Thursday, July 24, 2014

The good news about Obamacare you might have missed (updated)

While almost everyone is focusing on the recent Halbig decision by a federal court, you might have missed some good news that was just announced about Obamacare. As background, I've been paying a lot of attention to what I think is one of the most important insurance reforms included in the legislation - the medical loss ratios. They require insurance companies to spend 85% (80% for those in the small group market) of premiums on healthcare. If they spend more than 15-20% on administration/profit, they are required to pay it back in a rebate to their customers.

The Department of Health and Human Services just announced that those rebate checks will be in the mail shortly.
U.S. health insurers will send out about $330 million in rebates to employers and individuals this summer under President Barack Obama's healthcare law, the U.S. Department of Health and Human Services said on Thursday...

The rebates will go to about 6.8 million people and have a value of about $80 per family. They are to be sent by Aug. 1 either directly to consumers or to the employer providing the health coverage, who is required to pass the savings onto employees, the agency said in a report.
But perhaps even more important is the impact this provision has had on premiums overall.
If insurance companies had maintained the 2011 ratio of premiums relative to the cost of medical care, consumers would have spent $3.8 billion more in additional premiums in 2013, the health agency said.
In other words, in 2013 Obamacare saved us all $3.8 billion in premiums via the medical loss ratios. That, my friends, is a BFD!!!

UPDATE: The White House just released this image showing the total savings from 2011-2013.


2 comments:

  1. Nancy I think there is another hidden savings some aren't thinking about as much either; it's the fact there is no life time limit anymore and you can't be taken off your insurance if you do get sick and they don't want to cover you. You might have the statistics, I don't. Yesterday Pat Bowlens family announced he would no longer be running day to day operation of the Denver Broncos. He's wealthy and has good insurance I'm sure but no one except close family and friends new he was fighting this battle. A person without their resources would be devastated finically and not just mentally. My son has insurance for the first time as an adult of thirty-six because his oilfield employer in WY wanted low cost insurance too and bought a group plan for his small company. Carol

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    1. Where we'll see the impact of the reforms you're talking about (getting rid of caps and denials for pre-existing conditions) will be in a reduction of the number of personal bankruptcies. Remember that health care costs were the leading cause of bankruptcy prior to Obamacare.

      I recently saw a study of how Massachusetts was just starting to be able to document that as a result of health care reform. So it will likely take a few years to see it nationally.

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