Section 2718 - Called the "Golden Bullet" of HCR - Do you know what it means? If not, read here!

[FrenchieCat]

From the Senate Bill:

Section 2718 "BRINGING DOWN THE COST OF HEALTH CARE COVERAGE".

‘‘(1) REQUIREMENT TO PROVIDE VALUE FOR PREMIUM PAYMENTS.—
‘‘(A) REQUIREMENT.—Beginning not later than January 1, 2011, a health insurance issuer offering group or individual health insurance coverage (including a grandfathered health plan) shall, with respect to each plan year, provide an annual rebate to each enrollee under such coverage, on a pro rata basis, if the ratio of the amount of premium revenue expended by the issuer on costs described in paragraphs (1) and (2) of subsection (a) to the total amount of premium revenue (excluding Federal and State taxes and licensing or regulatory fees and after accounting for payments or receipts for risk adjustment, risk corridors, and reinsurance under sections 1341, 1342, and 1343 of the Patient Protection and Affordable Care Act) for the plan year (except as provided in subparagraph (B)(ii)), is less than—
‘‘(i) with respect to a health insurance issuer offering coverage in the large group market, 85 percent, or such higher percentage as a State may by regulation determine; or
‘‘(ii) with respect to a health insurance issuer offering coverage in the small group market or in the individual market, 80 percent, or such higher percentage as a State may by regulation determine, except that the Secretary may adjust such percentage with respect to a State if the Secretary determines that the application of such 80 percent may destabilize the individual market in such State.


What it means:

The language is convulted but the result is simple,
insurance companies can no longer make money by ensuring people who don't make claims.

Under the current business model of private insurers the goal is to recruit insurees who in all likelhood won't make claims, while denying those who are certain to either because of pre-existing conditions or simply by falling sick. The bill directly outlaws those practices but under 2718 they wouldn't have the desired effect anyway. Take the hypothetical case where your entire risk pool is made up of healthy young adults whose claims are mostly limited to broken bones from skiing or biking accidents. Under 2718 unless those claims across the risk pool don't add up to 80% or 85% depending the insurer has to rebate the extra premium. At the extreme the company would have to rebate the entire premium and so go out of business having no revenue to even pay employees. Under the new model the only ways to increase profits are one, to compete on the basis of volume, or two to reduce administrative costs, which is a 180 from the current model of hastling claimants into dropping coverage or simply finding excuses to rescind coverage.

Similarly 2718 limits or eliminates the utility of simply raising premiums because it would require a parallel increase of provider payments on an 85 to 15 ratio, otherwise the rebate provision would trigger. And while collusion between provider and insurer can't be excluded the benefits would flow more than 5 to 1 to the provider while the price differential with other plans falls entirely on the insurer. The same effect occurs by eliminating a category of coverage, even if you didn't fall afoul of the Acceptable Benefits Package requirements once again you risk triggering the rebate provision.

The words are not used in the bill but the result is nearly automatic cost controls. And enforcement is relatively easy, most of the information needed to calculate MLR is readily available in SEC filings and IRS returns, you don't need HHS auditors rummaging around in the records, the SEC, the FBI and the IRS are already on the job.

This language is not in the House Bill, at least not with the same effect, and we can expect that insurance companies will start working on the usual suspects to kill the bill on final (the language is still in the bill as of 3/13/10). Which in my mind is reason to just get this bill signed to nail 2718 into law.

Because on its own it has many of the same benefits on the overall system that the Public Option was supposed to deliver.
http://www.angrybearblog.com/2009/12/medical-loss-ratio-revisited-cost-and.html

You can go to the article link and read the comments, as that might answer some of your questions
in reference to loopholes ect.....

The author also has the last comment on that blog:

"For those of us who believe that given an open playing field a Public Option can out compete for-profit insures this provision is the Golden Bullet to ultimately kill the Beast that keeps 50 million people uninsured at a societal cost far greater than that of other developed countries.

At times I worried about pointing this out lest opponents of health care reform focus on killing it, but figured that AHIP was all over it anyhow. And indeed they seem to have watered it down to nothingness over the summer only to have it come back to life. There was some reporting that their early elation about getting the individual mandate through without the PO was tempered when they found out this had crept back in the bill and gotten past the Conservadems. Which in my view is the strongest reason for the Democrats to swallow hard, pass this version of the bill before Nelson and Lieberman get instructions to find some new pretext to kill the bill. Take the money and run."


Maybe that's why Nancy is smiling so much these days!...... :shrug:

[4lbs]

1. So, therefore, consider the following scenario.

PIP (Private Insurance Provider) charges one million people $300 monthly on their policies.

That's $300 million monthly, and $3.6 billion annually.

Under this "Golden Bullet", at least 80% of that would have to be used to pay out claims. That's $240 million monthly on average, and $2.88 billion annually.

