Medical Loss Ratio Revisited: Cost and Coverage Controls that Work.
Back on July 28th I posted on what I considered to be the most important provision of the original House Tri-Committee Health Care Bill in Sec 116: Golden Bullet or Smoking Gun Smoking Gun referred to the belief by Republicans that this bill was designed to ultimately transition to Single Payer, and Golden Bullet to my belief that they were right, that if you forced private insurance to give up its predatory business model that ultimately they would abandon less profitable markets just as they did in the heyday of managed care.
What Sec 116 did was to establish minimum Medical Loss Ratios for all plans participating in the proposed Exchanges. Medical Loss Ratio is the industry term for percentage of premium dollar actually spent on provider payments with the remainder retained by the company to pay for marketing, administration, executive compensation, and profit. Under the House Bill the actual mandated MLR for each area would be set by an auction process and in that model you pretty much needed a Public Option to establish a baseline.
Over the course of the summer and fall the language of Sec 116 was displaced and minimized in a way that restricted it only to policies issued before the establishment of the Exchanges and so make it almost useless in the bigger picture. But then a near miracle happened at the last minute, the Team of Ten inserted Section 2718 “BRINGING DOWN THE COST OF HEALTH CARE
COVERAGE”. MLR Regulation was back, and better the ever. Text from the Manager’s Amendment and commentary below.
‘‘(b) ENSURING THAT CONSUMERS RECEIVE VALUE FOR THEIR PREMIUM PAYMENTS.—
‘‘(1) REQUIREMENT TO PROVIDE VALUE FOR PREMIUM PAYMENTS.—
‘‘(A) REQUIREMENT.—Beginning not later than January 1, 2011, a health insurance issuer offering group or individual health insurance coverage (including a grandfathered health plan) shall, with respect to each plan year, provide an annual rebate to each enrollee under such coverage, on a pro rata basis, if the ratio of the amount of premium revenue expended by the issuer on costs described in paragraphs (1) and (2) of subsection (a) to the total amount of premium revenue (excluding Federal and State taxes and licensing or regulatory fees and after accounting for payments or receipts for risk adjustment, risk corridors, and reinsurance under sections 1341, 1342, and 1343 of the Patient Protection and Affordable Care Act) for the plan year (except as provided in subparagraph (B)(ii)), is less than—
‘‘(i) with respect to a health insurance issuer offering coverage in the large group market, 85 percent, or such higher percentage as a State may by regulation determine; or
‘‘(ii) with respect to a health insurance issuer offering coverage in the small group market or in the individual market, 80 percent, or such higher percentage as a State may by regulation determine, except that the Secretary may adjust such percentage with respect to a State if the Secretary determines that the application of such 80 percent may destabilize the individual market in such State.
The language is convulted but the result is simple, insurance companies can no longer make money by ensuring people who don’t make claims.
Under the current business model of private insurers the goal is to recruit insurees who in all likelhood won’t make claims, while denying those who are certain to either because of pre-existing conditions or simply by falling sick. The bill directly outlaws those practices but under 2718 they wouldn’t have the desired effect anyway. Take the hypothetical case where your entire risk pool is made up of healthy young adults whose claims are mostly limited to broken bones from skiing or biking accidents. Under 2718 unless those claims across the risk pool don’t add up to 80% or 85% depending the insurer has to rebate the extra premium. At the extreme the company would have to rebate the entire premium and so go out of business having no revenue to even pay employees. Under the new model the only ways to increase profits are one, to compete on the basis of volume, or two to reduce administrative costs, which is a 180 from the current model of hastling claimants into dropping coverage or simply finding excuses to rescind coverage.
Similarly 2718 limits or eliminates the utility of simply raising premiums because it would require a parallel increase of provider payments on an 85 to 15 ratio, otherwise the rebate provision would trigger. And while collusion between provider and insurer can’t be excluded the benefits would flow more than 5 to 1 to the provider while the price differential with other plans falls entirely on the insurer. The same effect occurs by eliminating a category of coverage, even if you didn’t fall afoul of the Acceptable Benefits Package requirements once again you risk triggering the rebate provision.
The words are not used in the bill but the result is nearly automatic cost controls. And enforcement is relatively easy, most of the information needed to calculate MLR is readily available in SEC filings and IRS returns, you don’t need HHS auditors rummaging around in the records, the SEC, the FBI and the IRS are already on the job.
