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Health Insurers Fight Claim Ratio Proposal

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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.

“The data are clear that soaring medical costs are the key driver of rising health insurance premiums,” AHIP says. “According to government data, health plans account for only 7% of national private health expenditures and just 5% in the growth of health care costs. A serious discussion on rising health care costs needs to focus on the other 95%.”

In related news:

The American Benefits Council, Washington, is highlighting a provision that is already in H.R. 3590: A section that would tax the 28% subsidy that employers receive for providing drug coverage for retirees.

Congress created the subsidy in the Medicare Modernization Act of 2003, to encourage employers to continue provide retiree prescription drug benefits.

“Now the policy is to be reversed, which will undoubtedly destabilize this vital coverage and impose more costs on the federal government,” the benefits council says.

The AFL-CIO, Washington, is uniting with the benefits council in opposition to that provision, the benefits council says.

For the latest health bill coverage, please see:

CIAB Might Back Public Option Compromise

For earlier health bill coverage, please see:


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