The PIP would have at most a profit of $720 million. Much, much less than the $1.6 billion to $3.8 billion profits the PIPs reported for last year.

Now, if the PIP simply raises premiums to $500 monthly for those million customers, that means it takes in $500 million monthly, and $6 billion annually.

However, because of this "Golden Bullet", it must still pay out at least 80% of that. So, it must pay out $400 million monthly, or $4.8 billion annually.

Then it would have a profit of $1.2 billion.

If the PIP only pays out $4 billion that year instead of $4.8 billion, it must rebate/refund $800 million to it's customers. The difference between the 80% amount mandated by the "Golden Bullet" and the amount they actually paid out in claims.


Something tells me this is why the PIPs have been rapidly and vastly raising insurance premiums. They know this "Golden Bullet" will take effect beginning Jan 1, 2011. To keep the same $2 billion or so annual profit, they must do the math to get the proper amount of revenue to take in, meet the 80% reimbursement quota, and still make $2 billion.

To make $2 billion profit, they'd have to take in $10 billion in revenue for the year. That's about $834 million per month. If the PIP was taking in $600 million monthly, then it would need $234 million more monthly. That's an average 39% increase per customer.

[FrenchieCat]

3. Whoa!

That's some math, ain't it?

Answers the question some had on that.

[truedelphi]

11. Where do construction costs of facilities, where do salaries

And other expenses fall?

The above discussion is detailed as if there are only the expenditures related to claims, when there are other expenditures as well.

[4lbs]

18. I was trying to present the simplest scenario. If you want to make it more complex and compute all

of that, go right ahead.

Being that complex isn't necessary for the basic fundamental understanding of how the "Golden Bullet" rule will affect things.

[AllentownJake]

27. Here is what the "Golden Bullet" doesn't protect against

Rises in Health Care cost outside the realm of insurance.

So you have just mandated profits for private hospitals, private practices, and the pharmaceutical industry.

Yeah you have an 80% medical loss ratio, you did nothing about the fundamental problem underlying that, the rising cost at the care level.

What is your next Golden Bullet. This one is a blank.

[truedelphi]

44. That is my feeling also. When Obama initially used the words "Cost Containment" I thought he meant

He was concerned about the inflated prices that all the various segments of the Big Medical Interests charge us for.

But it turned out he was only referring to the monies that the Fed government allocates to this problem, and how those expenses will be paid.

And as that turns out, in part the monies will come from a major slash of MediCare "waste,' including monies to pay doctors. Doctors are already fleeing from treating geriatric patients - this will make it even harder to find doctors if you are on MediCare and do not have supplemental "boutique" coverage.

And no one at the Federal or Congressional level (except those who recently voted in the House for a public option) give a hound's tooth about the inflated costs that we consumers bear.

[Beetwasher]

20. Those Expenditures Are Considered Administrative Overhead

n/t

[FrenchieCat]

39. Correct, and there is an accounting clause, that spells out

what the various categories are that are acceptable as health care cost and which are not.

[napi21]

2. That must be wha 'reporters' meant when they talked about

ins. co's will have to pay out at least 85% of their profits to claims. That's a great section! That almost turns the ins. co's into something similar to a public utility.

[Oregone]

4. Thats supposed to be a "good" ratio?

You know, compared to Medicare and Canadian Single-Payer, its, well, a bit high. The status quo is a bit insane, so Ill digress on that point...

But this isn't the only important thing to really clue in here on regulating the MLRs, and its actually all guesswork on the long term market implications. What we are dealing with here is the capitalistic private market and private ownership of these companies. What these people care about, strictly, is profit-per-share. The existence of these corporations is to, above all, either maintain or increase the profit-per-share ratio; they will not waiver in such a pursuit. So, the corporations taking in some set amount in revenue either have two obvious ways to maintain the profits per share.

1) they could attempt to make to company more efficient (cutting ads, staff, lower pay, etc, such that less of that 15-20% is spent on operations and can therefore be profit). The companies have a lot of wiggle room here being so bloated, so undoubtedly they will do these things. This, ultimately, is not good for the end customer because it isn't saving money in the big picture. It just makes sure they spend less of what is over after the medical loss, so they can disburse it to their shareholders.

2) another approach they can take is to simply negotiate *higher* rates with providers, such that 20% of their new amount is equivalent to 35% of the old amount. Its a bit counter-intuitive to think an entire industry would do this instead of race to the bottom, but remember, no one wants to see the profits-per-share drop and there is also an anti-trust exemption for the time being.

================

So, let me just throw an example out here how this "golden bullet" could, in a capitalistic free market, NOT be the panacea....

Today, imagine a company has gross revenue of $100 million dollars, and pays out $65 million in claims.

This leaves them with a 35% medical loss ratio.

This company spend $30 million of this money on staff, executive pay, buildings, advertisements, and general operational costs.

