July 03, 2012

The 80/20 rule of #Obamacare is not a 'bomb'

Last December, a Forbes columnist claimed the 80/20 rule of Obamacare, which requires that if an insurance company spends less than 80 percent of premiums on medical care it must rebate the excess (it's 85 percent for larger group plans) would be a "bomb" for private insurers. Well, here's the details, and for the first year, at least, it's not a "bomb." Now, $1 billion sounds like a lot, but divided over more than 12 million policies, means  less than $100 rebated per policy on average.

So, let's stand by on just how effective this is as a cost-control measure. Given that insurers helped do a lot of work on the bill writing, we shouldn't expect that this would be allowed to be too big of a "bomb." (Except maybe for big insurers wanting to push small ones out of business.)

Beyond this year, it's probably too soon to say too much. But I wouldn't expect the burden to be too much more onerous down the road. As for cost control, electronic medical records and a push for more preventative medicine will probably help a bit more, but still not a lot.

Big cost control has to come from less aggressive end-of-life care and other things that American doctors, some American patients and even more American families of patients still largely don't want to accept.

1 comment:

Anonymous said...

That's funny, when insurers or health providers are ordered to pay half that amount as a result of a lawsuit, they scream bloody murder about the affect it has on the industry. So is it a significant amount or not?