Whether you are a believer in the benefits of single-payer health coverage or an opponent, mark this year down on your calendar because this is the year seismic shifts in our health care system finally begin. If you thought that the Obama Administration wussed out on pushing the nation in the direction of universal health care for everyone, today is the day you begin to understand that the reality is quite the contrary.
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The medical loss ratio requires health insurance companies to spend 80% of the consumers’ premium dollars they collect—85% for large group insurers—on actual medical care rather than overhead, marketing expenses and profit. If they fail to do so, the insurers will have to send their customers a rebate check representing the amount in which was left unspent on actual medical care. This one item will have more impact on the future of how medical care is paid for in this country than anything I’ve ever seen. This aspect of the law represents that which will ultimately lead to the demise of large parts of the private, for-profit health insurance industry. Why? Because there is virtually no way for-profit health insurers are going to be able to learn how to get by and still make a profit while being forced to spend at least 80 percent of their receipts providing their customers with the coverage for which they paid. If they could, we likely would never have seen the extraordinary efforts made by these companies to avoid paying benefits to their customers at the very moment they need it the most.