Tuesday, June 15, 2010

Transition Slowly?

Fascinating. The concern voice here is that insurers will leave the individual markets in some states if they have to spend a certain percentage of premium dollars on health care (remember discussion of "medical loss ratios" below?). So if they can't make more of a profit, they will just leave the market? Isn't this as strong an argument as you can imagine for having a public option? If private insurers only want to participate in the market if they can price gouge, then shouldn't we say "bye-bye" to them and have a more efficient, government plan?

The National Association of Insurance Commissioners is urging a gradual transition to the new medical loss ratios. I think this is all bunk. Especially in light of the evidence (cited in past posts) that insurers are going to try to include all kinds of things that don't contribute to health care -- like fighting coverage denials -- in the medical loss ratio, I have a hard time feeling sorry for the individual insurers who already are charging upwards of $900 per month. Of course, we do have to worry about consumers if insurers leave the private market, limiting the options available to individuals. But again, my solution would be to create government-sponsored plans rather than to allow insurers to keep spending so much of our premium dollars on administrative costs and profits. Jennifer

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