10%+ Increases Will Now Be "reviewed"

[Full Throttle]

These people are utterly clueless about the way the insurance business works.

For crying out loud, they already have protection against "unreasonable" increases - it's called MLR. If they don't pay out enough in claims, people get refunds. Scheez.

Unreasonable rate increases should be determined by the market. Unreasonable = no new business. The only sticky factor is raising rates substantially on an old block of business with uninsurables unable to get out.

 

[ABC]

This will be interesting. Especially if carriers start to release medical loss ratios to defend a rate increase.

 

[Norwayguy]

I do not believe that the MLR's will protect against "unreasonable increases." The MLR's are designed to keep the administrative costs to a 15% or 20% of premium. If a carrier increases rates by a significant amount, for example 40%, it may or may not be unreasonable. But as long as the adminsitrative cost is under the 15% or 20% the MLR is not violated.

Since 85% of premium must be used to pay medical expenses a carrier can not just jack up a rate unreasonably because once they get out of wack with the MLR they have to refund premiums.

 

[Crabcake Johnny]

Anything in writing where the feds have any authority over rate increases? I thought this was each state's job:

Connecticut Insurance Dept. Rejects Anthem's Proposed Rate Increase - California Healthline

 

[Norwayguy]

Anything in writing where the feds have any authority over rate increases? I thought this was each state's job:

Connecticut Insurance Dept. Rejects Anthem's Proposed Rate Increase - California Healthline

Its written the same place that says the Feds can Mandate the purchase of a product....They are making things up as they go along....However the new law allows the Seceratary of HHS Shebullshits to exclude carriers from the exchanges which is I believe the point of this attack.

I still want to see Insurance Execs at a Congressional hearing instead of saying how wonderful it is be there and other smoke they blow up the Congressional a$$es to tell them they are screwing up the country and give them both barrels.

 

[leevena]

Since 85% of premium must be used to pay medical expenses a carrier can not just jack up a rate unreasonably because once they get out of wack with the MLR they have to refund premiums.

Let me use an example to explain my thinking. Assume the current rate is $100; $85 going to medical and $15 going to administration. All is fine with MLR.

Lets further assume that the rate increase is 40%, so the rate goes to $140. But the carrier does not need an increase for the admin, rather they need it for the medical loss. So it is possible that the carrier could have a $140 rate, with $15 still going towards admin., and the other $125 going towards medical costs. In this situation the new MLR would be 88/12. MLR is not violated.

 

[somarco]

Unreasonable rate increases should be determined by the market.

No doubt, but ask the folks in DC to understand this.

These are the same folks who believe living within your means is not a problem when all you have to do is raise taxes and borrow from the Chinese, or simply print more money.

Anything in writing where the feds have any authority over rate increases?

They lack the authority to do any of this crap but the carriers just roll over every time a new mandate flies out of Washington's butt.

 

[Norwayguy]

Let me use an example to explain my thinking. Assume the current rate is $100; $85 going to medical and $15 going to administration. All is fine with MLR.

Lets further assume that the rate increase is 40%, so the rate goes to $140. But the carrier does not need an increase for the admin, rather they need it for the medical loss. So it is possible that the carrier could have a $140 rate, with $15 still going towards admin., and the other $125 going towards medical costs. In this situation the new MLR would be 88/12. MLR is not violated.

Which is exactly as someone else says why do they need to review 10%+ increases because in this example we have a 40% increase which is subject to the MLR and if the MLR gets busted the excess premium must be refunded..
Take your example $100 goes to $140 but in this case medical cost do not increase so we have $100 85 Medical $55 admin & profit without the HHS review the company would automatically refund the premium...This announcement is nothing more than more soundbites.

 

[leevena]

Which is exactly as someone else says why do they need to review 10%+ increases because in this example we have a 40% increase which is subject to the MLR and if the MLR gets busted the excess premium must be refunded..
Take your example $100 goes to $140 but in this case medical cost do not increase so we have $100 85 Medical $55 admin & profit without the HHS review the company would automatically refund the premium...This announcement is nothing more than more soundbites.

I think you may be misunderstanding my post. Some one posted that there was not need to police the rate increases because the MLR's would do it. My post was not to comment about the policing of 10%, rather, it was to show that the MLR issue would not be able to identify "unreasonable" rate changes.

 

[Norwayguy]

I think you may be misunderstanding my post. Some one posted that there was not need to police the rate increases because the MLR's would do it. My post was not to comment about the policing of 10%, rather, it was to show that the MLR issue would not be able to identify "unreasonable" rate changes.

How could the example you give be anything other than a reasonable increase sure a 40% jump isn't fun but the carrier is paying out 88% in medical cost in your example so the increase was not just justified but needed.