Thursday, June 21, 2012

MLR rebates raise questions about funding assumptions for HB 392

Today the Department of Health and Human Services announced the first round of consumer rebates under the MLR (Medical Loss Ratio or 80/20) rule.   This is the provision in the Affordable Care Act that requires private medical insurers to spend no more than 14-20% of premiums collected (depending on market size) in non-medical care related areas (administration, salaries, or marketing).

Nationwide there will be $1.1 Billion in rebates, of which $1.85 million will be shared by 5,639 Delaware families who will receive average rebates of $351/family.  (It is interesting to note that the highest rebates will be paid in Vermont, where the average family will receive $807, and that there will be no rebates whatever issued in Rhode Island or New Mexico.  Not sure exactly what that means.)

While any opportunity to receive money back is generally a good thing in the eyes of the person cashing the checks, The HILL points out that HHS was careful to let people know that no rebate checks at all would actually go out if the Supreme Court struck down the Affordable Care Act, although it is surely coincidence that the rebates were announced on the very first day upon which the justices ould have revealed a verdict.

In Delaware, however, there is an additional meaning to the issuing of these rebates.  HB 392, the Single-payer health insurance bill being pushed by Representatives John Kowalko and Earl Jaques, because HB 392 focuses a great deal of attention on remediating the . . . 
30 percent loss to administrative/overhead costs (costly paperwork, profits, advertising, lobbying, etc.) 

. . . in private insurance.

If the Federal acceptable maximum for administrative/overhead costs has already been slashed from 30% to 14-20% (again, depending on market size), then one would think that parts of the financial planning regarding how much waste remained to be cut from private insurance in the enactment of a Single-payer plan would have to be . . . rethought.

But that probably won't happen.

There, now somebody will be happy.

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