This leaves $5 million dollars in pure profits the shareholders get to receive each year. With a million shares, each one delivers $5 of dividends per share; this is the target rate for each shareholder.

Now, after this reform, lets assume they must now operate with an 85% medical loss ratio.

They assume that they can reduce overhead by $15 million dollars by dropping health care benefits, removing cubicle walls, firing staff, and running the heater at 59 degrees max all year round.

And now, lets remember that they need $5 million in profit to maintain the proper profit per share ratio (so the owners don't bail in mass)

So, all in all, they need to have an overhead of $5 million + $15 million dollars, or $20 million

Now, $20 million must be a *maximum* of 15% of their new gross revenues.

20/.15=$134 million dollars.

So this company became 50% more efficient and raise their negotiated rates 34% so that they could maintain the target per share ratio. And their friends did too after a nice phone conversation.

You see, insurance companies DO NOT care how much they pay hospitals and doctors for services. ALL they care about is the profit-per-share ration. Thats it. Don't fool yourself. This is capitalism and the private market (without forced competition). If they must pay more to get the same (or more eventually), its no sweat off their back.

I'm not saying this will *always* happen, or claiming to know the extent. I'm just explaining a mechanism that would cause regulated MLRs not to be a total "golden bullet"

[FrenchieCat]

5. “medical loss ratio”

means insurers has to spend 80 to 85 cents of each dollar they collect from plan members to provide health care. I repeat, to Provide health care, not something else. Removing Cubicles walls and firing Insurance employees to increase how much of the 15% gets to their shareholders is not our concern.

Again, our only concern is that they must spend 80-85 of each dollar they collect to provide health care.

"Cost" isdefined. You can look it up yourself. But I'll quote the main parts:

"the amount of premium revenue expended by the issuer on costs described in paragraphs (1) and (2) of subsection (a)"

‘(a) ....

‘(1) on reimbursement for clinical services provided to enrollees under such coverage;

‘(2) for activities that improve health care quality; "


and of course compared to the current status quo 65/35 ratio, 80-85/20-15 is much better.

[Oregone]

6. Yes, and I never said otherwise, but how does that help you in the end?

How? By what market mechanism are you determined that is definitely going to help the consumers?

After all, its a "golden bullet"

The *only* guaranteed thing that will happen is that insurance companies will develop strategies to maintain or increase profit-per-share ratios, even under these conditions. Insurance companies will not willingly sacrifice profits and will not be inclined to pass forced efficiency savings down onto the consumer if they can find a way around it.

And if they catch onto the fact that even overhead reduction will not preserve profits in each scenario, then medical payout could be raised to offset a potential loss. That could cause harm, most definitely.

There is a scenario where this could reduce premiums (extreme bloat cutting & loss of profit to hit the 15-20% mark), but it is not the only scenario (especially as long as the anti-trust exemption remains, which provides easier manuevering)

The reality is this is an experimental measure in a market environment. As much as it is appealing, quite frankly, it has potential to both drive up premiums and medical costs (as well as force insurers to be more efficient). What this isn't guaranteed to do is affect private profits AT ALL.

So, as long as you and I both understand that its likely that profits remain constant, then the chips will fall where they may to illustrate how this works in practice with the private market. Either premiums should almost instantly dropped, or there is going to be some shennanigans here explaining why all of a sudden their medical loss just took a massive jump (and medical providers will be happy as fuck if that happens too)

BTW, just so we are clear, I'm not a big fan of profit or this insane type of overhead involved here (unfortunately, the government has decided the cost of private industry running the show is somehow worth it for the general welfare of the people). I'm just playing devil's advocate a bit regarding this "golden bullet" and mentioning a problem Ive seen for a bit. I honestly dint think unless you regulate billable rates centrally for the insurers, as well as almost absolutely lower the ceiling on any overhead and profit (like some European systems), then its not guaranteed to go as planned.

[FrenchieCat]

7. If rates are raised to that extent,

Kind of like what happened with that "WTF" 39% increase by Anthem Blue Cross in California,
the public will not only support a Public Option, but may as well single payer....
both would become a rallying cry.....


States have been given the tools (in this bill) to start their own Single Payer program....
as well, the congress can pass a stand alone PO.

Don't pass this bill, and wait for a bill that gives you everything,
well now, that's an experiment bound not to work.

In otherwords, this bill is the beginning, not the end.
I don't know if you get that part. :shrug:

[Oregone]

8. So is it a "golden bullet" or not?

Is the real "golden bullet" public outrage or something? Because there is plenty of that already....and suffice to say. :)

And if they decide to make people pay for a bigger pie they get a slice of, why is the "public option" the appropriate response? Please already....

Seriously....

In that scenario, isn't it time to ask why the American people have to pay almost double for health care, per capita, than other countries pay (and get better outcomes too). Isn't it time to ask if having private industry involved just might not be worth the exorbitant cost?

