BOOM Goes the Dynamite in the Healthcare Law

It’s not often you’ll see someone advocate the destruction of a profitable business venture they are engaged in, but yeah I did it, and now the fuse lit with the passage of our healthcare law has hit the explosive.

Forbes article
That would be the provision of the law, called the medical loss ratio, that requires health insurance companies to spend 80% of the consumers’ premium dollars they collect—85% for large group insurers—on actual medical care rather than overhead, marketing expenses and profit. Failure on the part of insurers to meet this requirement will result in the insurers having to send their customers a rebate check representing the amount in which they underspend on actual medical care.

This is the true ‘bomb’ contained in Obamacare and the one item that will have more impact on the future of how medical care is paid for in this country than anything we’ve seen in quite some time.  Indeed, it is this aspect of the law that represents the true ‘death panel’ found in Obamacare—but not one that is going to lead to the death of American consumers. Rather, the medical loss ration will, ultimately, lead to the death of large parts of the private, for-profit health insurance industry.

Why? Because there is absolutely no way for-profit health insurers are going to be able to learn how to get by and still make a profit while being forced to spend at least 80 percent of their receipts providing their customers with the coverage for which they paid. If they could, we likely would never have seen the extraordinary efforts made by these companies to avoid paying benefits to their customers at the very moment they need it the most.

Today, that bomb goes off.

You know it seemed a lot of the disappointment in the law surrounded the idea that the Insurance companies were making out like a fat rat.  Some of us (ME ME ME ME) who actually knew what was about to happen tried to state no they weren't, but because like most things the President does this was subtle this was at the heart of the matter but not loudly just effectively people lost their minds.

Here's how I wrote about it just before passage of the act.

I’ve sold health insurance and health insurance products for coming up on 8 years now.  It’s been a fantastic business and a wonderful place to put my skills at communication and explanation to work.  Understanding policies is difficult for those of us who are trained and licensed it can be a bear for those who have limited to zero understanding of how health insurance works.  I’ve made a comfortable living being a person who takes honesty and integrity into your open enrollment meetings, and as the letters from my policy holders can attest a God send to people trapped in claims hell.

With the passage of the proposed health care insurance reform I will be put out of business, and I couldn’t be happier to have to find another gig in the midst of one of the worst financial crisis in America with unemployment numbers not seen since Ronald Reagan.

You see insurance companies don’t pay the people who sell their products with W2 style wages where you are an employee of the company with benefits and the payroll fairy to visit every other week.  Brokers and agents are paid by straight commission, a percentage of the premium written on policies issued.  Depending on the product and the carrier it can range from 3% to 25% and for the supplemental type products as much as 40%.  So, when you see your little 100 man company has a health insurance bill of say 1 million per year someone your broker is getting bigtime paid.

There won’t be any margin in the new health care bills for brokers as there will be a mandated 85% premium to benefit ratio.  That means for every dollar the health insurer takes in 85 cents has to go to benefit.  There will be no more 10 cents for me your local insurance agent, and we won’t be needed anyway.  The new health insurance reform that I have dubbed the StepOne Healthcare act of 2010 will provide for exchanges where individuals and groups can purchase their policies without needing me the middle middle man.  The plans will have a defined benefit so I imagine that they won’t need me to explain them.  The plans will have set costs and one huge pool to draw from, so you there won’t be any advantage to a company hooking its wagon to a large brokerage firm that could negotiate with the carriers the exchanges will fill that role.

After next week and the passage of reform unless I’m just an idiot, and I’m not, I’m going to have to look for a new wagon to pull.  I imagine you’re asking yourself then why have you been fighting like hell for this bill?

I have collected a file of too many individuals I can’t get covered at any price.  One of the ways I made a niche for myself is I would dive into difficult cases and I would seek coverage for people who other big firms or little ones like mine would refuse, and back in the day I could do something for them.  Today as my Big Daddy would say they are SOL.  Yeah they have maladies, and yes they are suffering.  It’s real hard to know that.

I’ve been to open enrollment meetings where a new change in benefit has been installed with one of those $5000 dollar deductibles and I’ve spoken with people who have literally told me that they were not going to let their kids out to play.  They were so frightened of what would happen if God forbid they broke a bone or took some stitches that they actually kept them locked up like a prime veal cow.  I have to think back to my youthful boyhood and I was so dangerous the ER doctor knew me by first name, but damn I had fun, and this wasn’t the first story I’ve ever heard like that or the 10th.

I’ve met with business owners who loved their employees.  By love I mean this person and say those 20 key players behind his door started something together and have been together from the beginning 25 years.  The receptionist is like a member of the family, the loading dock guy named his kid after him.  I’ve seen them break down into tears as they can no longer afford to offer health insurance to people they consider family.  I’ve seen them rage when their group got dropped right when Betty the secretary develops breast cancer and I can’t find them group coverage anywhere.  I don't want to see that anymore.

Pass the bill.  Don’t fight passing the bill.  I've seen a lot of commentary where this will be a boondoogle for insurance companies, and that's horse pucky.

Don't pass this bill and did you see the increases you got?  Those near 40% hikes?  Well if you don't pass this bill you wont work for money anymore, you'll work for coverage.  Those 40% hikes will be broken down monthly, and oh I'll get a raise everytime they put one through, but I don't want it.  PUT ME OUT OF BUSINESS!

Don't worry about me folks, I'll be just fine.  Kill the bill?  LOL