I'd like to know what happened to executive salaries.
http://www.huffingtonpost.com/2012/12/05/obamacare-health-insurance-rules_n_2247380.html?utm_hp_ref=fb&src=sp&comm_ref=false
By Jeffrey Young Posted: 12/05/2012
Health care reform rules aimed at pressuring health insurance companies to become more efficient saved consumers nearly $1.5 billion last year, according to a study released by the Commonwealth Fund on Wednesday.
The health care law enacted by President Barack Obama requires that health insurance companies selling plans to individual consumers spend at least 80 percent of the premiums they collect on medical care. Health insurance companies selling plans to groups of at least 50 people, such as employers offering benefits to workers, must spend 85 percent of premiums on medical care. Companies that fail to meet these standards under the so-called medical loss ratio rule must refund the difference to their customers.
Health insurance companies responded to this requirement by cutting overhead, delivering rebates and, in some cases, reducing profits, according to the study, which was authored by Michael McCue of Virginia Commonwealth University in Richmond and Mark Hall of Wake Forest University of Winston-Salem, N.C. The study was issued by the Commonwealth Fund, a research institution.
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People who buy health insurance on their own, rather than get coverage at work, saw the biggest benefits, the researchers concluded. These consumers got $394 million in rebates, and the companies providing insurance in the individual market reduced overhead by $209 million, according to the report. Health insurance companies saw profits disappear for individual products when compared to 2010. Profit margins fell from 0.15 percent to -1.2 percent, the study found, with profits falling by $351 million.
Although these consumers benefited in the short-term, negative profit margins are cause for concern, the researchers cautioned. If insurance companies can't profit from selling products to individuals, or can't make large enough profits selling to groups to offset other losses, then it could become harder to find coverage in the future, the report said.
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Insurance companies selling coverage to groups were able to cut administrative costs and keep much of the difference because they tended to already meet the law's 85 percent standard, the report concludes.
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