The best you could come up with is a mixed-market? Please...

The time has already been far past to boot their asses down the road, and if they respond to this benevolence with more of their shit, you are going to suggest that people keep stringing them along with a "public option"

Ah, fuck that already.


"I don't know if you get that part."

I honestly don't. Ill be the first to put money into a pool that *significant* improvement to this bill will be decades away (if not more). I think before it is drastically improved, it could be totally revoked.

[FrenchieCat]

9. I don't get you.....

You are so against this bill,
no matter how much it advances us,
until I don't think there is anything
that I could say that would make you
understand what is in this bill,
because you only want to talk about what isn't in it.

I can't help you.
The bill will pass,
and due to it, many will be better off, period.

Those who are against this bill
are on the wrong side. period.
All of your demanding guarantees doesn't negate that fact.

[Oregone]

33. Well, you're either with us or against us

Life aint so black and white. Sorry. And most certainly not politics either

[vaberella]

42. Sadly you don't realize you speak in the same manner.

You're either with single payer or you're not. You say what single payer does and why it is best and lay out all that is bad with this bill....ie making the black and white claim that one is automatically better than the other. When we have to take in the political environment in the US, the problems of health care and respective facilities or lack there of or single payer would die on it's head because we have so many problems. As FC said, this isn't the end it's the beginning.

[Oregone]

45. Not a bit at all

In this thread Ive made reference to European models that use private industry to run health insurance, but mention their approach to profits, overhead, and regulation are in another universe compared to this.

There is no universal solution. No one size fits all. Different policies work for different countries. It isn't single-payer uber all. With that said, this reform, in this private market environment, has much lacking.

Straw man fail.

[cornermouse]

10. "I think before it is drastically improved, it could be totally revoked. "

I hope so. But by then, it will no doubt be too late. The door will have been opened and there will be no going back from the increased charges.

I don't agree that what they're doing is going to benefit enough people to make it worthwhile and unfortunately I think that's exactly the way they planned it.

[eomer]

12. This provision doesn't eliminate the profit motive, it merely changes the game they will play.

If this rule is enacted, for-profit insurance companies can no longer profit by denying claims, which sounds like a good thing. But, unfortunately, they can now profit by approving bogus claims or by agreeing to pay rates that are too high. Because the more they pay out in claims, the more profit they are allowed. So I don't see how this provision would be an automatic cost control. On the contrary, it would make the insurance companies motivated to encourage costs to rise.

And, of course, as the insurance companies find ways to get their costs to rise, premiums will rise with them. Premiums will be set at a level of (costs / 0.8).

This isn't any golden bullet and it's not an automatic cost control mechanism.

[phleshdef]

23. Oh well then, lets hang it up and not regulate anything ever.

Companies will only look for a way around it, might as well not even bother.

[eomer]

48. No, let's not.

I'm in favor of passing this piece of crap and then continuing to fight.

But in the meantime let's be realistic about the crap that it is.

[laughingliberal]

24. Mostly they will get around it by juggling certain items around to classify as expenses

This is the reassurance Oppenheimer and Co gave their investors about the MLR of 85%.

[FrenchieCat]

38. ‘‘(a) CLEAR ACCOUNTING FOR COSTS.

It's in the bill, page 7 & 8. Tell me what you find there.
I can say that currently, status quo wise, the accounting determination are
left to 50 different insurance commissioners....but no longer per this bill.

http://democrats.senate.gov/reform/managers-amendment.pdf

[laughingliberal]

49. They seem to think they're safe

A note from a health care analyst with Oppenheimer & Co reassured investors saying, " this number was "“workable” for insurers,...they can label certain items that count as corporate expenses for accounting purposes as health care for purposes of meeting the spending minimum."

It's pretty much the same message Potter has about this. First these numbers can be manipulated and second we have no one to speak of in the federal government with the expertise to discern the manipulation. It would also seem we need to look at funding for enforcement.

I addressed this here:

http://www.democraticunderground.com/discuss/duboard.php?az=show_mesg&forum=433&topic_id=221735&mesg_id=221982

It's not a magic or golden bullet. California has had MLR standards in place and they are still catching very little of the fraud. I was not happy that President Obama's OMB stepped in and put the cabash on it when a proposal was made to set the MLR at 90%. It would have been far more difficult to hide under that MLR and it is still lower than the average MLR 20 years ago.

[CTLawGuy]

13. b-b-but

it's a korprite giveaway!111!!!

[cornermouse]

16. How else are you going to

"piss off the extremists"? By the way, do you want to define the qualities you think make an extremist?

[CTLawGuy]

31. irrational;

nothing is ever good enough; hatred of compromise; uses own "facts" rather than actual facts; constant accusations of selling out, etc.

Also I'd like to add "stalking".

