The method for determining the MLR, a categorization into 80% and 85% will provide a uniform country-wide yardstick to ensure that consumers receive their money’s worth when it comes to insurance premiums. This comes as a relief considering the patchwork of rules for MLR computation that exist across the country today. That insurance companies will need to make this information available to the consumers will bring in greater transparency and accountability into the system. This step will not only provide a control mechanism for the revision of insurance premiums but also equip the citizens with an opportunity to ‘vote with their feet’.
A great amount of time and deliberation must have been invested in deciding the definition of ‘medical costs’, the inclusions and exclusions. The exclusion of the ICD-10 implementation comes as a surprise though. The ICD-10 (supposedly the most expensive of all the medical cost exclusions) will provide a uniform ‘language’ for the assessment of the general health situation and monitoring of disease patterns. In my view and I could be wrong, it would be of benefit to the consumers, if the financial onus of this public health activity is shifted away from the insurers. This may significantly contribute in preventing consequent increases in insurance premiums.
The resistance from the insurers regarding the inclusion of fraud prevention, utilization and other expenses as a part of the administrative costs (15 – 20% with the new MLR calculations) needs to be deftly tackled. With the reforms, the insurers will have new avenues to cut on costs especially relating to the underwriting expenses (plans will now provide universal coverage), marketing expenses, broker fees etc, which have till now commanded a considerable amount of their budget. Industry data suggests these targets are achievable.
Keeping vested interests aside, it is time for insurers to stop raising hurdles and strengthen the successful implementation of long-awaited reforms that are here to provide affordable healthcare to an entire nation.
This article underscores one of the major challenges of using private for-profit insurance companies as the means through which people pay for their health care. It should certainly come as no surprise that there is vigorous debate surrounding how the MLR's will be calculated. Private insurance companies have been some of the strongest opponents to health care reform for years, and now that legislature has passed, they have been equally vocal in lobbying to minimize the negative impact this new law will have on their bottom line: profits. One cannot fault the health insurance industry for this; after all, a for-profit company's primary objective is to maximize profits. So despite a minimum MLR seeming like a fairly common sense way to help control costs and provide some consumer protection, it is certainly not good for the financial interests of shareholders. Consequently, it is only natural for insurance companies to want costs like fraud prevention and quality assurance to be counted as expenses related to the delivery of medical care, thereby maximizing room for profit.
With this in mind, I would expect any cost containment efforts which decrease the profitability of providing health insurance for these companies to be met with considerable resistance and consternation from the insurance industry. This is another reason why I favor the use of a National Health Insurance model for our hypothetical country over the Bismark model.
The method for determining the MLR, a categorization into 80% and 85% will provide a uniform country-wide yardstick to ensure that consumers receive their money’s worth when it comes to insurance premiums. This comes as a relief considering the patchwork of rules for MLR computation that exist across the country today. That insurance companies will need to make this information available to the consumers will bring in greater transparency and accountability into the system. This step will not only provide a control mechanism for the revision of insurance premiums but also equip the citizens with an opportunity to ‘vote with their feet’.
ReplyDeleteA great amount of time and deliberation must have been invested in deciding the definition of ‘medical costs’, the inclusions and exclusions. The exclusion of the ICD-10 implementation comes as a surprise though. The ICD-10 (supposedly the most expensive of all the medical cost exclusions) will provide a uniform ‘language’ for the assessment of the general health situation and monitoring of disease patterns. In my view and I could be wrong, it would be of benefit to the consumers, if the financial onus of this public health activity is shifted away from the insurers. This may significantly contribute in preventing consequent increases in insurance premiums.
The resistance from the insurers regarding the inclusion of fraud prevention, utilization and other expenses as a part of the administrative costs (15 – 20% with the new MLR calculations) needs to be deftly tackled. With the reforms, the insurers will have new avenues to cut on costs especially relating to the underwriting expenses (plans will now provide universal coverage), marketing expenses, broker fees etc, which have till now commanded a considerable amount of their budget. Industry data suggests these targets are achievable.
Keeping vested interests aside, it is time for insurers to stop raising hurdles and strengthen the successful implementation of long-awaited reforms that are here to provide affordable healthcare to an entire nation.
This article underscores one of the major challenges of using private for-profit insurance companies as the means through which people pay for their health care. It should certainly come as no surprise that there is vigorous debate surrounding how the MLR's will be calculated. Private insurance companies have been some of the strongest opponents to health care reform for years, and now that legislature has passed, they have been equally vocal in lobbying to minimize the negative impact this new law will have on their bottom line: profits. One cannot fault the health insurance industry for this; after all, a for-profit company's primary objective is to maximize profits. So despite a minimum MLR seeming like a fairly common sense way to help control costs and provide some consumer protection, it is certainly not good for the financial interests of shareholders. Consequently, it is only natural for insurance companies to want costs like fraud prevention and quality assurance to be counted as expenses related to the delivery of medical care, thereby maximizing room for profit.
ReplyDeleteWith this in mind, I would expect any cost containment efforts which decrease the profitability of providing health insurance for these companies to be met with considerable resistance and consternation from the insurance industry. This is another reason why I favor the use of a National Health Insurance model for our hypothetical country over the Bismark model.