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  •  Page 27 (1+ / 0-)
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    Besdeekian

    Sec. 2714. Ensuring Value and Lower Premiums
    p. 27, lines 2 through 9:

    ‘‘(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.

    "At times, we've struggled to keep the promise of liberty and equality..." Nobel Peace Prize Winner President Barack H. Obama

    by GN1927 on Fri Oct 30, 2009 at 10:23:00 AM PDT

    [ Parent ]

    •  That provision does NOT mean 85% to health care. (0+ / 0-)

      "Medical loss ratio" would mean the private insurance tax of 30% on health care will remain. Insurance company overhead (lobbying, advertising, dividends, salaries and perks, expensive real estate, fancy offices) will still eat up 20% or more of health care dollars.

      The "medical loss ratio" is after overhead so it guarantees them 15% profit in addition to 15-20% overhead. No limit on overhead at all.

      Making 15% overhead/profit the limit with all other money going to health care providers for providing care would do the trick from a market standpoint.  That is not in the bill.

      •  It's my understanding that the medical loss ratio (1+ / 0-)

        is the percentage of a plan's premiums which is devoted to paying for medical services.

        Administrative costs, profits, and taxes are excluded from this calculation.

        Is there something in the legislation which negates or alters the common definition of this term?

        "At times, we've struggled to keep the promise of liberty and equality..." Nobel Peace Prize Winner President Barack H. Obama

        by GN1927 on Fri Oct 30, 2009 at 10:53:03 AM PDT

        [ Parent ]

        •  None that I see which is why it is meaningless. (0+ / 0-)

          20% overhead, 20% profit and 15% guaranteed profit on actual coverage and the government requires everyone to buy your product.

          Insurance companies will be leaping with joy when this health care bill passes.

          •  But I think that the (1+ / 0-)

            term Medical Loss Ratio means that there will administrative costs and profit will have to come in at under 15%.  Unless there is something in the legislation which negates or alters the common definition of this term, Medical Loss Ratio means the portion of premium proceeeds which have to be spent on medical services; medical services means physicians, tests, etc; administrative costs are not considered medical services.

            "At times, we've struggled to keep the promise of liberty and equality..." Nobel Peace Prize Winner President Barack H. Obama

            by GN1927 on Fri Oct 30, 2009 at 11:11:39 AM PDT

            [ Parent ]

            •  Bottom line. No restriction on insurance costs. (0+ / 0-)

              "Medical Loss Ratio means the portion of premium proceeeds which have to be spent on medical services"

              The provision will have no effect on reducing the cost of health care.

              Which is AFTER overhead so guaranteed 15% profit AFTER spending 15%, 20%, 30% on overhead (golden parachutes, real estate, salaries, lobbying fees to buy legislatures and regulators).

              It is meaningless in controlling costs.  It's like saying the top tax rate is 25% but that's AFTER 1,000 pages of deductions  reduce the $1M income to zero.

              The insurance company would FIRE any accountant who showed a lavish 15% profit on medical spending. It is a provision that would never kick in and if it did would be meaningless.  Punishing an insurance company for having a dumb accountant.

              •  Besdeekian, (3+ / 0-)

                I really think that you don't understand the term, Medical Loss Ratio.  It doesn't relate to the percentage that an insurance company is allowed to profit.  It's the percentage of a plan's premiums which is spent on providing medical care.  And so if this legislation forces a medical loss ratio of 85% (or higher), that means that profits, administrative costs, and taxes will have to all come in under 15%.

                "At times, we've struggled to keep the promise of liberty and equality..." Nobel Peace Prize Winner President Barack H. Obama

                by GN1927 on Fri Oct 30, 2009 at 11:53:48 AM PDT

                [ Parent ]

                •  You don't understand "Medical Loss Ratio" (0+ / 0-)

                  It does not include the costs for overhead (salaries, real estate, dividends, lobbyist costs, advertising costs, private jet costs). It refers only to the POST OVERHEAD money spent on health care.

                  So the insurance company is being guaranteed a 15% profit on what is left of the health insurance premium AFTER OVERHEAD.

                  It is a golden parachute for the health insurance industry.

                  Now if the law read that 85% of every premium dollar had to be spent on health care services, that would have had some impact.

                  The House bill does not say that.

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