[cornermouse]

32. Your own words, not mine.

Stalking? Nice try, no cigar. A simple search would prove the truth of that.

[november3rd]

14. Wow

No wonder the GOP keeps saying no one knows what's in the bill. Thanks for the insight.

[Lydia Leftcoast]

15. In other words, they're guaranteed 15%?

That's a lot of money to spend on executive salaries and perks and shareholder dividends.

Wendell Potter was saying that they got along with 5% in the 1990s.

[laughingliberal]

21. 20 years ago the usual MLR was over 90% without a law, over 95% in some cases

At one point legislators were hoping to set the MLR at this level. The President's Director of OMB put the cabash on that saying it would amount to nationalization of the system. The 85% level was reported to be the level the insurance industry was working towards as it was the level at which they could most easily manipulate the numbers.

From an interview Lawrence O'Donnell conducted with Wendall Potter on the MLR and the likelihood it would be enforced:

O'DONNELL: "Is there anyone currently employed in the U.S. government - at the IRS, or in the HHS - who knows how to enforce this; how to go into an insurance company and figure out what their real medical loss ratio is?"

POTTER: "No, I don't think so. At least I haven't come across them. One of the things I have learned over the last six months is that there is very, very little understanding in Washington about how commercial health insurance companies work, including on Capitol Hill. The exceptions are Sen. Rockefeller and his team..."

Potter was also noted to remark the industry felt they could 'live' with the 85% MLR


"POTTER: No, it’s not clear to me, and there’s, and that’s a very important thing. We need to know who will be doing the regulating, who will be defining the terms, who will be setting the rules. And I don’t think that we have that clarity yet.]/b]

A note from a health care analyst with Oppenheimer & Co reassured investors saying, " this number was "“workable” for insurers,...they can label certain items that count as corporate expenses for accounting purposes as health care for purposes of meeting the spending minimum."

It has also been reported by Countdown that Aetna has admitted to the state of California that they 'fudge' their numbers in the small group market. California regulations do have a defined MLR for insurers but they have found it difficult to detect fraud and difficult to enforce.

I have, in fact, been contacted by several here who live in CA and have talked about the difficulty regulators there have been stymied in efforts to detect fraud and enforce the regulation.

This has been one issue I've had with the bill. Whereas they have written some regulation into the bill, some have been loopholed and, even without that glaring problem, there has been no funding set aside for enforcement. To a large extent regulations under the Senate bill stay in the hands of the states. It would be some help to have the House version of the national exchanges but even there no funding for the enforcement has been set aside. NCLB was a decent idea in theory, we have seen the abysmal failures that resulted from failing to fund it. Failing to fund agencies to enforce these rules will make enforcement, in any timely manner, difficult.

[Oregone]

34. 15% of what?

All they need to do is increase the size of the pie to make sure their slice gets bigger

[laughingliberal]

50. Yeah,, more with clever manipulation of 'expenses.'

Yes, 20 years ago the usual MLR was above 90%. When a push to set it at 90% was made Obama's OMB director squelched it and said it would amount to a nationalization of the system. Funny, I don't remember the system being nationalized in the 1990's.

[Fla Dem]

54. Well yes that would be a lot, but I suspect all other overhead expenses

would have to come out of that 15%; all salaries, including below management, facilities and infrastructure maintenance, their cost of providing benefits, rents, building leases, taxes, etc.

[hulka38]

17. Would you address this caveat, Frenchie?

"...except that the Secretary may adjust such percentage with respect to a State if the Secretary determines that the application of such 80 percent may destabilize the individual market in such State"

It seems like a huge loophole waiting to be exploited.

This is up to the State SoS?

[Beetwasher]

19. DHHS Secretary, Currently Sebelius

[hulka38]

35. Thank you.

[laughingliberal]

22. This is a loophole which might be somewhat mitigated if the House version of the exchanges

that are national is adopted. If the clause allowing policies to be sold across state lines remains, it is imperative we have national exchanges and that the Senate pass the bill revoking the anti-trust exemption for insurance companies. I still expect the insurance companies to easily manipulate the MLR but these measures would put a little more oversight in place.

[IndianaGreen]

25. There is no House version of anything! The House is being ordered to pass the Senate bill

and whatever crap the party elites come up with as "reconciliation" will be revealed later and no amendments allowed. Seems like the House and Senate leaders don't want the public option to be introduced as an amendment.

Whose side are they really on? Corporations or the people?

[laughingliberal]

28. I understand that

I'm hoping to see some of the House version come out of the reconciliation. I think we know whose side they're on. I'm just pushing to see some improvement before it passes. We're going to be fighting to change this thing for 30 years.

[IndianaGreen]

29. If you want real change, you will have to throw the entire political class out of power

just about what is going to happen in Greece.

[FrenchieCat]

36. The key is that is from section (ii) with respect.....offering coverage in the small group market

The entire section you quote is restricted to small group market and individual market.

