Republicans on the House Energy and Commerce Committee will consider legislation repealing a crucial Obamacare consumer protection that requires insurers to spend at least 80 percent of their premium dollars on actual care rather than overhead or profits. The Center on Budget and Policy Priorities explains that the bill, H.R. 1206, amounts to a massive premium hike for more than 13 million Americans:
Nearly 13 million people recently received more than $1 billion in rebates on their health insurance premiums due to a health reform provision known as the “80/20 rule” or the “medical-loss ratio” standard. [...]
Under H.R. 1206, insurers wouldn’t have to count the commissions they pay to agents and brokers as part of their overhead. Insurers could spend more of the premium on costs that don’t affect patients’ health or medical care, including greater profits, so consumers would be paying more for less value in their health insurance. [...]
The average rebate was $151 per family across all markets; in some states, average rebates by market topped $500 per family. [...] Regardless of how insurers pay the rebates, H.R. 1206 would likely reduce or eliminate how much consumers receive under the 80/20 rule.
This Obamacare provision is called “medical-loss ratio,” which is industry jargon for the ratio between premiums charged by insurance companies and the amount of that money insurers use to pay for actual medical services. By establishing a predefined, base medical-loss ratio of at least four dollars spent on medical care for every dollar spent on overhead or profit, Obamacare forces the insurance industry to streamline their business practices and direct more money toward direct health care services.
In attempting to weaken the medical-loss ratio provision, House Republicans are forcing Americans to subsidize insurance company profits rather than their personal care, thus raising overall costs in the industry while reducing the quality of American health care.