Friday, January 7, 2011

Health Insurance Rate Increases and Healthcare Reform

I like to think of this like squirrels (insurance companies) storing up nuts (cash) for the winter (regulation and capping of premiums).

PS I have not seen reports of health insurance companies filing for bankruptcy lately. 

From Fox News

More companies opt out of healthcare plan

In the past two months, the Obama Administration has allowed 222 employers, insurers, and unions to opt out of a key mandate in the new health care law.  McDonald’s, Waffle House and Universal Orlando are among the companies that have received a one-year waiver, which allows them just provide minimal coverage, below what the law allows.
Since October, the list has grown significantly, when only 30 companies applied, and received the waivers.  Of these 222 companies, they cover more than 1.5 million people, including 34 unions with more than 140,000 members.  a few others who recently received the waivers are Ruby Tuesday, AMB Bowling Worldwide, and the local chapters of the International Brotherhood of Trade Unions Health and Welfare Fund and the Teamsters.
Although these waivers are just for one year, the way the law is written, they can apply for an extension until 2014.  What is a double standard, is that many of these unions fought so hard for healthcare reform, afraid that many companies would dump their coverage, yet now unions are now demanding to be exempt from the new law.  And it was many of the country’s biggest unions that backed Obama’s plan.  Early on, the unions won exemptions for the cadillac plans, those that had the most benefits.
Workers now must worry whether or not their low cost plans will continue the coverage they need.  And the companies that didn’t get waivers say it’s unfair that they must follow the rules of the new law, while others are exempt.  Yet taxpayers wonder if they qualify for waivers on the individual mandate.  This part is where it’s mandated that all Americans purchase health insurance or face a fine of $750 per person, or $2,250 per household.
The federal government started granting the waivers in September, when it gave the fast-food chain McDonald’s an exemption on its mini-med plans, paid for by the company.  Mini-med plans cover part-time and low-wage workers. McDonald’s threatened to drop its mini-med plans, covering 30,000 workers, if it did not receive an exemption.
The discord comes from a provision of the new health-reform law that says a percentage of insurance premiums must now be spent on actual benefits.  In the beginning of next year, at least 80% to 85% of the premium must be spent on healthcare.  None of the money paid can be used for executives, or wasting those revenues on marketing and other administrative costs that elected officials argued don’t do much to directly help patients.
And the government will now define what they consider lawful expenditures on health-care coverage, and potentially what are lawful salaries and administrative costs, money that could be used on desease prevention.
McDonald’s and other companies had argued that this new requirement in the law, dubbed the “medical loss ratio,” was too onerous for their mini-med plans.  Such plans always typically have high administrative costs because their workforce tends to turn over much more frequently.
Since these plans don’t cost as much, administrative costs often look outsized in comparison and would put them above the threshold for what sums must now be spent on medical care under the new law.

Your comments are Welcome.

1 comment:

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Born in the Midwest. Married with 6 children and 3 grandchildren. Attended Maine West High School, Harper Jr College, Northern Illinois University, the University of Illinois College of Dentistry. Practice in Crystal Lake, Illinois.

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