There’s a provision of the Patient Protection and Affordable Care Act (“Obamacare”) “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.”
Today, the Department of Health & Human Services issues the rules of what insurer expenditures will—and will not—qualify as a medical expense for purposes of meeting the requirement….
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.
More likely, in my opinion, is that the private insurance companies will become like regulated utilities — the kind of universal health care they have in The Netherlands and Germany. When I asked I the speaker at the meeting of Health Care for All – Washington about this, he pointed out that the cost of such systems is higher than the cost of true single-payer systems such as Canada’s and France’s. Unfortunately, due to historical and political constraints, it’s possible that the insurance-company-as-utility model of health care payment may be the best the US can get in the foreseeable future. I support single-payer but am open to the option of insurance companies as well-regulated utilities.
Of course, another possibility is that the proverbial fox polices the hen house and the regulators end up serving the insurance industry.
[Note: see comments for informed feedback.]