Health Insurers Now Moved To Intensive Care Unit

Posted by on Dec 04, 2011 at 9:10 am

This is very bad news for the health insurance companies and one which I have written about and warned about in the past. The author of this piece in Forbes magazine seems to be just fine with health insurance companies going out of business and of course as a result taking all those jobs with them.

Of course, those of you who fear the inevitable arrival of universal health care really shouldn’t be too fretful. There will always be a for-profit health insurance industry for those who want to pay for it. The only difference will be that those who cannot afford private coverage will also have an opportunity to get their families the medical care that they need

Everyone wins-except the for-profit health insurers.

I can live with that.

Actually, no, you won’t be able to live with that. At issue is the mandate that health insurance companies must now put 80% of the premiums paid, 85% for large companies, towards paying the claims. That leaves the company with 15% to pay overhead. You know things like IT infrastructure, salaries, office supplies, facilities, etc.

That would be the provision of the law, called the medical loss ratio, that 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. Failure on the part of insurers to meet this requirement will result in the insurers having to send their customers a rebate check representing the amount in which they underspend on actual medical care.

Full disclosure, I work for one of those evil health insurance companies in an IT related field, and yes we have been warned to expect yet another round of layoffs numbering into the thousands in order to attempt to come into compliance with this provision of the law. According to financial filings we have about 42,000 employees. That number may be a little high since we have been laying off people left and right ever since Obamacare was passed with I think 1500 in one day being the largest event. So far.

Often times we feel like they should just pipe in the suspense music from “Jaws” over the elevator Muzak system since that is what it has felt like for the last couple of years.

The author is correct in his statement that this provision is probably the single biggest contributor to moving the American health care business to a single payer model.

The Supreme Court will not take up the case until later in the year and in the meantime untold damage is going to be done to the insurers. Damage many of the smaller companies won’t recover from and one which has already caused the big guys to drastically alter their business model. We haven’t merely been sitting back hoping and praying. Insurance companies live in the real world and a lot of steps have been taken to try and minimize the impact the full implementation of this provision is going to have, and to my company’s credit they are holding off sending out the official layoff notices until after the first of the year, but we all know they are coming.

Now I am just hoping that I survive yet another round of personnel cutbacks.

What really set me off however was the tone the author took painting some sort of utopian world where everyone gets top of the line healthcare magically. One need look no further then the VA health care system to quickly realize that that won’t be the case. This is the VA system which every election cycle the politicians promise to address and improve, just like they do Social Security and Medicare. When the feds have total control over your healthcare it is probably the final aspect of your life that you lose control of.

Thanks Dems and Obama.

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