Obamacare’s practical design was undercut when insurers, upset by limits on their obscene profits, reacted by re-writing policies and limiting their markets. Out went choice, up went costs, to make the Affordable Care Act unaffordable. Change was needed but the new draft is so bound up in hatred for all things Obama, hunger for partisan victory, and regulating people, not corporations, that it is blind to the elephant in the room.
The most important thing to examine is the relationship between amounts paid out in benefits and what members pay in premiums. The ratio linking benefits with premiums paid-in was commonly displayed as a simple percentage but that has been repealed and replaced by the ratio between benefits paid out and profits. That tactical switch was an invitation for corporate accountants to tweak the ratio in their favor by finding new things to charge against profit. This, from a cash-rich industry currently bingeing on stock buy-backs.
Obamacare’s “80/20 Rule” set a guideline for insurers that allowed no more than 20 percent to cover administrative costs so that 80 percent could be passed to members as benefits. Though the too common practice of maximizing profits by denying claims certainly warranted limits, HMOs circumvented the 80/20 rule to maintain unconscionable gaps between subscribers’ premiums and benefits paid out. Add HMOs’ considerable profits and off-the-scale salaries paid to corporate officers to give the White House and Congress better cost control opportunities than cutting benefits for poor sick people.
Robert Graef
Lake Stevens
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