Election Year Bribery: Couldn't Kick In At A Better Time
Lawrence Rafferty, guest-blogging at Turley, writes about health insurance rebate checks set to go out in August:
I have to admit that I was not aware that the Affordable Care Act, or Obamacare, as its detractors call it, mandates that the insurance companies who don't spend at least 80% of premium money on actual medical care expenses, must send rebates to policy holders."But the rebate provision of the law -- the fruits of the so-called "80/20 rule" -- is about to kick in big time, as millions of Americans receive rebate checks or premium reductions from insurance companies who have failed to spend enough on patient care.
This cash could be a true game changer in public attitudes about whether the law actually is beneficial and good public policy. The rebate provision of the law has been known and discussed in health care policy circles for months, but has largely flown below the radar in the political world and for voters--until now." Time
These rebates or premium reductions could not only be a big financial benefit to millions of policy holders, it could also be a big political boost for the Obama Administration in its attempts to convince the public of the many benefits provided by the Affordable Care Act (ACA).
Now that I know that the ACA will provide these rebates, just how much money are we talking about? The Time Magazine article linked above quotes a Kaiser Family Foundation study that suggests that big dollars are involved here.
"This analysis looks at the latest estimates provided by insurers to state insurance commissioners.The analysis finds that consumers and businesses are expected to receive an estimated $1.3 billion by this August in rebates from health insurers who spent more on administrative expenses and profits than allowed by the ACA.
The rebates include $541 million in the large employer market, $377 million in the small business market, and $426 million for those buying insurance on their own. Rebates in the group market will generally be provided to employers, and in some cases be passed on to employees as well. Rebates are expected to go to almost one-third (31%) of consumers in the individual market.
Among employers, about one-quarter (28%) of the small group market and 19% of the large group market is projected to receive rebates. The share of consumers in the individual insurance market expected to receive rebates ranges from near zero in several states to as high as 86% in Oklahoma and 92% in Texas. " KFF
That will probably work out well for you Amy.
A good chance only a small benefit will go to the employees of large companies. And I wonder how they account for companies that are self insured?
Jim P. at May 14, 2012 6:22 AM
Amy Alkon
http://www.advicegoddess.com/archives/2012/05/14/election_year_b.html#comment-3189967">comment from Jim P.What would work out well for me is having minimal government. Even if I benefit through policies of big government, I know that they are ultimately leading us down a very dangerous path. I'm a "personal responsibilitarian," and I began paying into Kaiser in my early 20s and have paid for it since, every month. I chose it because I realized that I didn't want to take the path to the quickest riches for me -- writing sitcoms -- and realized that I might always be a hard-working middle-class person, and this is the health insurance of that sort of person. Once you're in, you're in -- the premiums go up only by age.
Amy Alkon
at May 14, 2012 6:30 AM
I have the same view. I have employer provided health care. But I have made it a point to pay my glasses and eye exams on my own. The way eye insurance is crafted, I wouldn't pay much less than just going to any of the store front eye glass places. Same with the dental plan. I just pay and get it done.
I just hope it comes up to the 7.5% for taxes.
I also need medicine on a regular basis. I pay for it as well. I only use insurance for acute conditions.
What worries me is that SCOTUS won't strike down Obamacare before August, the checks go out, and we get Obama back in November.
Jim P. at May 14, 2012 8:21 AM
this seems to conflate "care" with "Insurance" in a big bad way... If you have a group that is pretty healthy you rate their insurance based on averages and such actuarial tables...
But if they stay healthy, they might beat the odds. OTOH if they get less healthy than you don't beat the odds. But it's a long term game, not year over year.
This is designed to keep ins.co's honest, but like a lot of such laws, won't work that way, they'll start having solvency problems.
But then, if you are cynical, that is by design. This health system is designed to run ins.co's out of business, so that big brother is the only viable last resort.
At which point the fed will humbly step in and assume the role of caregiver, 'till such time as you have used too much.
SwissArmyD at May 14, 2012 9:28 AM
As JimP said, this could "work great" for people who are healthy. But what about those who cost more than they paid in? Do the insurance companies get to send a bill for the difference?
The way I see this going is one of two ways:
1. As Swiss said, Father Government will have to eventually step in as the only option, or
2. Insurance companies will decide it is better to raise rates on everyone, and lessen the chance that they'll pay out more than they take in. Even if they have to pay back money to some people, it will be worth it when they take in higher premiums across the board. They'll have that money for a year, even to just earn interest, and then they lose less on those they have to pay out huge amounts for.
