Rush Limbaugh had stacy, his secret insurance lady on the phone today, and she basically said that under the new rules that the insurance companies will probably go out of business in less than 2 years. One of the biggest problems is their 65 -35 model (65 in claims payment; 35 for administration and claims expense storage for major catastrophes) which has been an industry standard was changed today to 85-15, which leaves the insurance companies only 15% on the dollar to pay for all administrative costs as well as catastrophe savings. It makes all insurance companies financially unstable. That doesn’t include all the colonoscopies and mammograms that are now included under preventative medicine that they have to pay for in full. Insurance companies will go out of business under this model.
She adds at the end that she is now updating her resume and is getting out of the industry. I wonder if there will be a mass exodus?
(The video may take a moment to load)
UPDATE: After researching her claims, I believe she meant the ratio was 65-35% and now, as she stated correctly, is indeed 85-15%. What she didn’t mention is if the insurance company doesn’t spend the 85% on premiums, they have return it back annually to the enrollees in the form of a rebate. They don’t get to keep it to help pay for their costs and put back for catastrophes.
This is the legislative language taken directly from the Senate bill that was signed by the President today. It’s very convoluted, but this is simply proof of her claim:
(A) REQUIREMENT- Beginning not later than January 1, 2011, a health insurance issuer offering group or individual health insurance coverage (including a grandfathered health plan) shall, with respect to each plan year, provide an annual rebate to each enrollee under such coverage, on a pro rata basis, if the ratio of the amount of premium revenue expended by the issuer on costs described in paragraphs (1) and (2) of subsection (a) to the total amount of premium revenue (excluding Federal and State taxes and licensing or regulatory fees and after accounting for payments or receipts for risk adjustment, risk corridors, and reinsurance under sections 1341, 1342, and 1343 of the Patient Protection and Affordable Care Act) for the plan year (except as provided in subparagraph (B)(ii)), is less than–
(i) with respect to a health insurance issuer offering coverage in the large group market, 85 percent, or such higher percentage as a State may by regulation determine;
(ii) with respect to a health insurance issuer offering coverage in the small group market or in the individual market, 80 percent, or such higher percentage as a State may by regulation determine, except that the Secretary may adjust such percentage with respect to a State if the Secretary determines that the application of such 80 percent may destabilize the individual market in such State.
UPDATE: I rushed this out earlier today and I have now corrected some of my poor sentence structure and clarified a few things.