the nature of the way the financing works. This will translate into less choice and competition, and is another way that the law will lead to people losing coverage they may like.

As the article points out, not everyone got a waiver. So many who currently have health insurance will lose that benefit.

If you like the plan you have you can keep it . . . . but only if  HHS grants it a special waiver.

If the carriers fall short of those payout's they have to cut refund checks.  HHS estimates the refunds will total about $1.4 billion or about $164 per insured.

Think about this for a moment.

Each carrier will have to incur ADDITIONAL costs to comply with this stupid rule in order to calculate IF they owe a refund. Once they complete that task they will have to track down anyone who has been covered by their company, calculate their pro-rata share of the refund, and cut them a check.

If you are a business that get's a refund after you have filed your tax return that means adjusting your return to reflect the lower outlay you had for health insurance. More costs and hidden taxes associated with Obamacrap.

And then there is this little goody.

Also, it's no accident that the requirements were set at 85 percent and 80 percent. Last December, the Congressional Budget Office issued a memo saying that if the requirements were set any higher than that, health insurers would have to be considered part of the federal budget -- driving up the cost estimate of ObamaCare. As the CBO put it, referencing proposals for even more stringent requirements, "this further expansion of the federal government's role in the health insurance market would make such insurance an essentially governmental program, so that all payments related to health insurance policies should be recorded as cash flows in the federal budget." At the time, the Cato Institute's Michael Cannon pointed to the memo as a "smoking gun," revealing that Democrats had deliberately hidden the true cost of ObamaCare by making sure the CBO wouldn't factor in the cost of the private sector mandates imposed by the legislation.

Well isn't that interesting?

The MLR thing is a heated battle that will result in fewer health insurance companies offering fewer choices and higher rates overall. Somehow that doesn't match up with what was promised.

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