‘‘(ii) with respect to a health insurance issuer offering coverage in the small group market or in the individual market, 80 percent, or such higher percentage as a State may by regulation determine, except that the Secretary may adjust such percentage with respect to a State if the Secretary determines that the application of such 80 percent may destabilize the individual market in such State.

So yes, it appears that in this particluar market, the Secretary (Sebelius?) would be the one that could seek an exemption, but only if it could demonstrate that the 80% requirement would spur insurers to get out of the business of insuring those markets. But the default by standard regulation to be adhered to by the states is a percentage can only be 80% or higher otherwise. (States also have the ability of setting up a single payer program, and then there's the exchange for small and Individual markets):

(c) Sec. 1303. Special Rules
q) Requires the Office of Personnel Management (OPM) to contract with health insurers to offer at least two multi-state qualified health plans (at least one non-profit) through Exchanges in each State. Requires OPM to negotiate contracts in a manner similar to the manner in which it negotiates contracts for Federal Employees Health Benefits Program (FEHBP), and allows OPM to prohibit multi-state plans that do not meet standards for medical loss ratios, profit margins, and premiums. Requires multi-state plans to cover essential health benefits and meet all of the requirements of a qualified health plan; States may require multi-state plans to offer additional benefits, but must pay for the additional cost.
http://democrats.senate.gov/reform/patient-protection-affordable-care-act.pdf

To your question.......
The key consideration is: “or such higher percentage as a State may by regulation determine,…”. It is also important to understand that the Insurance Industry has not been transparent about the MLR and so the bill allows unlimited flexibility to the State regulators. Combine that to their ability to enforce rebates, and, this provision could in fact be used to squeeze every last bit of inefficiency out of the Insurance Industry. And there should be a chain reaction effect because as regulators squeeze insurers, they will in turn apply more pressure to providers.
If the importance of Sec. 2718 is understood, and then if that understanding is applied to the Maryland model : http://online.wsj.com/article/SB125288688445707403.html , it becomes fairly clear that though the MLR regulating may be the most effective way to drive down costs
http://www.prospect.org/csnc/blogs/beat_the_press_archive?month=03&year=2010&base_name=protectionists_dominate_health&3


Why every progressive Senator supports this bill
http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=433x80261

[AllentownJake]

26. So when my doctor or pharma company or hospital raises their rates

The insurance industry raises them at the same rate to keep the claims payout at 80%.

My rates still go up.

Hint: Insurance is not the driving reason health care costs so much, they raise their rates because the cost of care is rising that they pay out.

I thought people on DU were smarter than this. Seriously, what you think the world is a vacuum and things are just that simple?

Golden Bullet my fucking ass.

[IndianaGreen]

30. but you get covered if you have a pre-existing condition...

except that if you can't afford the higher premiums and co-pays, you won't get the health care you need.

[FrenchieCat]

37. Yeah? You think that what the Anthem Blue Cross increase wasn't noticed?

Five cost controls in the Senate health-care bill

1) Bundled payments: A lot of the focus has been on cost controls that work through the insurance system. But costs aren't rising because insurance is expensive. They're rising because health care is expensive. The experiments with bundled payments are an attempt to begin addressing those drivers directly. Right now, hospitals get paid for each procedure they conduct. If you come in with symptoms of a stroke, they get one check for the diagnostic, one check for the stroke medication, one check for the surgery, etc. And if you have to come back in two weeks, they get more money for that, too.

Under bundled payments, the hospital would receive one check for everything related to your stroke over a single period of time. That means they make more money from doing less, rather than more money from doing more. It also gives them an incentive to coordinate care when you're out of the hospital, as it's cheaper to get a nurse to call and make sure you're taking your medicine than it is to have you in for a follow-up procedure. For more on the bundled payments system, and Sen. Mark Warner's efforts to strengthen it, see this post, or this article.

2) Prudent purchasing: Howard Dean gave this prominent play in his op-ed this morning, and he was right to do so. The only problem is that he said it's not in the bill, and it is.

Prudent purchasing means that insurers can't enter, or stay, in the exchanges unless regulators are satisfied that they're doing a good job. That works both to ensure a good product, but also to hold costs down. If an insurer wants to hike premiums, for instance, they have to submit a justification to the exchanges and post that justification publicly on their Web site. If the exchange isn't convinced, that insurer can be dropped from the exchange, losing all customers and profits they were making.

Do this to one or two insurers, one or two times, and the message will be pretty strong. Moreover, it will go a ways towards countering the status quo bias that current infects insurance purchasing, wherein people don't change because, well, it's a pain to change insurers, and so insurers aren't forced to provide products as good as a competitive market would ordinarily demand. It also gives regulators a way to tamp down destructive marketing (an insurer can be dropped for using their marketing to try and cherrypick healthy customers -- say, by advertising exclusively in Runner's Monthly) and seed quality reforms.