On some other blogs I called this “The Most Important Health Care Provision You Never Heard Of”, something that is no longer true. It was reported the other day that the Health Care insurers were ecstatic at the passage of the bill, all those new customers delivered by the individual mandate! And Wall Street responded. But then some lobbyist realized what the real import of 2718 was and sent a follow up memo saying “not so fast”.
This language is not in the House Bill, at least not with the same effect, and we can expect that insurance companies will start working on the usual suspects to kill the bill on final. Which in my mind is reason to just get this bill signed to nail 2718 into law. Because on its own it has many of the same benefits on the overall system that the Public Option was supposed to deliver.
Bruce
thanks for keeping us up on this.
i would add one dour warning. the companies are experts at gaming regulations. they are perfectly capable of finding ways to make a lot of money while paying out huge claims to a lot of people.
if I understood Atul Gowande correctly, the high cost of health care in this country has something to do with over treating and over charging the patients.. and their insurance companies, including Medicare.
Well that is why the PO would have been useful if not totally critical.
Under an 85% MLR it is possible for insurance companies to collude with providers to over-provide services. But they have to get everyone on board, because their profit slice of the 15% on their side of the MLR is going to get swamp by the 85% of the extra premium dollar having to go to the actual providers and unless they have every other Exchange participating insurer in with them they risk pricing themselves out of the market. Moreover whether the Exchanges are State run (the Senate version) or by the Feds (the House) the insurers can only have their given State or Areas depart so much from similarly situated States and Areas before State Insurance Commissioners or reps of the Federal Health Choices Commissioner start asking questions about why providers are successfully able to charge insurers that much more than they get from Medicare. I mean I understand the gap that exists already because of Medicare’s power to tell providers to ‘take it or leave it’.
But assuming all relevant authorities don’t just turn a blind eye towards what would be criminal fraud (by overcharging and over perscribing to subsidized participants in the Exchange this is a pretty risk way of grabbing profits.
Besides under the current model insurers get their profits by denying care not by approving everything just because it gives them an excuse to raise premiums. In the former case they get all the gain from screwing down on providers, it would be a bitter pill to let providers get 85% of the extra swage.
Plus this provision is designed to control premiums and not provider payments. The incentive to control the latter will be shifted mostly to the federal government which presumedly will work to enhance efficiency and effectiveness in provider delivery rather than the insurance company simply focusing on dollars as such.
In my opinion this bill should never have been diverted from its original focus on access and providability for individuals and families to cost control nation wide. While obviously related these are fundamentally different goals and the result of the focus shift has been 10 million fewer people projected to be insured compared to the House Tri-Committee bill.
It seem the insurance companies if they just paid what the hospital or doctor billed them and never checked if the bill was reasonable they could save money and drive up their MLRs. I’m not sure this is a great idea.
It seem the insurance companies if they just paid what the hospital or doctor billed them and never checked if the bill was reasonable they could save money and drive up their MLRs. I’m not sure this is a great idea.
why is it assumed that loss ratios [which are accounting procedures] cannot be manipulated and who, btw, will be enforcing the nominal eighty and eighty five percent? where’s the enforcement language?
It seems to me; if the recently debated health bill would have both enriched the insurance companies with US funds and borrowed the money at good rates instead of taxing the folks who own the senate, then there would be no need for you to suggest ways for their insurances companies to further defraud the working US citizen.
Deficits and debt are great when it is huge transfer payments to drug firms. Or perpetual war profits.
Well the snarkish answer is “In the bill”. http://democrats.senate.gov/reform/managers-amendment.pdf
But a more useful answer is to ask “how could you manipulate the ratios?” Plus loss ratios are not just accounting procedures, they are or have been a direct feature of reports not only to shareholders but to the Health Choices Administration the SEC and the FBI.
‘‘SEC. 2718. BRINGING DOWN THE COST OF HEALTH CARE COVERAGE.