In the end, as Amy said, with more government intrusion, everyone loses.
Jazzhands at May 14, 2012 11:09 AM
Bread and circuses. Gotta bribe the slaves so they don't revolt.
Sio at May 14, 2012 12:31 PM
In rough figures, $1.3 billion distributed to 200 million people insured is $6.50 per person. Yay for ObamaCare!
I have no idea (sarc) why politicians, unions, and all federal employees have been exempted from this bounty of money, prosperity, and great care. I suppose they just don't trust in a future micromanaged by government.
mjperry.blogspot.com/2010/02/health-insurance-companies-rank-88-by.html
Health Insurance Companies Rank #88 by Industry Profit Margin
=== ===
America's Health Insurance Plans (AHIP) is an insurance association of 1,300 members. It reported last October that annual health insurance premiums averaged $2,985 for individual coverage and $6,328 for family plans in 2009. The industry average profit margin of 3.4% means that insurance companies make about $100 profit for individual coverage, and a little more than $200 profit for each family policy.
=== ===
Excessive profits are not driving higher costs for insurance and medical care. Higher costs come from government regulation and oversight, which the patient pays for. There are 2 administrative personel for each doctor in the US, handling insurance claims and credentials.
Why don't insurance companies compete to make things simpler? My take is that they are the de facto regulated agencies of the state and federal government. They can't change how they operate, because they operate under a thicket of impossible regulations, at the forbearance of the bureaucracy
The Regulatory Speed Trap
09/09/11 - Covert Rationing Blog by Dr. Rich [edited]
=== ===
America has many laws, rules, regulations, and guidelines that for all practical purposes are impossible to fully comply with.
Such laws and regulations allow regulators to declare, at a time of their choosing, almost anyone to be a criminal who is functioning under those laws. DrRich calls it the Regulatory Speed Trap, recognized by its typical 5-step pattern;
(1) Over a long period of time, regulators will promulgate a confusing array of disparate, vague, poorly worded, obscure and mutually incompatible rules, regulations and guidelines.
(2) Individuals or companies which need to provide their products or services despite such hard-to-interpret regulations, will necessarily render their own interpretations with the assitance of attorneys, consultants, and the regulators themselves, and will act according to those interpretations.
(3) By their apparent concurrence with such interpretations, or by their failure to object to them, the regulators over time allow de facto standards of behavior to become established.
(4) When it becomes to their advantage, the regulators will reinterpret the ambiguous regulations in such a way that the formerly tolerated de facto standards suddenly become grievous violations.
(5) Regulators aggressively, but selectively, prosecute newly felonious providers of products or services.
=== ===
Andrew_M_Garland at May 14, 2012 1:19 PM
Well, every other person in texas might get money, but I can assure you we won't. We bought a new car right before cash for clunkers, we bought energy efficient appliances right before "let your neighbor buy you appliances", bought our first house before the firsttime homebuyers credit and our bigger house right before the move-up program. In fact, other than our kids tax deduction, we've never gotten penny one that I'm aware of. You're welcome.
if anyone would like advance notice the next time we decide to buy something, so that you can then wait for the inevitable government kickback for others that follows, let me know.
momof4 at May 14, 2012 3:57 PM
So they deliberately wrote the law to try to show savings (or rebates) just before the election.. yet have most of the costs/taxes (sorry, "penalties") kick in AFTER the election? Go figure.
Miguelitosd at May 14, 2012 4:42 PM
momof4... glad to see it's not just me that seems to always just miss such things. :)
Miguelitosd at May 14, 2012 5:07 PM
There is a nice discussion of the rebates at Insure Blog.
The average rebate will be $127 for the year, but many people will not get rebates, and the rebates will be mostly taxable, for the honest ones.
Andrew_M_Garland at May 14, 2012 5:11 PM
Andrew: Great list. I have one addition:
(6) Insurers and companies will eventually realize that the most effective path through the regulatory maze is to pay protection money, in the form of campaign contributions or hiring of connected lobbyists. Once this occurs, profits are no longer a concern -- the favored will be subsidized and bailed out.
Cousin Dave at May 14, 2012 6:04 PM
Correct me if I'm wrong, but the way I read the article is that aside from the self insured will be getting the rebate. Is there anything which says they have to pass it on to the employyees?
lujlp at May 15, 2012 10:33 AM
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