People need to understand how health insurance works!

[healthmyths]

As uninformed people are wont to do, they form opinions with very little information.
Case in point there are extremely few people who have any idea of how health insurance works and
because of this ignorance on so many levels totally ignorant perceptions have caused this tremendous
gap in understanding.
So let's make it simple.
Assume you want to start a health insurance company.
A) You have to put up millions of dollars even before you are open for business.
B) You have to then PROVE to all the states insurance regulators you have enough money in reserve
to pay FUTURE claims.
C) Now you have to figure out how much you will charge for premiums. To do that you have specialists
known as "actuaries" who determine future costs of paying claims and how much will be left over
to pay operating expenses AND make a profit to generate additional "RESERVES".
D) Now you know your premiums and you get your rates approved by the state you can now "sell".
E) Once you have revenue coming in you pay out claims from the revenue.
F) On AVERAGE health insurance companies pay out 80% of all premiums in claims.
If you don't believe me here is the link:
80/20 Rule
The 80/20 Rule generally requires insurance companies to spend at least 80% of the money they take in from premiums on health care costs and quality improvement activities. The other 20% can go to administrative, overhead, and marketing costs.

The 80/20 rule is sometimes known as Medical Loss Ratio, or MLR. If an insurance company uses 80 cents out of every premium dollar to pay for your medical claims and activities that improve the quality of care, the company has a Medical Loss Ratio of 80%
Rate Review & the 80/20 Rule

So this means for every dollar in premium 80 cents must pay medical claims.
Leaving 20 cents for salaries, overhead,marketing, AND TAXES!

So what has been the historical net profit AFTER taxes for health insurance companies?
Insurance regulators use a formula to compute the “authorized control level” for a company—this is the point at which regulators would take control of a company that is not performing well. Regulators begin to watch a company when its capital falls below three times its authorized control level.
So for example:
The Health Benefit Ratio (alias Medical Loss Ratio): WellPoint’s payments for health benefits in 2012 equal the sum of what it calls “health benefits” ($48,213.6 million) . As a fraction of total premium revenue of $60,728.5 million in 2012, total health benefits amounted to 79.4 percent of premium revenue.
http://www.corporate-ir.net/media_files/irol/13/130104/2012_AR/10k.pdf

So AFTER paying claims,overhead and taxes a health insurance company MUST have a profit.
Wellpoint net profit after paying $1,210.00 million or 31.3% in Total income tax expenses.
$1,445 in profit or 2.3% out of which they have to build RESERVES for future claims!
And that's the facts!

 

[9thIDdoc]

Actually it is health insurance that has wrecked American healthcare.
Hospitals and other medical facilities charge wildly inflated prices for supplies and services so they can stay open while still treating those who do not pay. Insurance is willing to pay these bogus charges because they simply pass the expense on to the consumer and it makes it look like they pay for far more health care than they actually do which in turn increases their profits under the 80/20 rule. At the same time they are rewarded for NOT paying for needed care.

 

[NYcarbineer]

As uninformed people are wont to do, they form opinions with very little information.
Case in point there are extremely few people who have any idea of how health insurance works and
because of this ignorance on so many levels totally ignorant perceptions have caused this tremendous
gap in understanding.
So let's make it simple.
Assume you want to start a health insurance company.
A) You have to put up millions of dollars even before you are open for business.
B) You have to then PROVE to all the states insurance regulators you have enough money in reserve
to pay FUTURE claims.
C) Now you have to figure out how much you will charge for premiums. To do that you have specialists
known as "actuaries" who determine future costs of paying claims and how much will be left over
to pay operating expenses AND make a profit to generate additional "RESERVES".
D) Now you know your premiums and you get your rates approved by the state you can now "sell".
E) Once you have revenue coming in you pay out claims from the revenue.
F) On AVERAGE health insurance companies pay out 80% of all premiums in claims.
If you don't believe me here is the link:
80/20 Rule
The 80/20 Rule generally requires insurance companies to spend at least 80% of the money they take in from premiums on health care costs and quality improvement activities. The other 20% can go to administrative, overhead, and marketing costs.

The 80/20 rule is sometimes known as Medical Loss Ratio, or MLR. If an insurance company uses 80 cents out of every premium dollar to pay for your medical claims and activities that improve the quality of care, the company has a Medical Loss Ratio of 80%
Rate Review & the 80/20 Rule

So this means for every dollar in premium 80 cents must pay medical claims.
Leaving 20 cents for salaries, overhead,marketing, AND TAXES!

So what has been the historical net profit AFTER taxes for health insurance companies?
Insurance regulators use a formula to compute the “authorized control level” for a company—this is the point at which regulators would take control of a company that is not performing well. Regulators begin to watch a company when its capital falls below three times its authorized control level.
So for example:
The Health Benefit Ratio (alias Medical Loss Ratio): WellPoint’s payments for health benefits in 2012 equal the sum of what it calls “health benefits” ($48,213.6 million) . As a fraction of total premium revenue of $60,728.5 million in 2012, total health benefits amounted to 79.4 percent of premium revenue.
http://www.corporate-ir.net/media_files/irol/13/130104/2012_AR/10k.pdf

So AFTER paying claims,overhead and taxes a health insurance company MUST have a profit.
Wellpoint net profit after paying $1,210.00 million or 31.3% in Total income tax expenses.
$1,445 in profit or 2.3% out of which they have to build RESERVES for future claims!
And that's the facts!