‘‘(a) CLEAR ACCOUNTING FOR COSTS.
page 7 & 8 of the linked document establish the specific reporting requirements from the companies to the HHS Secretary, if there are weaknesses and loop-holes in the language then feel free to point them out, but the twin claims ‘insurance companies always search out loopholes’ and ‘in the past have been successful in doing so’ while true are not necessarily dispositive, in the past this has been left to 50 different insurance commissioners, many of them in elected positions and often enough drawn from the industry. For example it is pretty hard to distinguish ex-insurance executive Ben Nelson, from former Nebraska Insurance Commissioner Ben Nelson, from Nebraska Senator Ben Nelson, oddly in each role Ben Nelson seems to be have been pulling the the same direction.
Enforcement will come via two mechanisms. First premium increases will still have to be approved via the State Exchanges who can freely inspect the reports from the companies to the HHS which will be posted on line. Similarly the SEC, the IRS, and the FBI will be able to compare those reports with the corresponding corporate filings and tax returns. So I wouldn’t think enforcement would require any detailed auditing beyond what these companies already experience today.
Cantab if an insurance company simply pays the bills from the hospitals they only get 15% of the overage flowing to them. Moreover they are exposed to all of the premium costs and so opening them for price competition against those companies who will actually negotiate with providers.
Making more dollars per policy doesn’t help the bottom line if you lose a disproportionate amount of customers. Such a strategy would have the effect of driving away healthy customers and drive up your MLRs in a way that choked off your profits.
What is the existing MLR across the entire health insurance industry? Would it provide a baseline?
Well it is hard to pin that down. The short version is that for profit private insurers in recent years have been running an overall MLR of between 75 and 84 which when broken down shows about a 5 point difference between individual and group. A commenter here showed some numbers from 2007 from CMS (i.e. the people who run Medicare) showing that private insurers overall are holding steady at around 88 which discrepancy is seeming explained by the fact that a large fraction of private insurance is officially non-profit which would have the effect of dragging up MLR, but not enough to explain the total difference.
What we do know is that for-profit Aetna announced a new policy in late October of purging their rolls of 600,000 subscribers with the explicit purpose of driving down MLR by eliminating. (My orginal post on this erred by citing the publication date of the story, which some commenters crowed meant my whole point was invalid, which didn’t make much sense at all but did serve to hijack the discussion).
Whatever the precise number and whatever the breakdown between private profit and private non-profit it is abundantly clear that the for-profits have been driving down their MLRs as a deliberate policy, while the overall numbers for the sector show that the 85/80 target is achievable.
BTW this doesn’t mean that for-profit insurers necessarily get driven out of business. They can keep profits up by increasing efficiency on the administration end (perhaps by not having to hire so many people whose jobs it is to deny enrollment, turn down specific claims, and rescind unprofitable policies), or by driving market share up based on customer satisfaction using a price and service model rather than the current business model built on predation.
Bruce:
The Senate Bill has a 300:1 ratio on premiums for older clientele as opposed to younger and the House Bill has a 200:1 ratio for a similar older to younger comp. Does it seem conceiveable the MLR would come into play here also?
As it stands, older citizens pre-65 could be priced out of Healthcare.
With the apparent flexibility provided by the following:
” ‘(1) REQUIREMENT TO PROVIDE VALUE FOR PREMIUM PAYMENTS.—
‘‘(A) REQUIREMENT.—Beginning not later than January 1, 2011, a health insurance issuer offering group or individual health insurance coverage (including a grandfathered health plan) shall, with respect to each plan year, provide an annual rebate to each enrollee under such coverage, on a pro rata basis, if the ratio of the amount of premium revenue expended by the issuer on costs described in paragraphs (1) and (2) of subsection (a) to the total amount of premium revenue (excluding Federal and State taxes and licensing or regulatory fees and after accounting for payments or receipts for risk adjustment, risk corridors, and reinsurance under sections 1341, 1342, and 1343 of the Patient Protection and Affordable Care Act) for the plan year (except as provided in subparagraph (B)(ii)), is less than—
‘‘(i) with respect to a health insurance issuer offering coverage in the large group market, 85 percent, or such higher percentage as a State may by regulation determine; or
‘‘(ii) with respect to a health insurance issuer offering coverage in the small group market or in the individual market, 80 percent, or such higher percentage as a State may by regulation determine, except that the Secretary may adjust such percentage with respect to a State if the Secretary determines that the application of such 80 percent may destabilize the individual market in such State.”
