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Vested interests have spent billions attacking Obamacare and the real reason for the attacks is a little know provision in Obamacare that limits the current profiteering by the healthcare insurance industry.  The profits of the big ten insurance companies increased 250% between 2000 and 2009. They had a decade of record profits and extreme CEO salaries.  The United Healthcare CEO made over a staggering $100 million a year.

The only reason why an entire industry could be reaping in such profits is uncompetitive activity in the market. If we had a pure competitive market in the insurance industry, the insurance companies could not be reaping in extreme profits because competitors could enter the market and offer lower cost policies on a lower profit margin. Profits are kept in check by competitors and a competitive market.

Prior to the mid-1980's most health insurance companies were run as non-profits.  Blue Cross, Blue Shield was a non-profit healthcare provider.  Then, 95% of your premium was spent on medical expense and 5% was used for administrative costs.  Since health insurance companies began to convert to for-profit businesses, less and less of your premium payment was used on medical expenses and more and more was taken for profit.  

United Healthcare for example, before Obamacare, paid out just 70% of your premium on medical expenses and kept 30% of your health insurance premium for profit.  This is why the CEO of United Healthcare was so handsomely rewarded with $100 million a year in compensation.  Moreover, the ever increasing profits made by the health insurance companies handsomely lined the pockets of their shareholders and Wall Street.

Obamacare attempts to limit outright profiteering by the Health insurance industry by mandating that 80% of your premium dollars be spent on medical expenses, leaving 20% for profit.  If the Health insurers spend less than 80% of your premium on medical expenses, they must refund the excess.  That would mean that United Healthcare, which only spent 70% of your premium on medical expenses, would have to refund you 10% of the premium they charged you.  This is exactly what has happened.  This year, because of this provision in Obamacare, the Health insurance industry has already had to refund $1.1 billion in premiums to consumers.  

And the Healthcare industry and Wall Street in none too happy to have their lavish profits that they have been making off of us limited.  Hence, vested interests have spent billions demonizing Obamacare.  This is the true reason why they are so strongly attacking Obamacare and know it's repeal will only mean the continuation of high premiums and less coverage for you because they are for-profit companies and, as such, their goal is to try to maximize their profits for their shareholders.  The only way to do that is squeezing you: raising your premiums and/or covering less and less of your medical costs.
 

Poll

Do You Agree with Obamacare's Limit of Healthcare Profits?

86%25 votes
13%4 votes

| 29 votes | Vote | Results

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Comment Preferences

  •  I voted yes, but (0+ / 0-)

    Would have liked the levels to be what Franken originally put forward.

    Certainly from our standpoint, this gives us a sense of momentum -- when the United States has accolades tossed its way, rather than shoes. - PJ Crowley

    by nsfbr on Thu Oct 11, 2012 at 07:56:01 AM PDT

    •  Better alternative (0+ / 0-)

      An even better alternative would be for the government to do its job and enforce the antitrust laws.  Rather than limiting the profits of the industry, if we increased real competition and ended anti-competitive activity in the industry, we would see lower premiums and better services.  The problem is the industry has become so powerful and has the additional power of Wall Street behind it, that none of the politicians will do anything about the real problem.  There is far too much money in politics to correct this any other way than what was done in Obamacare.  And see what they unleashed on Obamacare for having that provision.

  •  Thanks for the history insight. (0+ / 0-)

    When we lived in Florida, starting in 1993, there were two hospitals in the Melbourne area.  Both, as best I remember, were non profits.  Somehow, over the years, although built with donations, they were changed to being privately owned, at no cost to the final owners.  Eventually, the two hospitals were suing each other because  the Cape Canaveral hospital wanted to build a clinic in the area that the Melbourne hospital considered its territory.  Somehow, non-profit had morphed into profit driven, and competition for the right to build medical clinics in an area historically served by one hospital, became a hard fought, complex legal fight to gain necessary government approval.

    Prior to the mid-1980's most health insurance companies were run as non-profits.  Blue Cross, Blue Shield was a non-profit healthcare provider.  Then, 95% of your premium was spent on medical expense and 5% was used for administrative costs.
    It's difficult to believe that was the case.  Only 5% for administration?  Would a fully comprehensive Medicare manage to achieve that ratio?
    United Healthcare for example, before Obamacare, paid out just 70% of your premium on medical expenses and kept 30% of your health insurance premium for profit.
     

    Time is a long river.

    by phonegery on Thu Oct 11, 2012 at 08:07:53 AM PDT

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