Estimated returns from the MLR (administrative costs to medical costs)
Bruce Webb on Angry Bear was among the first of bloggers to point out that this aspect of the Medical Loss Ratio begins in 2009 and here and points again to the MLR as it comes into play.
A non-profit group estimates if the Affordable Care Act provisions had been effect in 2010, U.S consumers would have received $2 billion in rebates.
Sara Collins, vice president of the Commonwealth Fund, a foundation supporting independent research on health policy, said the medical-loss ratio rules that went into effect in 2011 were designed to control private insurance administrative costs for consumers and government.
The rules require a minimum percentage of premium dollars to be spent on medical care and healthcare quality improvement — not administrative costs and corporate profits. Insurers must meet a minimum medical loss ratio of 80 percent in the individual and small-group markets, and 85 percent in the large group market — and issue rebates if they do not, Collins said.
The report by the Commonwaelth Fund: The Commonwealth Fund estimates returns to customers from insurance companies who did not comply last year for all fifty states.
If this eventually slows down claims processing there will be a lot of bitching and whining by patients and providers, not to mention violations of state prompt pay laws.
Good optics, but nothing to really solve any problems.
(I was involved in prompt pay lobbying and insurers in a couple of states really hate me.)
So much of the dispute of MLR is really about agent commissions as well. (since they are a large part of the costs). Moving as some insurance such as some auto has done to a web only model should reduce the aquisition costs of medical insurance. It may be that for advice on what to choose folks will have to pay directly for the advice, thus making the costs explicit not as today hidden.
Wait why the delay ? Why have no rebate checks been mailed yet. You say first checks mailed summer 2012. Ohhhhhhhh. That’s not 11 dimensional chess. That’s 1 dimensional chess. But it’s a winning move (unless the 5 dimensional Supreme Court majority decides that the MLR rule is unconstitutional).
Interesting sidelight.
The next to last iteration of the Senate Bill that became ACA had a MLR of 90/85 Group/Individual. Which led CBO (apparently Director Elmendorf himself) to say that this ratio would constitute nationalization and so add all health care costs to federal spending. Which would not have materially changed the savings they scored and so overall deficit/debt scores but would have ballooned federal ‘spending’ as a percentage of GDP. Yet backing off of 90/85 to 85/80 magically removed Obamacare from ‘socialized medicine’.
That is in the event what was in effect a Constitutional decision was adjudicated by Doug Elmendorf. Which of course has me asking: “Exactly what level of MLR tips Obamacare from private to socialization? 87.225% Group? What?”
Things moved fast those last 36 hours and few people with initials not being BW seemed to notice this jaw dropping power move by CBO. Which left me wondering whether I just dreamed it. But no health insurance companies were given 5% MLR room just because.
Hi Bruce:
Unfortunately, I was not one of the few people. I am just not as cognizant as BW on those happenings. Our boy Dougie was also one of the chief tools to kill Hillarycare which lends credence to his apparent attack on a higher MLR.
it is a huge amount, but what else can we do? I am sure that we will see improvements. yacht charter greece