It seems that this amounts to socialized medicine in disguise. The equation has subsidies to protect on one side, and rebates protecting on the other side.
We seem to be at the core of the issue. This MLR is the main lever of what dictates all things related to health care costs with subsidies creating a dependency that gives the government the necessary negotiating leverage.
This brings the issue to a matter of crony-ism? Which I suppose makes the core issue the same of that which underlies all advanced policy initiatives to varying degrees. If a better option were doable we would probably be discussing that.
thanks Bruce. I don’t know how I got to be “guest” but there it was.
you are probably right about this, or the insurance companies wouldn’t be yelling so much.
i’ll have to watch and see what happens when the dust settles.
my own preference is for a “public option” in the sense of a direct tax to pay for a “high deductible” insurance plan that the government lets the insurance companies manage on a basis of lowest bid/ with government oversight. can’t tell if that’s not in the cards because the insurance companies can see where real free enterprise competition would get them, or because the other side wants to kill the insurance companies outright.
Cantab
brace yourself. you seem to be making the same objection i am. the issue for the insurance companies may be that they want it all. that is they want the 30 million new customers and they want the old MLR and they want to be able to deny claims that would cost them a lot.
run
not sure i get what you are saying here. i think you meant 2:1 versus 3:1.
my take is that that’s a stupid way to regulate it. we all know we are going to need more medical care when we get old than while we are young. it would make more sense to pay a higher premium now with the understanding that the “excess” is going to prefund our higher costs later. i don’t see how private insurers could do this formally, though they might end up doing it informally if insurance is mandated for everyone.
frankly, i can’t see the “regulating private industry” approach working… at least not this way. and i expect a horrible backlash when healthy young americans are told they have to buy health insurance while their taxes are going up to subsidize those who can’t afford it, and the insurance companies are raising their rates as we speak.
love
i don’t think the “socialized medicine” meme helps, or is accurate.
yes, we “socialize” in the sense of bringing in the government ot regulate the insurance companies in return for forcing everyone to buy insurance. but the private companies are still calling the tune while the customer pays the piper.
what we seem to have is more like a “south american solution”. as you say, cronyism.
a better option is indeed doable. but we would need a public with the intelligence to dis-elect most of the people in Washington and do it better next time.
Run that was actually going to be the topic of my next post, which I think I will now delay until we get the bill as merged with the Manager’s Amendment.
Actually I think the effect is mitigated. The Senate Bill (and the House Bill) establish premium limits as a percentage of income and on my reading applies to everyone as a cap and not as a floor. That is while you can have a three to one ratio between young and old it would seem that both have to fit under that absolute cap and not a case where that limit only applies to the youngest enrollees and ratchets up from there. That is I don’t think anyone thought that the actual premium cap on family income could be somewhere between 24-36% for older applicants (3 to 1 over baseline) with cost-sharing above that.
So if the HIGHEST premium you can charge to ANYONE is 11% or 12% (in the original bills) or 8% in the bill as passed (though I could not pin-point that language this morning, hence my delay in the post) this implies that the 3 to 1 differential can only manifest as a DISCOUNT for younger enrollees. It seems to me that the way to maximize premium dollars is to narrow that gap and charge each income/age cohort as close to the premium cap as possible and then only use the available discount to compete on volume for younger workers.
If anyone can find language that allows the 3 to 1 ratio to trump the income based premium cap then please share it here before I make a fool of myself on Monday. But I am still looking for the hole in the logic and the language and haven’t found it yet.
Absolutely. That is why my post on July 28th was subtitled “Golden Bullet or Smoking Gun”. For the private insurers and the reflexive libertarians a higher MLR might lead investors to force the companies to abandon lower margin markets just as they did back in the heyday of managed care, particularly if there was a Public Option waiting in the wings with an MLR in the 90’s. Even without the PO the fall back might be a non-profit or something like the Washington State Basic Plan. The other for-profit firms would be forced to decided whether they wanted to transition to a model based on competing for volume on the basis of service and price rather than the predatory model enabled by their anti-trust exemption (which allows them to share rating information and so indirectly collude on price). So Conservadems and Republicans were not being paranoids, when it comes to providing universal single-payer health care they really do have real enemies.