The 80 - 20 rule is a provision of Obamacare.

Medicare, btw, operates at about 95 - 5.

 

[NYcarbineer]

For profit insurance works like this:

1. You collect as much money in premiums as the market will bear

2. You pay out as little in benefits as you can get away with.

3. You keep the difference.

 

[my2¢]

Healthmyths, good stuff. Makes sense looking at stuff starting on basis of the facts.

Isn't a MLR of 80% somewhat low? I tried looking for historic figures but had little luck in my quick research.

Medical loss ratio - Ballotpedia

 

[healthmyths]

Actually it is health insurance that has wrecked American healthcare.
Hospitals and other medical facilities charge wildly inflated prices for supplies and services so they can stay open while still treating those who do not pay. Insurance is willing to pay these bogus charges because they simply pass the expense on to the consumer and it makes it look like they pay for far more health care than they actually do which in turn increases their profits under the 80/20 rule. At the same time they are rewarded for NOT paying for needed care.

How do you increase profits if 80% of your premiums go out in Claims?
Let's see what you are saying...
Insurance company raises premiums to $10 million. Claims are 80% or 8 million
Operating costs are 15% leaving 5% "profit". BUT remember the insurance company has to use part of profits for "RESERVES" for future claims.
Now let's say premiums go to $20 million claims are 80% or $16 million
Operating expense say 15% leaving 5% profits of which part has to go for "RESERVES" so where are they increasing profits?
More and more premiums mean more and more reserves!

 

[healthmyths]

Now if you want to cut health care costs read this carefully!

 

[healthmyths]

As uninformed people are wont to do, they form opinions with very little information.
Case in point there are extremely few people who have any idea of how health insurance works and
because of this ignorance on so many levels totally ignorant perceptions have caused this tremendous
gap in understanding.
So let's make it simple.
Assume you want to start a health insurance company.
A) You have to put up millions of dollars even before you are open for business.
B) You have to then PROVE to all the states insurance regulators you have enough money in reserve
to pay FUTURE claims.
C) Now you have to figure out how much you will charge for premiums. To do that you have specialists
known as "actuaries" who determine future costs of paying claims and how much will be left over
to pay operating expenses AND make a profit to generate additional "RESERVES".
D) Now you know your premiums and you get your rates approved by the state you can now "sell".
E) Once you have revenue coming in you pay out claims from the revenue.
F) On AVERAGE health insurance companies pay out 80% of all premiums in claims.
If you don't believe me here is the link:
80/20 Rule
The 80/20 Rule generally requires insurance companies to spend at least 80% of the money they take in from premiums on health care costs and quality improvement activities. The other 20% can go to administrative, overhead, and marketing costs.

The 80/20 rule is sometimes known as Medical Loss Ratio, or MLR. If an insurance company uses 80 cents out of every premium dollar to pay for your medical claims and activities that improve the quality of care, the company has a Medical Loss Ratio of 80%
Rate Review & the 80/20 Rule

So this means for every dollar in premium 80 cents must pay medical claims.
Leaving 20 cents for salaries, overhead,marketing, AND TAXES!

So what has been the historical net profit AFTER taxes for health insurance companies?
Insurance regulators use a formula to compute the “authorized control level” for a company—this is the point at which regulators would take control of a company that is not performing well. Regulators begin to watch a company when its capital falls below three times its authorized control level.
So for example:
The Health Benefit Ratio (alias Medical Loss Ratio): WellPoint’s payments for health benefits in 2012 equal the sum of what it calls “health benefits” ($48,213.6 million) . As a fraction of total premium revenue of $60,728.5 million in 2012, total health benefits amounted to 79.4 percent of premium revenue.
http://www.corporate-ir.net/media_files/irol/13/130104/2012_AR/10k.pdf

So AFTER paying claims,overhead and taxes a health insurance company MUST have a profit.
Wellpoint net profit after paying $1,210.00 million or 31.3% in Total income tax expenses.
$1,445 in profit or 2.3% out of which they have to build RESERVES for future claims!
And that's the facts!

The 80 - 20 rule is a provision of Obamacare.

Medicare, btw, operates at about 95 - 5.

MEDICARE pays NO CLAIMS dummy!

They contract with what are called Medicare Administrative Contractors... for profit organizations that have bid on Medicare contracts!
Here read the facts!

Since Medicare’s inception in 1966, private health care insurers have processed medical claims for Medicare beneficiaries. Originally these entities were known as Part A Fiscal Intermediaries (FI) and Part B carriers. In 2003 the Centers for Medicare & Medicaid Services (CMS) was directed via Section 911 of the Medicare Prescription Drug Improvement, and Modernization Act (MMA) of 2003 to replace the Part A FIs and Part B carriers with A/B Medicare Administrative Contractors (MACs) in accordance with the Federal Acquisition Regulation (FAR). Learn more about MACs at What is a MAC. Learn more about MAC current events at What’s New.
Medicare Administrative Contractors - Centers for Medicare & Medicaid Services

 

[Mr.Blonde]

The 80 - 20 rule is a provision of Obamacare.

