Armageddon did NOT come!

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I a presuming you woke up fine this morning. The world did not end.  Well, that’s not the way it was predicted.  Had you listened to all the histrionics, you would have expected the world to have ended yesterday.  You see, yesterday was another red letter day in the provisions of the Affordable Care Act.  You know, what is pejoratively called ObamaCare.

English: U.S. Health Insurance Status (Under 65)
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As of now, it is requirement for all health insurance companies to justify their premiums via a medical loss ratio.  The medical loss ratio must be either 80% (or 85% for large group insurers).   That means that the medical care for which insurance companies reimburse must not be less than 80% (85% for large groups) of the premiums they charge insureds.  No longer can these entities include overhead, marketing expenses and the like in determining your premium dollars. Don’t forget that insurance companies spent a fortune trying to get this provision removed.  Thankfully, they failed.
I also expect that the insurance companies will find a way to include their nurse advisers (the ones that call incessantly reminding asthmatics to not ride bicycles in the winter, for example) as part of their medical costs (and succeed). They’ve already tried to have the commissions paid to salespersons to be considered as a medical expense- and the HHS (Department of Health and Human Services) nixed that idea.  But, the final decision on other kinds of factors will not reach the light of day for several weeks or months.

Now, I know that many folks expected the insurance companies to go out of business because of this.  However, I don’t.  But, it’s the reason why insurance companies have been looking for ways to expand their businesses and to adjust their business models.

One response has been the acquisition of physician practices and hospitals.  This affords the insurance company more control over its costs- and a means to move profit and overhead to other areas of their business.  (I discussed this emerging trend in July 2011.)

I do admit that if health care insurers do not ratchet down their overhead, we will be headed to further consolidation in the industry.  This has already happened in another HHS regulated industry- the dialysis providers.  In the 1980’s, there were thousands of providers; now two providers cover 70+% and the consolidation is continuing.

But, one of the biggest considerations to make our insurance costs more affordable really has to be the regulation of health care costs increases.  And, that is the province of the Independent Payment Advisory Board.  (See this entry for background.)   There was talk this board would reach its demise this year- but it’s absolutely clear that no such legislation will pass either body of Congress.  We need the IPAB to insure that costs are, indeed, contained.  So, insurance- and health care-  costs can be affordable.Roy A. Ackerman, Ph.D., E.A.

 

 

 

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8 thoughts on “Armageddon did NOT come!”

  1. Roy you must have the dates mixed up, the world is supposed to end tomorrow lol. Healthcare is one of those topics that make me want to rant, beginning with all the lovely paperwork. I was talking to a traveling vet (I know we are not talking pet health here) and she was telling me that her medical office was at home but she saved a lot by handling minor health concerns at the “patient’s” home. I know that the current health system is the norm but if it is not working and causing headaches everywhere why not make changes, I am happy that you write about it and share you knowledge and perspective on the topic. (PS the point of my vet story is to show that alternatives exists, different ways of doing things that may seem strange but provide results).
    Karla Campos recently posted..How to Backup your WordPress to Free Cloud Storage Automatically.

    1. I won’t even begin to discuss pet health care, Karla. The way folks who DON’T go to the doctor for their own ailments and will traipse to the vet immediately. Who spend more on their pets than they do on their own well-being.

      Roy

  2. As a person who has to pay all my own health care premiums and gets very little help in return, I would love to see health care costs affordable. And yes, at one visit I might pay a lot at the vet, but I pay much, much more for my health insurance than an occasional vet visit.

    Insurance is a gamble. They gamble you won’t need it and they can keep the money and you gamble you will need it and will get reasonable help. In my case the odds are definitely in the house’s favor, not matter what.
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    1. Ann:
      I also pay my own healthcare costs. I also pay them for all my employees (ok, the IRS does provide some relief to me in this endeavor).
      But, I understand the concept well. I don’t gamble in Las Vegas- never have and presumably never will. And, I know that the amount that I provide my “health care insurer” (HCI) has averaged roughly 12X my annual benefits (and closer to 50X for my staff). But, it only takes one missed gamble in this game.
      Oh – there is one other benefit. The rates my doc would charge are 1/4 what he lists, since the purchasing power of my HCI exceeds mine in this “grocery store”/

      Roy

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