For those of us who believe that given an open playing field a Public Option can out compete for-profit insures this provision is the Golden Bullet to ultimately kill the Beast that keeps 50 million people uninsured at a societal cost far greater than that of other developed countries.
At times I worried about pointing this out lest opponents of health care reform focus on killing it, but figured that AHIP was all over it anyhow. And indeed they seem to have watered it down to nothingness over the summer only to have it come back to life. There was some reporting that their early elation about getting the individual mandate through without the PO was tempered when they found out this had crept back in the bill and gotten past the Conservadems. Which in my view is the strongest reason for the Democrats to swallow hard, pass this version of the bill before Nelson and Lieberman get instructions to find some new pretext to kill the bill. Take the money and run.
coberly:
Correction (you are correct on the ratios): The Senate Bill provides for a 3:1 ratio for premiums pre-65 and the House Bill 2:1 for pre-65 and in either case also not young.
If you smoke, the ratio can be as high as 1.5:1 and young. Through no fault of your own; you are penalized to a greater extent for a natural phenomena as opposed to something one inflicts upon themselves. A little strange, don’tcha think? The increase in healthcare costs is not so much driven by an aging population as much as the plethora of new treatments and devices having limited impact upon health or what one might refer to as diminished return for the expense of them. I suspect we are chasing the wrong cost factor having the greatest impact even though it appears to be the most popular one to cite.
I would expect a horrible back-lash if it doesn’t work also but for the wrong reasons. Sorry Bruce, I think Cob and I may have violated your plan on shifting discussion. The MLR may work if, if it is targeted against those devices , meds, and procedures not providing a resonable impact on health improvement.
Dale, many of us are hoping that your diselect scenario actually happens.
If we are going to do medical loss ratios then if would make sense to say how much of my annual premium is spent on providing me with medical services. Another measure could be my expected medical services given my probability of getting sick in a given year. Given that I’m a runner and not with my middle age surfing crisis i’m also working out in the pool my level of health is pretty good. I would say that my expected medical cost is around $1,500 per year. To avoid argument I would let someone assume that the cost is $2,500 per year. Yet my company pays around $5,000 per year. Thus for last year since I spent 0 on healthcare services my personal MLR based on actual money spent was 0 percent. They took $5,000 and I got back nothing. Based on expected services consumed my personal MLR would have been 50 percent. If we going to talk about what we pay versus what we get end the analysis at the insurance company is an inaccurate accounting of how my money is being spent. And taken collectively this is how our money is being spent on us.
And what about MLR once you walk into the hospital. Over the last 10 years the only time I’ve been to the hospital was to get stitches for two minor cuts. I probably had about 10-15 minutes with the doctor getting my injury cleaned up and having the doctor sew it up. I could see paying the doctor $200 per hour for his time and expertise. The would make my bill come out to $50. Double that for cost of medical supplies and overhead and I’m paying $100. The actual bill though was around $400. So my hospital MLR is around 25 percent.
And by the way rather then go back to the hospital to get the stitches removed I just used some scissors and took them out myself. I should get at least as much credit for doing this as those that bring their own cloth bags to carry home their groceries.
i suppose ratios could be manipulated through payouts into [accounting] categories which do not directly benefit those paying premiums, making higher loss ratio numbers more apparent than real.
isn’t this more/less what former cigna exec. wendell potter warned about and has been touched upon by a few of the ‘left’ liberal blogs?
same time, the existence of enforcement mechanisms should not be confused with their application [or has nothing been learned from the last decades of financial shenanigans].
“Last night, former insurance industry executive Wendell Potter appeared on Countdown, claiming that the industry could get around the requirements on the medical loss ratio through accounting tricks. To recap, under the Senate bill, the insurance industry would be required to spend 85 cents of every dollar in the large-group market, and 80 cents in the small-group and individual markets, on medical care, rather than overhead, administrative costs, salaries, marketing and profit.
