walkitout (walkitout) wrote,
walkitout
walkitout

Health Insurance Premium Reductions

No, health insurance companies have not suddenly become The Good Guys.

http://www.ama-assn.org/amednews/2011/05/30/bise0601.htm

"Under the health system reform law, insurers must pay at least 80% to 85% (depending on the plan) of every premium dollar on health care. If they do not meet that standard over the course of a year, they must pay back a portion of their customers' premiums the following year."

We're halfway through 2011. The last couple years, utilization ("going to the doctor" and "getting treated" and so forth) has been quite low. The expectation was that the economy would pick up this year (it didn't) and when it did, utilization would go up (it _really_ did not). Also, in the leadup to the passage of ACA ("ObamaCare"), many insurance companies lobbied hard to raise rates because (they said) they expected their costs to go way up covering all these really sick people, etc. The companies can either reduce rates, or they can cut checks rebating those rates later in the year. While it is possible to imagine a world in which everyone looks forward to their health insurance rebate check every year, I'm pretty sure that's not our world.

The Blue Shield of California story is probably a little more complicated, because Aetna (above) is a for-profit company but Blue Shield of California is a non-profit. Which is sitting on a ton of cash and has amazing margins.

"a major health insurance company with hefty returns that have swelled its reserve to more than $3.5 billion."

Blue Shield has been pushing for universal coverage in the state for about a decade now; OTOH, their executives make a lot of money. It makes them an ambiguous target for activists.

http://articles.latimes.com/2011/jun/08/business/la-fi-0608-blue-shield-20110608

If you've been wondering what impact the passage of ACA might have in your life, tho, I think insurance premium reductions might well be it.
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