November 22, 2010
New Rules Tell Insurers: Spend More on Care
By ROBERT PEAR
WASHINGTON — The Obama administration issued new federal rules on Monday that will require many health insurance companies to spend more on medical care and allocate less to profits, executive compensation, marketing and overhead expenses.
The rules, intended to benefit consumers, vastly expand federal authority to direct the use of premiums collected by companies like Aetna, Humana, UnitedHealth and WellPoint. While some states have had such requirements, Monday’s announcement is the first such mandate by the federal government and grows out of the new national health care law.
“Millions of Americans will get better value for their health insurance premium dollar,” Kathleen Sebelius, the secretary of health and human services, said in issuing the rules…
Starting next year, she said, insurers in the individual and small-group markets must spend at least 80 percent of their premium revenues on medical care and activities to improve the quality of care. Insurers in the large-group market must spend at least 85 percent of premium dollars for those purposes...
He said most insurers should be able to meet the standards because “their profitability and reserves are at an all-time high.”
Italics and emphasis are mine. This underscores the problem with for profit healthcare companies which are run without any sort of protections for the consumer/patient. The more they deny care, the more profitable they are. They make money by denying care. And it’s the consumers who bear the brunt if they are unlucky enough to get sick and can easily go bankrupt in the process. A majority of bankruptcies in the U.S. are caused by the costs of a medical illness. So, of course, the Republicans in Congress are doing everything they can for the big insurers, and making the claim that it will “destabilize insurance markets” and that there will be less competition. Competition has not decreased medical costs in this country. We spend more per capita on healthcare than any of the other industrialized countries and have worse results.
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