What is Minimum Loss Ratio?

Thank you for joining us for this weeks’ health insurance update. Today we are talking about the Minimum Loss Ratio or MLR. So what exactly is the MLR? The MLR is a law that dictates what companies can and can’t charge for in health insurance. The MLR uses an accounting statistic that measures the premiums paid out in patient claims for individual and small group policies. The policy allocates 80% for claims and 20% for overhead. The discrepancy lies in that most policies are 65% to 70% in claims while the rest is needed administrative costs on individual and small group policies, which are more expensive to administer.

Mila Kauffman, Maines’ insurance superintendent, who is also a supporter of President Obama’s Healthcare plan, warns that the MRL Ratio may disrupt our individual health insurance market and is seeking an exemption for the state of Maine. What’s interesting is that Maines’ existing healthcare regulations closely resemble the laws that are about to be imposed nationwide through the “Obamacare” initiative. In 1990, there was an MLR “crack down” in Washington State which caused a collapse of the market in 36 of the 39 counties within the state. This begs the question, is that a foreshadowing of what’s to come for the entire nation?

Promises, Promises…

Remember those famous words uttered by the President that if you like you’re health insurance, you’re going to be able to keep it? Well maybe, and maybe not. If you’re on a group policy that was in place before March 23, 2010, you are eligible to be “Grandfathered in” when the Patient Protection and Affordable Healthcare Act kicks in. However, you can only change deductibles, co-insurance, co-pays, and other benefits by a minimum amount; in the case of deductibles, as little as 5%. And if you want to shop your policy and change carriers, you will lose your “Grandfathered” status and be forced into a Government mandated plan. So what does all of this really mean to the small business owner? You will no longer have the freedom to chose the coverage you want, change carriers, or move from a fully insured plan to a consumer directed plan like an HSA or HRA because the Government is going to dictate what you can and cannot do by forcing you and other business owners to purchase only those plans sanctioned by the Patient Protection and Affordable Healthcare Act. Is it just me, or does the President’s promise sound a little disingenuous?  

It’s Called Checks and Balances, Right?

President Obama has appointed Dr. Donald Berwick as the new head of CMS (the Centers for Medicare and Medicaid Services) that oversees the giant Medicare bureaucracy that has a budget bigger than the Pentagon. If you don’t know who Dr. Berwick is, perhaps you should find out because he is going to affect each and every American. Here’s what the Wall Street Journal has to say about Dr. Berwick, “President Obama’s incredible recess appointment of Dr. Donald Berwick to head the Centers for Medicaid and Medicare Services is probably the most significant domestic policy personnel decision in a generation. It’s more important to the direction of the country than the Elena Kagan nomination to the Supreme Court.” Here’s why the Wall Street Journal put such an emphasis on this appointment, here are some quotes from Dr. Berwick himself: “The UK has people in charge of it’s healthcare, people with clear duty and much of the authority to take on the challenge of the changing system as a whole. The US does not.” Dr. Berwick is an unabashed admirer of the UK’s rationed healthcare system and would very much like to emulate it here in this country. He goes on to say that, “the unaided human mind and acts of the individual cannot assure excellence. Healthcare is a system, and it’s performance is a systemic property.” Again, Dr. Berwick is praising the UK’s system. And last, but not least, “I cannot believe that the individual healthcare consumer can enforce through choice the proper configurations of a system as massive and complex as healthcare, therefore that is for the leaders to do.” In other words, they know a lot more than we do, and they should be making our healthcare decisions for us. Perhaps that’s why Sen. Baucus, the Democratic chairman of the Senate Finance Committee was so taken aback by the President’s recess appointment stating, “Senate confirmation of Presidential appointees is an essential process prescribed by the Constitution that serves to check executive power.” Perhaps in this case, President Obama’s power really does need to be checked.

Thank You Cleaver

In a recent letter I received from Congressman Emanuel Cleaver, fifth district rep. for Missouri, he touts eliminating overpayment of Medicare payments to Medicare Advantage Plans like Humana Gold and Coventry Advantra.  Cleaver states that Medicare’s benefits are not affected and that this move is going to save over $150 billion over the next 10 years. Here’s what the Congressman didn’t say: by cutting Medicare Advantage payments to carriers by $150 billion dollars, they are capping what the carriers are being paid, the problem is, they are not capping what doctors and hospitals can charge. The net effect of this therefore, will be as hospital and doctor costs rise, which will happen, the Medicare Advantage Plans will have fewer dollars under the cap to work with. This will cause your low premium or zero premium Medicare Advantage Plan to have higher premiums and it will also raise the cost of out of pocket expenses. The vindictiveness regarding these plans of Democrats such as Cleaver, McCaskill and Moore is hard to understand, especially since these plans are so important to folks on fixed incomes that are seniors that cannot afford the $200 or more per month cost of a Medicare Supplement Plan. Medicare Advantage Plans like Humana Gold and Coventry Advantra, have an 83% satisfaction rate and have won the Gold Award for satisfaction three years in a row. So the question is, why is it that Democrats are so determined to destroy these plans? So in November, when you get your new plan design with a higher premium and bigger out of pocket expenses, don’t forget to call Congressman Cleaver and say thank you.