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Medical Loss Ratios- new rule for 2011

happyHBmomhhappyHBmom Posts: 2,070
edited 06/11/2012 - 8:48 AM in Health Insurance Issues
I did not know about this part of the health care overhaul bill, but thought this was interesting.

2011 is the first year requiring insurance companies to spend either 80% or 85% of their premium income on medical care. Prior to that I guess there were state laws, but no federal requirement.

This was the part that surprised me:
Over 20 percent of consumers who purchase coverage in the individual market today are in plans that spend more than 30 cents of every premium dollar on administrative costs. An additional 25 percent of consumers in this market are in plans that spend between 25 and 30 cents of every premium dollar on administrative costs. And in some extreme cases, insurance plans spend more than 50 percent of every premium dollar on administrative costs. This regulation will help consumers get good value for their health insurance premium dollar.
So hopefully this will improve health care for some of us! More info at http://www.healthcare.gov/news/factsheets/medical_loss_ratio.html


  • But what happens if they spend less than 20% on admin .. do they have to spend the 80-85% on care? What happens if they just don't have enough claims?

    I'd be afraid that this will just mean fewer claim reps and longer waits for approval and payment.
  • We've had this law in California for a while now. If their claims go down, they have to reduce rates and/or refund the customers. You might already have it in your state.

    There are certain things they can spend the money on, but it basically has to be for the customers wellbeing, not the shareholders or executives. Beyond that if claims are less than expected, the money goes back to the customer.

    I can't believe some companies were only spending 50% of premiums on their customers medical care!

  • I'm sure ins. companies will be covering more people as required by law so they will obviously be spending more too. Yes, they will bring in more but they will have to pay out more for well check ups,tests, procedures,etc. That may be more costly than some premiums paid in the long run. Some people are lucky and never run into major medical expenses. Others(like us spineys)can cost ins. co. much more than our premiums and deductibles. Therefore, there has to be a balancing act and the ins. companies need a reserve to fall back on. As the baby boomers age and as we all know ins. pays quite a bit for procedures these days I'm afraid quality will be comprimised. They are already trying to reduce many yearly exams to longer periods of times prior to these new laws. Also, what if they(ins) are always required to do that then go bankrupt with no extra money to cover them or pull out of business in your state or completely bankrupt?

    Here in FL we had unfortunate circumstances in 2004 where 3 hurricanes, some of us were hit by 4 in a row, that wiped out many areas across central FL. It was devastating to us and our ins. companies. When they lost all that money do you know what they did? They quit selling homeowners here!They dropped us and ran!Our premiums tripled and there isn't enough competition to shop around plus they might drop you if you make a claim too soon. They continued to sell car ins but we lost big names like Allstate and State Farm in some areas, not just small firms with unknown names. Just like health care, homeowners and renters ins. is hard for some people to obtain, afford and the deductibles are outrageous here. We would have to pay up to $15,000 deductible off the top if we had major hurricane damage. I live in a 1500 sq ft home, nothing big or fancy, so imagine what some people would need up front. Many retired folks would never be able to fix/rebuild their home if that happens, probably includes us too. Anyway, sorry I got off the subject....LOL!

    I think we need health ins. for everyone. I have family and friends w/out that deserve and need it. I could be w/out in a heartbeat which worries me sick all the time. But I don't like the plan put in place and the attachments. Gotta work harder and longer to find a better solution! Just my opinion.


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