Health Insurers Fight Claim Ratio Proposal

Senate Democrats may have agreed create a more privatized public option health plan – but require commercial health insurers to spend 90% of premium revenues on claims.

News of the claim ratio minimum proposal surfaced today as lawmakers spent another day debating H.R. 3590, the main Senate health bill, on the Senate floor. That version of the bill on the Senate floor would set the minimum ratio of health claims costs to premium revenue at 85% for group plans and 75% for individual plans.

Senate Majority Leader Harry Reid, D-Nev., who created the Patient Protection and Affordable Care Act bill, reported Tuesday that Democratic senators who want the government to be heavily involved in a public option plan and Democratic senators who oppose the idea of a government-run public option plan had reached a compromise.

Reid said he would wait until the Congressional Budget Office had analyzed the possible effects of the compromise before providing any details.

The version of H.R. 3950
America’s Health Insurance Plans, Washington, responded to the rumors of the 90% claim ratio minimum with a “Fact Check” bulletin arguing that a minimum ratio would “reduce patients’ access to programs that improve patient safety and quality of care.”

Some of the premiums not going toward premium payments pay for services such as disease management programs and wellness programs, AHIP says.

“While the expenses associated with these strategies are technically accounted for in administrative costs, they directly improve patient health outcomes and, ultimately, help reduce overall costs,” AHIP says.

Health plans also have to spend money to develop provider networks and verify that the providers are providing high-quality care, AHIP says.

A required minimum ratio could also hold back spending on health information technology modernization efforts and useful patient communication efforts, such as quality data collection programs, AHIP says.