As a few of you may recall, on September 19th I wrote a diary suggesting some alternative tactics to take the pressure off the public option and distract its opponents by making them fight on new fronts. One of these ideas was that any insurer taking Federal subsidies for health care should be required to have a medical loss ratio of 90%, rising to 96% over time (see below the fold.)
Well, I'll be damned if they haven't taken me up on it. Tonight Sen. Jay Rockefeller, on Countdown, broke some news. Sen. Franken has just introduced the Fairness in Health Insurance Act of 2009, which would mandate that 90% of the $485 billion of subsidies given to private insurers in the Senate Finance bill be spent on actual health care. Sen. Rockefeller liked the idea so much he plans to offer Franken's bill as an amendment in the Finance Cmte. tonight or tomorrow.
Check below the fold for more.
In the diary referenced above I wrote this:
3. Make health insurers spend our premiums on health care. The medical loss ratio is the proportion of health insurance company revenue that is spent on providing health care. It may be regulated by states, which tend to favor this regulatory mechanism because it is easy to measure and administer. Wall Street also closely watches medical loss ratios, and a company's stock price depends heavily upon it. Wendell Potter described, in testimony to Congress, how this works for insurance company executives and their customers (see heading 2.) In 2005, medical loss ratios for six of the largest health insurers ranged from 77 - 84%. Ten years earlier, they were in the high 80's or 90's. By contrast, Medicare's administrative costs are reported by the government as 3.6% (though conservative critics often cite 5-6%) and costs under Canada's single-payer program are 1.3% (same link). By contrast, the Bush administration's effort to privatize Medicare called Medicare Advantage pays between 12 - 17% more than standard Medicare rates to private insurers to administer a Medicare-plus program. The pluses are sometimes substantial, sometimes illusory.
An essential feature of reform, both to further cost containment and health insurance regulation, is to limit the money health insurers skim off the top. I would propose that any private health insurer taking Federal funds maintain a medical loss ratio of at least 90%, rising to 96% over ten years. 96% corresponds to the Medicare administrative overhead, which is slated to diminish in upcoming years as Medicare outlays increase. Any ownership interest in qualifying companies by non-qualifying insurers would have to be prohibited, to stop the shell company scam. If private insurers are going to finance care, why should we accept greater inefficiency than government shows? Battle cry: Spend health care money on health care. [See original for links.]
HR 3200 already requires an 85% medical loss ratio (H/T Betty Pinson). Now, the Senate bill has raised the bar while restricting the target.
Sen. Rockefeller sensibly pointed out that even if the health insurers have to spend 90% of Federal subsidies on health care, that still leaves them with $48.5 billion in profits. Who's going to vote against that? (A rhetorical question, we know, Senator.)
Please let your Senators know when you call that you want them to support this very sensible amendment and bill. Anything else is too corrupt even for the American government. Toll free numbers for Congress:
1-800-828-0498
1-877-264-4226
1-877-210-5351
(Thanks, MissInformation.)
Link to video on Countdown website here.
ERRATUM: Just noticed that my intended tip jar didn't post. In it, I meant to point out the hopefully-obvious fact that my title is snark. Apologies to anyone who thinks I'm that deluded about my own influence. All credit to Sens. Franken and Rockefeller.