3) The Medicare Commission: One reason there's so much packed into this iteration of health-care reform is because it's so hard to overcome the status quo outside of a massive reform effort. Common-sense delivery system reforms don't attract sufficient interest to muscle pass interest group opposition. The Medicare Commission streamlines the reform process, forcing a panel of independent experts to suggest a package of reforms in years when spending growth is too rapid and forcing Congress to vote on the package -- no amendments, and no filibuster.

The Medicare Commission enjoys a catalytic interaction with other elements of the bill, as it offers a process to take small programs and convert them into systemwide reforms. A pilot program that's working well, for instance, might be included in the next year's reform package, making it a policy that makes Medicare work better. This policy could be made a lot better if the Senate passes the Rockefeller-Lieberman-Whitehouse amendment.

4) The excise tax on high-value health insurance: This is, essentially, a tax on the unchecked growth in premiums. The key here is that the threshold at which premium dollars begin getting taxed at 40 percent doesn't rise as quickly as premiums costs generally rise. Now imagine two insurers: One holds costs down quite well, and one holds costs down quite poorly. Within a couple of years, the costlier insurer's plan is $3,000 over the threshold, while the cheaper insurer remains under it. The tax amplifies the difference between the two. The costlier insurer is suddenly $4,200 more than the cheaper insurer. In this way, plans with more successful cost-control mechanisms get an even larger market advantage. This makes the insurance market even more competitive in terms of price. For a longer explanation, read this post.

5) The individual mandate: In the last few days, an odd argument has arisen. The individual mandate, people say, must be sacrificed on the altar of cost control. The truth is quite the opposite. First, the individual mandate lowers average premium costs by bringing healthy people into the system. If the only people buying insurance are the people who expect to need to use it, the average cost will be prohibitively high. But second, the individual mandate is the political spur for future cost controls.

In a world without a universal health-care structure and an individual mandate, premium increases are a shame, but not much of a political problem. In a world with an individual mandate, large premium increases are Congress' problem. It focuses the mind on cost control. Given a choice between passively letting people become uninsured and taking on providers and insurers, Congress will choose the path of inaction. But given a choice between voting to take people's insurance away and taking on providers and insurers? That's a harder decision. Right now, the pressure in the political system comes from organized interests. The mandate levels the playing field. More on that here.

And that's not all, of course. There's the interaction of comparative effectiveness review and health information technology. There's the hope that regulations on insurers force them to innovate on price and quality, rather than on denying coverage to sick people. There are the good points Jon Gruber makes in this interview.

Will it all work? Define work. Will it be enough? Almost certainly not. Is it more than we've ever done before? Absolutely. And does it do more for cost control than the continuation of the status quo? Again, absolutely.
http://voices.washingtonpost.com/ezra-klein/2009/12/five_cost_controls_in_the_sena.html


You could have left out the snark.....as that would lend to more civil discussion and debate.

[AllentownJake]

40. I'm pretty much done with playing nice with corporatist

and I'm done with the party if this passes.

Watch what I'm about to do next :evilgrin:

Don't worry, I won't be here, and I'll be playing fully within the rules.

[FrenchieCat]

46. This isn't about you.

5 "I" in 2 sentences? Geeze..... :eyes:

[joe black]

41. Great bill.

Then why am I being forced to buy it. This is not right, I can't afford it what about it do people that want it don't understand about my plight.

[vaberella]

43. You're being silly. Subsidies are provided for those who can't afford.

basically it expands medicaid like that.

[Change Happens]

47. Frenchie is on fire today!!! Way to go and thanks.

[jeanpalmer]

51. Do you have an official link for the MLR?

The Senate and Library of Congress links to HR 3590 show only 75% and 80% MLR, not 80% and 85%.

For example see Sec. 2718 here on p.35 of the pdf: http://democrats.senate.gov/reform/patient-protection-affordable-care-act-as-passed.pdf

Or in the following link to the Library of Congress, either type in "H.R. 3590" in the search function or click on the link to it listed in the right column under "Weekly Top Five." http://thomas.loc.gov/

I've looked for official references to to 80%/85% but can't find any. The Senate Democrats' link above refers to the bill "as passed."

[OneBlueSky]

52. if this is as you describe it, you can be sure that one of two things will happen . . .

1) it will never be enacted as part of any health care "reform," or

2) the insurance companies (with the help of their Congressional minions) will find a way around it -- and fast . . .

too much money at stake here for it to be any other way . . .

[FrenchieCat]

53. Too many lives are at stake not to enact HCR.....

and given a choice, I choose saving lives over saving money. Hope you do too.