An article at Smart Money magazine suggests that the insurance industry is already looking for ways to wiggle out of this requirement:
It’s not all good news for insurers. The Senate bill would impose a “medical loss ratio” of 80% to 85%, depending on the market segment, meaning insurers would have to spend 80 to 85 cents of each dollar they collect from plan members to provide health care. Carl McDonald, a health care analyst with Oppenheimer & Co., an investment bank, wrote in a note to clients Monday that the number was “workable” for insurers, especially if they can label certain items that count as corporate expenses for accounting purposes as health care for purposes of meeting the spending minimum.
http://news.firedoglake.com/2009/12/23/whos-enforcing-the-medical-loss-ratio/
Juan I agree entirely. On principle. But where are the loopholes in the existing text? Sec 2718 (a)(3) theoretically allows some wiggle room but only as accepted by HHS and with the requirement to be posted on the internet allows for outside examination.
I am sure that Mr. McDonald’s firm will gladly work (for a fat fee) to establish such a loophole, but wishes are not fishes and you should not count the latter until they are in the creel.
My company spent around $5,000 to buy me healthcare. I felt fine so I did not use any. Thus my personal MLR was 0 percent.
“The MLR may work if, if it is targeted against those devices , meds, and procedures not providing a resonable impact on health improvement.”
Well it is actually the other way around. Policies that target those devices and treatments end up putting pressure on MLR and not the other way around. Cutting costs per enrollee on average drives down the left side of the equation (actual ML) and so triggers rebates and/or premium reductions to get the overall MLR back in balance. Without the MLR the insurance companies could just pocket all those savings thus not reducing overall health sector spending at all.
I don’t think you understood my previous comment. I suggested,(or meant to at least), that the SLR will allow the government to call “the tune”. And that is what makes this “socialism in disguise”. The subsidies make the government essentially a partner with the policy holders. And the rebate mechanism allows for regulation down to whatever the SLR is set at. So it becomes a matter of negotiation and that was what I meant to suggest by “crony ism”. Presumably, this is part of a shift toward limiting profits and compensation levels across the whole financial services industry.
I should probably also explain that I do not think of socialism as inherently negative. It is technically possible to have the same administration costs via public or private pools so it is of no concern to me what “ism” is used. That said, I must also respectfully disagree with what you claim in regards to a better option being available. If the perfect balance is found for this SLR, that may be the best that can be achieved regarding administration costs; then,” we would need a public with the intelligence to dis-elect most of the people in Washington…”. Which brings us back to the problem of cronyism, or corruption, but that has always been the case. And the legislation in question here seems to be a clever way to allow for some progress not only in regards to our corruption issues, but also in regards to the obvious imbalances of wealth distribution. Government mandated rebates applied to the private sector are an interesting concept .
I should have addressed my previous comment to Coberly. Sorry for any confusion.
Nice for you. On the other hand they call stroke the silent killer. Lots of people feel fine right until that artery blows. =-O
Bruce,
I run and now I swim for exercise and the generation ahead of me are in their eighties. You want me to be upset about medical loss ratios. You have a point. But then so do I in looking at what I’m charged versus my expected cost given the probability of getting sick. So I have to pay for sick people, people with pre-conditions. Well this leaves me paying more than twice what my expected costs are. That’s a personal MLR of 50 percent. So the current healthcare bill is forcing lower MLR on people like me. And they want to lower it more by having me subsidize train wrecks and poor people.
Are you sure this MLR issue is a winner for those that want bigger government involvement? Its almost 2010 — you can’t control what we think about the issue. Its not such a great thing that you raise insurance MRLs from 80 to 85 percent but lower mine from 50 to 40 percent.
They can try – and then someone can make THAT a political issue.
I don’t think you understand how MLR works in this context. Your last sentence is incoherent.
If you are in group coverage through your employer your plan is already banned from denying coverage for people with pre-existing conditions (perhaps after a waiting period) or rescinding your plan. If your company’s plan has an MLR of 80 today and is forced to take it to 85 it can only do that by cutting your premium or sweetening your benefits plan. How this translates from an MLR of 50 to 40 is baffling as is the idea that an individual even has an MLR to start with.
Perhaps you are confusing this with Acturial Benefit?
Sorry Acturial Value
Bruce,
No, I’m right on the money and consistent with your post. We are talking about getting value for our money. So what do I get for that $5,000 a year. I know last year when I had no medical needs I got nothing. So that would be a ratio of 0 / 5000 = 0 percent. Now I’m willing to look at some measure of expected cost. I’m healthy so i’m setting it to $2,500. 2,500 / 5,000 = 50 percent.
