A study done in 2008 by the National Association of Health Underwriters said that the average medical loss ratio for the industry is ALREADY 86%. Which makes these "limits" meaningless. (I originally posted this as a comment, but it seems to me that it is an important enough statistic to warrant a diary.)
Although I have sadly mislaid the link for the actual study, which I found a couple of months ago, I have found a reference to it in testimony made before the Pennsylvania legislature, which seems like a reasonably credible source:
http://www.legis.state.pa.us/...
A study done in 2008 by the National Association of Health Underwriters said that the average medical loss ratio for the industry is ALREADY 86%. Which makes these "limits" meaningless.
Although I have sadly mislaid the link for the actual study, which I found a couple of months ago, I have found a reference to it in testimony made before the Pennsylvania legislature, which seems like a reasonably credible source:
http://www.legis.state.pa.us/...
Here is the money quote, which you will find on the second page:
What part of a premium dollar is spent on claims?
According to Centers for Medicare and Medicaid Services (CMS) data reported
separately by a PricewaterhouseCooper 2006 report and by a 2008 analysis prepared by
the National Association of Health Underwriters, on average 86 percent of premium
dollars is spent on direct medical care. The breakdown includes:
- Physician services 24%
- Outpatient costs 22%
- Inpatient hospital costs 18%
- Prescription drugs 16% - Other medical services 6% (durable medical equipment, home health, other health
professionals, and other personal care, etc.
Other components of the premium dollar are:
- Consumer services, marketing 5% - Government payments, compliance costs as with HIPAA, claims processing 6%
- Profits 3%
Of
This piece of testimony is from a lobbyist for the industry, and to that extent, it must be admitted that they may be giving a high estimate--except that there is apparently corroboration from the Centers for Medicare and Medicaid Services and PricewaterhouseCooper. Whether these two organizations are in the industry's pocket, I don't know.
But if these numbers are accurate -- and they are the only well-documented estimates I have been able to find on current medical loss ratios -- then the "limits" in the Senate bill are a scam.