and make no mistake...this is the ultimate goal of Obamacare.....so they can finally introduce full on socialized medicine....
The Bomb Buried In Obamacare Explodes Today-Hallelujah! - Forbes
That would be the provision of the law, 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.
Indeed, it is this aspect of the law that represents the true ‘death panel’ found in Obamacare—but not one that is going to lead to the death of American consumers. Rather, the medical loss ratio will, ultimately, lead to the death of large parts of the private, for-profit health insurance industry.
Imagine yourself as a small business owner for a moment...can you imagine having to run that business with only 15% of your gross sales? This to pay ALL salaries, office space, advertising, commissions to salespersons, insurance on your business, accountants to keep up with endless paperwork required by our government?
Think you could do it? Of course not! Neither can the insurance companies!
Can you explain why in the early '90s, 95 cents out of every dollar was used by the insurance companies to pay claims?
Do you know why it changed?
This guy does. WENDELL POTTER is former Vice President of corporate communications at CIGNA, one of the United States' largest health insurance companies. With almost 20 years inside the health insurance industry, Wendell Potter saw for-profit insurers hijack our health care system and put profits before patients.
Wendell Potter on Profits Before Patients
BILL MOYERS: Why is public insurance, a public option, so fiercely opposed by the industry?
WENDELL POTTER: The industry doesn't want to have any competitor. In fact, over the course of the last few years, has been shrinking the number of competitors through a lot of acquisitions and mergers. So first of all, they don't want any more competition period. They certainly don't want it from a government plan that might be operating more efficiently than they are, that they operate. The Medicare program that we have here is a government-run program that has administrative expenses that are like three percent or so.
BILL MOYERS: Compared to the industry's--
WENDELL POTTER: They spend about 20 cents of every premium dollar on overhead, which is administrative expense or profit. So they don't want to compete against a more efficient competitor.
BILL MOYERS: You told Congress that the industry has hijacked our health care system and turned it into a giant ATM for Wall Street. You said, "I saw how they confuse their customers and dump the sick, all so they can satisfy their Wall Street investors." How do they satisfy their Wall Street investors?
WENDELL POTTER: Well, there's a measure of profitability that investors look to, and it's called a medical loss ratio. And it's unique to the health insurance industry. And by medical loss ratio, I mean that it's a measure that tells investors or anyone else how much of a premium dollar is used by the insurance company to actually pay medical claims. And that has been shrinking, over the years, since the industry's been dominated by, or become dominated by for-profit insurance companies. Back in the early '90s, or back during the time that the Clinton plan was being debated, 95 cents out of every dollar was sent, you know, on average was used by the insurance companies to pay claims. Last year, it was down to just slightly above 80 percent.
So, investors want that to keep shrinking. And if they see that an insurance company has not done what they think meets their expectations with the medical loss ratio, they'll punish them. Investors will start leaving in droves.
I've seen a company stock price fall 20 percent in a single day, when it did not meet Wall Street's expectations with this medical loss ratio.
For example, if one company's medical loss ratio was 77.9 percent, for example, in one quarter, and the next quarter, it was 78.2 percent. It seems like a small movement. But investors will think that's ridiculous. And it's horrible.
BILL MOYERS: That they're spending more money for medical claims.
WENDELL POTTER: Yeah.
BILL MOYERS: And less money on profits?
WENDELL POTTER: Exactly. And they think that this company has not done a good job of managing medical expenses. It has not denied enough claims. It has not kicked enough people off the rolls. And that's what-- that is what happens, what these companies do, to make sure that they satisfy Wall Street's expectations with the medical loss ratio.
BILL MOYERS: And they do what to make sure that they keep diminishing the medical loss ratio?
WENDELL POTTER: Rescission is one thing. Denying claims is another. Being, you know, really careful as they review claims, particularly for things like liver transplants, to make sure, from their point of view, that it really is medically necessary and not experimental. That's one thing. And that was that issue in the Nataline Sarkisyan case.
But another way is to purge employer accounts, that-- if a small business has an employee, for example, who suddenly has have a lot of treatment, or is in an accident. And medical bills are piling up, and this employee is filing claims with the insurance company. That'll be noticed by the insurance company.
And when that business is up for renewal, and it typically is up, once a year, up for renewal, the underwriters will look at that. And they'll say, "We need to jack up the rates here, because the experience was," when I say experience, the claim experience, the number of claims filed was more than we anticipated. So we need to jack up the price. Jack up the premiums. Often they'll do this, knowing that the employer will have no alternative but to leave. And that happens all the time.
They'll resort to things like the rescissions that we saw earlier. Or dumping, actually dumping employer groups from the rolls. So the more of my premium that goes to my health claims, pays for my medical coverage, the less money the company makes.
BILL MOYERS: So, the more of my premium that goes to my health claims, pays for my medical coverage, the less money the company makes.
WENDELL POTTER: That's right. Exactly right.
BILL MOYERS: So they want to reverse that. They don't want my premium to go for my health care, right?
WENDELL POTTER: Exactly right. They--
BILL MOYERS: Where does it go?
WENDELL POTTER: Well, a big chunk of it goes into shareholders' pockets. It's returned to them as part of the investment to them. It goes into the exorbitant salaries that a lot of the executives make. It goes into paying sales, marketing, and underwriting expenses. So a lot of it goes to pay those kinds of administrative functions. Overhead.
