Sen. Becker has introduced SB 171 which would require health insurers to report medical loss ratios. In the health insurance biz, money spent on actually paying for health care is regarded as “medical loss.” Sen. Becker’s bill would require health insurers to report what percentage of premiums are used to pay for health care as opposed to other stuff like salaries, marketing, hiring staff to deny claims, etc. The idea – for customers, anyway – is that the best health insurer is the one that is best able to translate premium dollars into health care payments. Investors and other stakeholders might prefer that premium dollars get diverted to other pockets.
The bill requires accounting for specific categories of expenditures, including: Chief executive officer and executive salaries and benefits; Advertising and marketing expenses; Travel and entertainment expenses; and State and federal lobbying expenses.
Sounds like a great idea to me.
I had an extended conversation last week with a friend about medical malpractice “costs” and how significant this was for the “cost” of health care overall. Ultimately we could not agree on the definition of the word “cost” and that alone doomed our meeting of the minds on what to do about med-mal reform. I never did convince him that the price of his premiums is not a cost of health care, but simply the price insurance companies ask him to pay. Nor was he convinced that the actual percentage of med-mal expenses as a portion of overall health care costs was less than 5% or that private insurance overhead costs were at least twice as much as government run health insurance costs (there is no way that the government can be more efficient than the private market…ever!). The bottom line for him was that insurers say med-mal costs force them to raise the “cost” of health insurance for us and so if we only reduce those costs, we will all see lower premiums, which is the “true cost” of health care. I made little or no headway in convincing him that the only significant change in the health care cost balance sheet we would see were we to reduce (or even preclude ALL) med-mal claims would be profits for insurance companies. I am speaking somewhat inaccurately and definitely in mere generalities here but I think my convo illustrates the wall of misunderstanding about how health insurers pass on THEIR costs and make profit is a major obstacle to many of our current health care debates and thus attempts to reform the system. A legislative requirement to report insurance cost balance sheets seems like a step in the right direction. However, I am starting to think that a sizable minority out there don’t actually care to listen.
As an aside, I am absolutely amenable to allowing private industry to provide a vital service to the public without significant government intrusion. However, in order to do so, they need to at least try to make good on the efficiency and productivity claims so widely touted by their market capitalist proponents. If the insurance industry isn’t even half as cost effective as large government plans, then I fail to see why we should countenance their continuing business operations as usual, especially if the justification is based almost solely on the argument that the free market is always more efficient and productive than government run services. Perhaps there are other arguments out there against legislation like SB 171. If so, I would like to hear them.
One simple rule change to insurance is drop the protection of health insurance by state by state. Simple allow an efficient companies with good delivery of coverage sell whereever they can. Let the market place take care of the situation. Thus endorsing a free entreprise/free market situation which certainly does not include the government “making” a business provide some of the information this bill requests. The intrusion of this bill into business operations is of major concern and anyone who thinks it is alright to do so should be aware that next session it could be closer to home for them.
Not so simple. Whose consumer protection laws apply? If the insurer, like the credit card companies, inserts language requiring that the laws of the most insurer-friendly state apply to the contract, will those provisions stand?
I just don’t think the free market works that well with the health insurance market. They collect their money in advance of the need. Health care pricing is not at all transparent. Medicine is complicated enough that most folks aren’t going to really know what they need. And, when you really need health care, it’s like bargaining with a gun to your head. None of these things resemble the model where the consumer, with perfect knowledge of the marketplace and the ability to walk away, picks among competing widget makers for the best value.
People that block this type of bill are the same type that say people don’t need to know how many calories are in their food.
Will still take the position that all is not as simple as it sounds—may start sounding like our libitarian friends—my economist side says there is a problem of government regulation of businesses to point of requiring variety of information and controls that go a long way toward dictating virually ever factor. Of course have to admit that I have life insurance and know not when I will die but expect the proper coverage will be there—own stocks and have no guarantee of return on investment nor do I want the government to take away the opportunity for return –yes, do believe in need for enforcement of insider trading and preventing robbery. But since most of my investments are in the health related industry and insurance just being truthful have concerns about my investments.