I don’t really see any other way to interpret this House Republican bill to weaken the new 80/20 rule, under which insurers have to spend at least 80% of enrollees’ premium dollars on actual medical care, rather than administration, profits, etc.
Nearly 13 million people recently received more than $1 billion in rebates on their health insurance premiums due to a health reform provision known as the “80/20 rule” or the “medical-loss ratio” standard. The rule requires insurance companies to spend at least 80 percent (or 85 percent in the case of large employer coverage) of what they collect in premiums on medical care and improving health care quality rather than for profits and overhead. If an insurer fails to meet the threshold, it must pay back the difference to individuals and employers. The 80/20 rule thus encourages insurers to be more efficient and ensures that individuals and employers that buy health insurance get the best bang for their buck.
A bill that the House Energy and Commerce Committee’s Health Subcommittee approved last week and that the full Committee is expected to consider this week would seriously weaken this critical rule. Under H.R. 1206, insurers wouldn’t have to count the commissions they pay to agents and brokers as part of their overhead. Insurers could spend more of the premium on costs that don’t affect patients’ health or medical care, including greater profits, so consumers would be paying more for less value in their health insurance.
The rebates that consumers just received show that some insurers have spent too much on administrative costs such as salaries and marketing, rather than on providing medical care and improving health care quality, or that they charged overly high premiums. More than a third of consumers in the individual market in 2011 were insured by a company that did not provide the required value for their premium dollars, according to the U.S. Department of Health and Human Services.
(Thanks: Sarah Lueck)
This is not a vote for higher waste or profits, it’s a vote in support of brokers, who have been trying since 2010 to get commissions out from under the cap.
The rebates that people got this year amount to about one-tenth of a PENNY on each premium dollar. This is not a horrible amount of either waste or profit that Obama/Sebelius would have you believe.
The broker commission would amount to another 2-3 cents on the dollar, though insurers have been gradually reducing commission amounts because as health costs – and hence premiums – rise, brokers have been getting an automatic payday, not unlike your realty who gets a flat 5-7% of sale price, even as prices become inflated, for doing no more work. Though I will say, good brokers do a LOT to help people navigate health insurance.
I would say that the very existence of brokers, along with private insurance more generally, constitutes wasted health care dollars. Hopefully the state exchange will cut out the need to have brokers help people figure out the private insurance market, and enable folks to make informed choices directly.
Yeah, Jon, I know a lot of people feel that way. Let’s see how they feel in 2015, a year after having picked – and experienced – their own coverage through an exchange (yay!) without a paid advocate /sherpa (broker – a good one, anyway) . Certainly “plain language” requirements will help this process, but this is an incredibly complex purchase. Not like buying an airline ticket on Priceline. Here’s hoping, though!
Millions of federal current and retired employees make health care plan choices every November by comparing plans on OPM’s FEHB website. No brokers involved at all. This is exactly how the state insurance exchanges will work, too.
ha…I’ve worked in govt and you have no idea the extent of educational support and hand-holding and navigation/advice provided by those employees’ Human Resource depts. They aren’t flying blind just because they don’t have a broker. And, for the record, I’m not a broker or married to one or anything. This is about the most complex purchase people make, after a house. And who reads that fine print? Some people are info geeks and they love to plow through that stuff. Most of us are not. That’s why the expert navigation is so helpful. While online comparison tools are getting much better, a broker is PAID – via your premiums – and LICENSED by the state to provide service, not just sell. When that insurer is giving you fits, who’s going to bat for you, who knows the system inside and out? Anyway, fingers crossed and hoping this works like y’all think it will.
As a federal employee and now retiree, I have my health insurance through FEHB. It’s not that hard to compare plans.
Deny it all you want, but you obviously have a stake in advocating for brokers, who are becoming less necessary.
Broker’s or not, it is with constant information that people gets aware of what’s happening. For some, this could just be a business plan to include brokers, or it could just be their way of proper information dissemination to everybody.
The great thing about a single payer system would be that nobody needs to make complicated choices about which insurance plan to buy. Everybody’s got the same insurer.
wow, you’ve never talked to anyone picking a Medicare plan, have you? Give the grandparents a call and see what they say about that. Also, ask what’s not covered, and what their out-of-pocket costs are. And their premiums, because they DO pay for this “single payer” coverage.
They pay for it IF they want additional, extra Medicare coverage. Otherwise, everyone pays the same and Medicare covers and pays out the same.