Medical Loss Ratio
Wednesday, July 25, 2012 at 10:59PM The other day I received a letter from my insurance company telling me that I wasn’t going to get a refund. I was reasonably happy about that, actually. The reason has to do with the Affordable Care Act (ACA) and the Medical Loss Ratio (MLR).
The MLR is the ratio of how much money a health insurance company pays out to cover medical expenses versus the amount of money it collects in premiums. An MLR of 75 means that for every $100 the company takes in it pays out $75 in coverage.
An MLR of 75 isn’t good enough anymore. In an amazing denial of insurance company wishes the ACA contains a provision requiring a minimum MLR of 80 for small group policies and 85 for large group policies (over 100 people). Companies that don’t meet this standard have to refund money to their policyholders to the point where they are at an MLR of 80 or 85%.
My health insurance provider has been paying out more than 80% of premiums, so no refund was forthcoming. Other people around the country are getting refunds, however. In Florida, one company is going to be refunding $15.7 million to 67,000 people. That company is called Golden Rule (*cough, hack*). Pardon, a little bile caught in my throat.
The Minor Heretic was once a customer of Golden Rule, back when Lake Champlain was salt water. I was on a budget, and they offered a cheap, high deductible plan. It was a good thing that I was healthy, because they provided an empty parachute pack. Look up “Golden Rule Insurance review” online and you will find a string of stories from people who were denied coverage, dropped when they got sick, or had their rates doubled or tripled without warning. Behavior like this did wonderful things for GR’s MLR. I found out while I was throwing my money down their gold plated toilet that their MLR was 52. They pocketed 48% of every premium dollar. More recently, in 2010, their MLR in Florida was 65.
No more. Thanks to that goddamned socialist ObamaCare that is going to enslave us all, health insurance companies can no longer gouge us. At least, not much.
Speaking of socialism, the MLR for Medicare, run by those bloated, inefficient, wasteful bureaucrats, is 97. No private insurance company comes near that, of course. That’s why they bribed, er, lobbied so hard against the public option provision when the ACA was being written. They simply couldn’t imagine competing with a program with only 3% overhead.
It would be a huge fight, but adding a Medicare-like option to the ACA would legitimize the “Affordable” part of the name. It would drop insurance costs by 15% or more, and might very well kill off a major part of the quasi-criminal health insurance industry.
For the moment I’ll appreciate not being screwed so badly by my insurance company. Down the road I look forward to Vermont becoming the first state with public single payer health coverage. Perhaps, eventually, all of America will realize that getting health insurance doesn’t have to mean wasting money.
Reader Comments (2)
Thank you for an example to enlighten me about some of the features of "Obamacare" . I confess I'm amazed (and glad) to hear that Medicare spends all but 3% of premiums on subscriber care. I'd have to wonder whether within the 97% is a substantial chunk of bogus or inflated claims and some other questionable care, but you mean the administration of Medicare requires only 3% of the Medicare budget? I really do like Medicare, as I work with elders for whom it is a great program and will soon be a subscriber myself, but maybe the MLR comparison is more complicated? I know people come to me a lot asking a lot of questions I'd like to be able to answer! Eleanor
Hi Eleanor,
Yes, in fact, the admin costs of Medicare are only 3% of the money that flows through it. I have seen estimates for fraud between 3 and 10 %. The 10% number apparently includes many payments that had incomplete documentation, but were later found to be legitimate.
The ACA included an extra $350 million to combat Medicare and Medicaid fraud, which should have a net positive payback of about 1.5:1.
The estimates for private health insurance fraud range as high as 15%.