[OneBlueSky]

55. I'm all for enacting HCR . . . but the pending bills are more insurance company largesse . . .

than health care reform . . . we need a system that covers everyone at a reasonable cost and that cuts out the middle men -- the insurance companies who skim a third or more right off the top of each health care dollar in return for -- what? . . . the right to take this money to enrich their shareholders with no commitment to health care other than using the system as a corporate ATM? . . .

there are two ways that for-profit corporations make money: 1) increasing income, and 2) reducing expenditures . . . that is inviolate, set in stone, and the corporations are legally bound by their fiduciary responsibility to their shareholders to maximize their profits . . . they are NOT bound to do ANYTHING else -- and they are particularly not bound to deliver quality and cost effective health care to Americans . . . do we really want these so-called "persons" in complete control of our health care system? . . . rather than, say, the medical professionals and their patients (you and me)? . . .

look, I'm all in favor of REAL, honest health care reform . . . unfortunately, I haven't seen any yet . . . the pending bills are neither real nor honest, and at this point it's come down to a matter of winning or losing, and nothing more . . . hell of a way to run a country -- and hell of a way to decide how our health care will be delivered, by whom, and for whom . . .

the real solution here is actually quite simple . . . just open Medicare to everyone, with a sliding premium scale based on income and family size and phased in over, say, five years . . . the system is already in place, and it works well, with minimal administrative and overhead costs . . . as for the total cost of covering everyone -- just stop the fucking wars for a few weeks and we'll very likely cover whatever the costs will be in their entirety . . . and have enough left over for at least a cup of coffee . . .

I understand that a lot of folks are saying that doing something is better than doing nothing . . . and with respect to Obama's political life, that's absolutely true . . . with respect to reforming the health care system, it's not . . . better to scrap a bad bill and start over with new assumptions, new goals, and new people doing the design work (say bye bye, Rahm) . . . I'd rather see us take an extra year and do it right than hurry through flawed legislation solely to protect the president's hind end . . . we can do better . . . we must do better . . .

I absolutely choose saving lives over saving money . . . but I want to save a LOT of lives AND save money at the same time . . . it CAN be done with the requisite political will and just a wee bit of courage on the part of the president and the Congress . . . I'm still waiting for both . . .

[FrenchieCat]

56. You are advocating the exact same thing that the Republicans are.....

the.exact.same.thing!

Quoting you: "better to scrap a bad bill and start over with new assumptions, new goals, and new people doing the design work . . . I'd rather see us take an extra year and do it right than hurry through flawed legislation"

So what I want to know is why is it that you have no problem denying 31 million people health coverage? Why is covering more, but just maybe later in order to spite the Insurance Carriers and to get coverage for fucking everybody your priority? Why don't those 31 millions mean not enough? What kind of value is that? Because it isn't a liberal value.

I saw that 11 year old little boy begging Congress while talking about his dead mother.
and it's not just him, it's other Babies, young children, mothers, fathers all told to fucking wait some more by those who believe they know a better way. Those who believe themselves so intelligent and so righteous that their priority is to make 31 million wait for something better, just in case it is out there, and if not soon, like another year, then who knows when?

How could anyone look into someone's face and want to say.....well, "since we couldn't do more for all of us, we ain't doing shit for you now! But maybe later, but maybe not!"

I fucking want to know what this is called? cause it ain't empathy; it ain't sympathy; and it ain't human related principle.....no matter how much folks try to rationalize it as such.

When did Americans' lives become of lesser value than sticking it to the suits?

What is that about? What kind of value is that called?

What kind of person, at this point, would really truly believe that they are doing anyone a favor,
by literally advocating handing a death sentence to these Americans (who ain't got no fucking choice as it stands),
in order to say "Fuck you" to Insurance companies and to Pres. Barack Obama?

Not Dr. Howard Dean.
Not Sen. Sanders.
Not Sen. Franken.
Not Mr. Krugman.
Not Weiner or Grayson or Barbara Lee.
In fact, I dare to say, certainly not people of good will. Because what you quoted was the Republican talking points. Feigning to care, when your recommendations belies that as a non fact.

So where does all of this righteousness come from? Because the sorry exaggerations about this bill
don't even start to explain why lives of ordinary Americans matters just so little to the keyboard warriors.

What is being told to these people is exactly that they aren't even worth compromise or consideration because I guess they really don't matter. The 31 million are mainly the poor who will now get health coverage through this bill, and I guess smart people just really don't like that shit, unless they get just as much if not the same as those who have fucking nothing!

Yeah....the more I think about it, the madder I become!
I'm really sick of this petty selfish ass spoiled bullshit.
All of the concerns about Cost and money and.....
under the guise that Barack Obama just wants a political win.....
But of course, the fact that he's been willing to risk more than you,
in order to help those 31 million....
well somehow, that isn't anything to even think about.

Well, I have known that the Republicans have no heart, hell they brag about it....
but I thought that we were way better.

It's not that something is better than nothing....
it's that nothing is nothing,
and that is what you feel superior enough to choose for others;
fucking nothing.