More
bad news out this week on the Affordable Care Act. It’s bad news if you were hoping it gets
repealed or ruled unconstitutional. It
is about to kick in another popular provision.
Looks
like this is another item to add to the list of benefits the Affordable Care
Act offers to consumers that Mitt Romney has vowed to eliminate on his first
day in office. You may add this one
right after guaranteed insurability for those with pre-existing conditions and
the option to have children covered under the parent’s plan until age 26. Those would also disappear.
Americans to get $1.3
billion in health care rebates
By Julie Appleby, KHN staff
writer
Read the entire article at: http://bottomline.msnbc.msn.com/_news/2012/04/26/11410966-americans-to-get-13-billion-in-health-care-rebates?lite
Millions of consumers and small businesses will receive
an estimated $1.3 billion in rebates from their health plans this summer under
a provision of the health care law that effectively limits
what insurers can charge for administration and profits, a new
study projects.
Almost one third of people who bought their own
insurance last year will get rebates averaging $127, according to an analysis
of state data by the nonpartisan Kaiser Family
Foundation. (KHN is an editorially independent program of the foundation.)
"This alone is not going to make health insurance
affordable for large numbers of people, but it is getting excess administrative
cost out of the system," says Larry Levitt, a study author.
Under the federal law, insurers must spend at least 80
percent of premium revenues on medical costs or quality improvements; the
remainder can go toward administrative costs, sales commissions and profits. If
companies set premiums too high, rebates in the form of checks or discounts off future premiums
are due consumers and businesses by Aug. 1.
The requirement, aimed at holding insurers more
accountable and slowing premium increases, went into effect last year and
applies to all health plans, except those offered by self-insured employers. Insurers had criticized the rule as
being too strict, while sales agents feared insurers would reduce their
commissions. (emphasis added)
The listed objections to the
provision in the law are from sales folks who will make less money at the
expense of those who require health insurance (pretty much everyone) and
insurance companies who stand to have reduced profitability. If there is an objection based on the fact
that Americans will receive less quality care, I haven’t seen it. Shouldn’t that be the measure by which we
judge whether the provision is good or not?
I love this quote from the
article that provides the health industry’s perspective:
Still, Alexandria-Va.-based health industry consultant
Robert Laszewski says the projected rebates are so small as to count mainly as
a "rounding error" that most consumers won't even notice.
Using Laszewski’s view,
since $1.3 billion is merely a “rounding error”, I guess the industry won’t
miss it.
Mitt Romney has vowed to
repeal the law and start over. This
might be out of Romney’s hands by November if the Court makes the point
moot. I wonder if an adverse decision by
the Supreme Court this summer that strikes down the law will give the industry
the ability to recover these refunds.
That would be a boon to Obama’s chances in that case. Millions see their scheduled refund of
premium being instead pocketed by the for-profit insurance industry. That won’t play well in Peoria.
Before the Right gets
apoplectic that Big Government is
redistributing wealth, discouraging success and amputating the Invisible Hand,
here is how Timothy Jost, a professor at Washington and Lee University School
of Law, described the rebates in the article:
"The purpose isn't to generate rebates, but to force
insurers to align their premiums more closely with their (medical) claims
costs. Each year, premium costs have
gone up more than medical costs, so what the rule does is force insurers to be
more efficient and, if they charge too much, to give some back."
We have a vested, national
interest in affordable quality health care.
This provision of the Act seems reasonable, and like many of the others,
will probably be popular once implemented.
As I have said before, and
now, we wait.