MLR Makes Insurance More Expensive

Yagents

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I absolutely agree with Gruber. Spend 80% of higher number or lower number, insurance companies can care less now about maintaining costs. These politicians who pushed this through, don't understand economics. The higher premiums go, the higher commissions go too

NPR: MLR “Could Actually Make Health Insurance More Expensive†| AHIP Coverage

The story goes on to note that, "Since 80 percent of premiums have to be spent on health care, insurance companies have less incentive to keep health care costs down. They have less incentive to negotiate with hospitals that want to charge higher rates and doctors who want to order potentially unnecessary tests."
 
"Since 80 percent of premiums have to be spent on health care, insurance companies have less incentive to keep health care costs down. They have less incentive to negotiate with hospitals that want to charge higher rates and doctors who want to order potentially unnecessary tests."

This is an incredibly stupid conclusion.

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An economist that has no clue and this is one of the authors that helped to write the law.
 
I disagree. Tell me where in the MLR structure is there an incentive for insurance companies to save money???

As long as they pay 80%, their in the clear. 80% of $1 or 80% of $2, they don't care anymore.
 
Just like always, if they pay a higher dollar amount of claims they will need to charge a higher premium . . . which will make them non-competitive.

You are thinking like a politician.
 
You're speaking about "affordability", which is a different beast altogether. The rich will pay higher premiums, the middle/low income will get more subsidies.

I'll ask again, where is the incentive for insurance companies to lower health care costs given the MLR structure?
 
The incentive is in the rate oversight and regulation that the carrier will be subject to.
 
That's the gestapo incentive. Rates are only subject to review above 10%. If carrier will go bankrupt without increase above that, they will allow the higher rate increase to happen.
 
That's the gestapo incentive. Rates are only subject to review above 10%. If carrier will go bankrupt without increase above that, they will allow the higher rate increase to happen.


I did not say it would work, just how it was designed.

Also, keep in mind, carriers were never in the business of controling costs. Whether it is the Blues, United, CIGNA, etc., they are in the business of financing. There is a significant difference between the two.
 
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Fraud prevention is not part of the 80%
Better network negotiated prices is not part of the 80%
New consumer shopping tools not part of the 80%
Wellness discounts not part of it
price transparency efforts not part of it
Better customer service efforts not part of it
Better brochures not part of it
Better claims process not part it
Better electronic health records not part it

Just a few off the top of my head

Insurance companies have always been involved of controlling costs.
 
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