There is Gross Profit, and Adjusted Gross Profit, and then there is Net Profit

[Winterblues]

The Bill says is will make it so they can only have fifteen percent Profit. Remember Net Profit is after every single expense has been paid including huge salaries.. Which Profit is the Bill referring to?

[dysfunctional press]

1. you left out obscene profit.

like the kind that's made from other people's suffering, for instance.

[dmallind]

2. The MLR (or rather its inverse) unless I am mistaken

Which would be that 85% of revenue has to go into payments for services. As such this would be closest to gross profit.

[napi21]

4. That's the way I understand it as well. The bill limits the amount

of money insco's can pay for things like salaries and advertising because they are restricted to 15% of their revenue to "play with". My guess is the stock holders will reall bitch if they get short changed and the execs still get their multi-million $ paychecks.

[Eric J in MN]

3. Senate bill: For small plans, 80% of premiums need to go to claims.

For big plans, 85% of premiums need to go to claims.

The HHS Secretary can drop this requirement.

[Hannah Bell]

5. you have to assume it's net. & 15% = armed robbery. average margins much lower.

[dmallind]

7. Nope. Not net at all. All revenue that is not spent on care. NT

[Hannah Bell]

10. i'm talking about gross v. net profit. gross profit isn't really profit.

not sure what you're talking about.

[dmallind]

11. I'm talking about the OPs question

In the bill proposal the limits of either 80% or 85% are thr percentage of revenue that must be spent on medical claims. NOT medical claims plus salaries, advertising, etc etc. So it's much closer to gross profit than net. In fact if you assume claims = direct COGs then it IS gross profit.

[Hannah Bell]

12. OPs question:

"The Bill says is will make it so they can only have fifteen percent Profit... Which Profit is the Bill referring to?"

The OP says "profit," you say "non-claims".

So you're saying the bill doesn't refer to "profit" at all, contra the OP.

[dmallind]

13. You are stretching like a weak elastic band

The 15% as I have VERY CLEARLY stated refers to any revenue not paid in medical claims. That is the equivalent of gross profit at the very worst. If you can't admit you are wrong then that's your problem. Don't try to make it mine.

[Hannah Bell]

14. The OP said the bill uses the word "profit". You say it uses different words.

You've missed my point.

[Bluenorthwest]

6. Stolen profits.

[kirby]

8. Medical Loss Ratio

Sen. Rockefeller explains:

"One of the basic financial measures used in the health care industry is the percentage of health insurance premiums that insurers use to provide health care to their customers. This percentage is commonly known as the "medical loss ratio." For example, if an insurer uses 75 cents out of every premium dollar to pays its customers' medical claims, the company has a medical loss ratio of 75 percent. A medical loss ratio of 75 percent indicates that the insurer is using the remaining 25 cents of each premium dollar to pay expenses that do not directly benefit policyholders, such as salaries, administrative costs, advertising, agent commissions, and profits."

The insurance giants argued that medical loss information is "proprietary" and "business sensitive." So Rockefeller asked the Senate Commerce Committee to investigate. The committee concluded, by examining premium and claims data reported to the National Association of Insurance Commissioners, that the medical loss ratio is significantly lower than the industry would have them believe.

Reed Abelson of the New York Times reports that in 2008, the for-profit average medical loss ratio was 84 percent in policies offered to large employers and 80 percent in policies offered to small businesses. In the individual market, there was an average medical loss ratio of 74 percent. Rockefeller specifically accuses CIGNA of breaking the law and inaccurately reporting information to the NAIC -- they had claimed a medical loss ratio of 93 percent.

The Senate analysis shows that the health insurance industry "provided one set of premium-benefit numbers to the public and to Congress, and presented a different one to their investors." The letter says that America's Health Insurance Plans' (AHIP) claim that the industry spends 87 cents of every premium dollar on medical care was part of an "expensive public relations effort." The publicly-traded health insurers' own financial reporting to the Securities and Exchange Commission does not come close to supporting the figure -- see page 7 of the letter to CIGNA for the individual breakdown.

[safeinOhio]

9. They deserve no more than 2% net profit

They have zero risk. If profits dip or cost rise they raise rates. They have a anti-trust exemption. They are stealing our money.