You want us to get mad at the health insurance companies for political reasons. I want people to get mad at being forced to buy insurance worth $2,500 and costing $5,000. Anyway, hopfully the democrats in the house will insist on the public option and Lieberman’s veto will call the whole thing off.
Bruce,
No, I’m right on the money and consistent with your post. We are talking about getting value for our money. So what do I get for that $5,000 a year. I know last year when I had no medical needs I got nothing. So that would be a ratio of 0 / 5000 = 0 percent. Now I’m willing to look at some measure of expected cost. I’m healthy so i’m setting it to $2,500. 2,500 / 5,000 = 50 percent.
You want us to get mad at the health insurance companies for political reasons. I want people to get mad at being forced to buy insurance worth $2,500 and costing $5,000. Anyway, hopfully the democrats in the house will insist on the public option and Lieberman’s veto will call the whole thing off.
Bruce,
Medical loss ratio = Amount paid out to medical service provider / Total premiums.
A key point here is that the amound paid to medical service providers is not the same as the amound spent on the medical services themselves. There are all sorts of overhead that gets added on to your medical bill.
No, I’m right on the money and consistent with your post. We are talking about getting value for our money. So what do I get for that $5,000 a year. I know last year when I had no medical needs I got nothing. So that would be a ratio of 0 / 5000 = 0 percent. Now I’m willing to look at some measure of expected cost. I’m healthy so i’m setting it to $2,500. 2,500 / 5,000 = 50 percent.
You want us to get mad at the health insurance companies for political reasons. I want people to get mad at being forced to buy insurance worth $2,500 and costing $5,000. Anyway, hopfully the democrats in the house will insist on the public option and Lieberman’s veto will call the whole thing off.
Bruce,
Medical loss ratio = Amount paid out to medical service provider / Total premiums.
A key point here is that the amount paid to medical service providers is not the same as the amount spent on the medical services themselves. There are all sorts of overhead that gets added on to your medical bill.
No, I’m right on the money and consistent with your post. We are talking about getting value for our money. So what do I get for that $5,000 a year. I know last year when I had no medical needs I got nothing. So that would be a ratio of 0 / 5000 = 0 percent. Now I’m willing to look at some measure of expected cost. I’m healthy so i’m setting it to $2,500. 2,500 / 5,000 = 50 percent.
You want us to get mad at the health insurance companies for political reasons. I want people to get mad at being forced to buy insurance worth $2,500 and costing $5,000. Anyway, hopfully the democrats in the house will insist on the public option and Lieberman’s veto will call the whole thing off.
Bruce,
Perhaps you are confusing this with Acturial Benefit?
I’m talking about the benefit that I’m getting rather than the medical loss ratio and arguing the former is more important to me then the latter. I don’t think that actuarial benefit is the right term either.
Should have tackled medical malpractice premiums. There will be a lot of Docs quiting as a result of this legislation. The average private practice physician works 40 hours before he makes any money. See what happens when medicare & medicaid reduce their payouts.
CBO scored malpractice reform. It added up to $54 billion over ten years which was mostly additional income tax revenues on the 0.2% of national health care spending that ended up in the pockets of doctors due to malpractice premium savings.
Bruce
i lost track of which way around was which, or which way Run meant “target.” But it seems to me that if insurance companies insure expensive, but dubious, procedures they run up their costs and their MLR but they also increase their total net return as long as their premiums are set high enough to pay for the greater use of useless procedures.
love
no problem. i can see why we are not understanding each other.
Cantab
not sure how you know how much you are going to cost the insurance company by the time it’s all over, but they have to go by population averages. like you i am healthy and have no medical bills and plan to die cheaply. of course i could change my mind at any time. and they have no way of knowing.
i don’t mind (so much) paying my share of the “expected” costs of the whole population. i object to paying the criminals who are overcharging, and, yes, for the hypochondriacs and self abusers who are overusing. but i don’t follow you into Randian solipsism.
if ri love were still here, i’d suggest that his view of possibilities is insufficiently imaginative. i ‘d go for some form of federal oversight of a free enterprise system (the way we build highways) that used a payroll tax to pay the premium of what amounts to a “high deductible” universal coverage. but no one is asking me. and the crazies who think like cantab… or want his vote… have far more representation in Congress and the White House than I have.
Bruce,
good stuff !