It would have probably worked like that if those young people who were so desperate to get health insurance actually got health insurance.

 

[JBond]

Actually it is health insurance that has wrecked American healthcare.
Hospitals and other medical facilities charge wildly inflated prices for supplies and services so they can stay open while still treating those who do not pay. Insurance is willing to pay these bogus charges because they simply pass the expense on to the consumer and it makes it look like they pay for far more health care than they actually do which in turn increases their profits under the 80/20 rule. At the same time they are rewarded for NOT paying for needed care.

Those that do not pay are a major issue. Why gloss over it? Similar to those idiots that have bachelor degrees and masters that refuse to pay back the tax payers. If they have no bones in the game, why would they care about the outcome?

 

[Thinker101]

As uninformed people are wont to do, they form opinions with very little information.
Case in point there are extremely few people who have any idea of how health insurance works and
because of this ignorance on so many levels totally ignorant perceptions have caused this tremendous
gap in understanding.
So let's make it simple.
Assume you want to start a health insurance company.
A) You have to put up millions of dollars even before you are open for business.
B) You have to then PROVE to all the states insurance regulators you have enough money in reserve
to pay FUTURE claims.
C) Now you have to figure out how much you will charge for premiums. To do that you have specialists
known as "actuaries" who determine future costs of paying claims and how much will be left over
to pay operating expenses AND make a profit to generate additional "RESERVES".
D) Now you know your premiums and you get your rates approved by the state you can now "sell".
E) Once you have revenue coming in you pay out claims from the revenue.
F) On AVERAGE health insurance companies pay out 80% of all premiums in claims.
If you don't believe me here is the link:
80/20 Rule
The 80/20 Rule generally requires insurance companies to spend at least 80% of the money they take in from premiums on health care costs and quality improvement activities. The other 20% can go to administrative, overhead, and marketing costs.

The 80/20 rule is sometimes known as Medical Loss Ratio, or MLR. If an insurance company uses 80 cents out of every premium dollar to pay for your medical claims and activities that improve the quality of care, the company has a Medical Loss Ratio of 80%
Rate Review & the 80/20 Rule

So this means for every dollar in premium 80 cents must pay medical claims.
Leaving 20 cents for salaries, overhead,marketing, AND TAXES!

So what has been the historical net profit AFTER taxes for health insurance companies?
Insurance regulators use a formula to compute the “authorized control level” for a company—this is the point at which regulators would take control of a company that is not performing well. Regulators begin to watch a company when its capital falls below three times its authorized control level.
So for example:
The Health Benefit Ratio (alias Medical Loss Ratio): WellPoint’s payments for health benefits in 2012 equal the sum of what it calls “health benefits” ($48,213.6 million) . As a fraction of total premium revenue of $60,728.5 million in 2012, total health benefits amounted to 79.4 percent of premium revenue.
http://www.corporate-ir.net/media_files/irol/13/130104/2012_AR/10k.pdf

So AFTER paying claims,overhead and taxes a health insurance company MUST have a profit.
Wellpoint net profit after paying $1,210.00 million or 31.3% in Total income tax expenses.
$1,445 in profit or 2.3% out of which they have to build RESERVES for future claims!
And that's the facts!

The 80 - 20 rule is a provision of Obamacare.

Medicare, btw, operates at about 95 - 5.

Only problem is Obama's version of the 80/20 rule is that 20 percent of the people pay for 80 percent of Obamacare.

 

[Snouter]

Low IQ, chronic welfare individuals who do not pay for insurance should only be allowed in a hospital if they pay with cash. Even then, they should be encouraged to not have any offspring.

 

[EverCurious]

#RepealEMTALA - EMTALA // ACEP

 

[9thIDdoc]

Actually it is health insurance that has wrecked American healthcare.
Hospitals and other medical facilities charge wildly inflated prices for supplies and services so they can stay open while still treating those who do not pay. Insurance is willing to pay these bogus charges because they simply pass the expense on to the consumer and it makes it look like they pay for far more health care than they actually do which in turn increases their profits under the 80/20 rule. At the same time they are rewarded for NOT paying for needed care.

How do you increase profits if 80% of your premiums go out in Claims?
Let's see what you are saying...
Insurance company raises premiums to $10 million. Claims are 80% or 8 million
Operating costs are 15% leaving 5% "profit". BUT remember the insurance company has to use part of profits for "RESERVES" for future claims.
Now let's say premiums go to $20 million claims are 80% or $16 million
Operating expense say 15% leaving 5% profits of which part has to go for "RESERVES" so where are they increasing profits?
More and more premiums mean more and more reserves!

How do you increase profits if 80% of your premiums go out in Claims?

Same percentage; but higher claim payout. 20% of $100 = $20 20% of $1000 = $200