Wednesday, July 4, 2012

The "Bomb" in Obamacare

An interesting argument from Forbes.  Excerpts:
...[The Bomb is] the provision of the law, called the medical loss ratio, that requires health insurance companies to spend 80% of the consumers’ premium dollars they collect—85% for large group insurers—on actual medical care rather than overhead, marketing expenses and profit. Failure on the part of insurers to meet this requirement will result in the insurers having to send their customers a rebate check representing the amount in which they underspend on actual medical care.

This is the true ‘bomb’ contained in Obamacare and the one item that will have more impact on the future of how medical care is paid for in this country than anything we’ve seen in quite some time.  Indeed, it is this aspect of the law that represents the true ‘death panel’ found in Obamacare—but not one that is going to lead to the death of American consumers. Rather, the medical loss ratio will, ultimately, lead to the death of large parts of the private, for-profit health insurance industry.


Why? Because there is absolutely no way for-profit health insurers are going to be able to learn how to get by and still make a profit while being forced to spend at least 80 percent of their receipts providing their customers with the coverage for which they paid. If they could, we likely would never have seen the extraordinary efforts made by these companies to avoid paying benefits to their customers at the very moment they need it the most.

Today, that bomb goes off...
So he's claiming that the bill forces all profit-based insurance companies out of business. Hm.
So, can private health insurance companies manage to make a profit when they actually have to spend premium receipts taking care of their customers’ health needs as promised?

Not a chance-and they know it. Indeed, we are already seeing the parent companies who own these insurance operations fleeing into other types of investments. They know what we should all know – we are now on an inescapable path to a single-payer system for most Americans and thank goodness for it.

There will always be a for-profit health insurance industry for those who want to pay for it.
I'm sorry, what? You were just explaining how it's impossible, under this law, for any for-profit health insurance company to make a profit. And now you're claiming that for-profit insurance companies will always exist. But they cannot possibly make a profit under this law. People will not go into this business...
The only difference will be that those who cannot afford private coverage will also have an opportunity to get their families the medical care that they need

Everyone wins-except the for-profit health insurers.

I can live with that.
Well, they can't. So you've announced that this means the end of private health insurance companies in this country. Competition will disappear. Hm. Somehow this seems to be a more stringent system than Britain has.

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