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Obama Rules Insurers To Get Less Profit

From a jubilant New York Times:

New Rules Tell Insurers: Spend More on Care

November 22, 2010

WASHINGTON — The Obama administration issued new federal rules on Monday that will require many health insurance companies to spend more on medical care and allocate less to profits, executive compensation, marketing and overhead expenses.

The rules, intended to benefit consumers, vastly expand federal authority to direct the use of premiums collected by companies like Aetna, Humana, UnitedHealth and WellPoint. While some states have had such requirements, Monday’s announcement is the first such mandate by the federal government and grows out of the new national health care law.

“Millions of Americans will get better value for their health insurance premium dollar,” Kathleen Sebelius, the secretary of health and human services, said in issuing the rules.

Ms. Sebelius said the rules would protect nearly 75 million people: 10.6 million with individual policies, 24.2 million with small-group coverage and 40 million covered by large employers.

Starting next year, she said, insurers in the individual and small-group markets must spend at least 80 percent of their premium revenues on medical care and activities to improve the quality of care. Insurers in the large-group market must spend at least 85 percent of premium dollars for those purposes.

Ms. Sebelius then went on to cite the article and section of the US Constitution which authorizes such draconian power over a private industry. – Just kidding, of course.

Insurers that do not meet the standards next year will have to pay rebates to consumers, starting in 2012.

As a thought experiment, let’s try to imagine what would happen if one of these insurance companies just told Ms. Sebelius to ‘go to hell.’

We would be mighty tempted to buy our health insurance from such a company – that is, at least until they are destroyed by the Obama administration.

Ms. Sebelius estimated that up to nine million people could get rebates worth up to $1.4 billion. About 45 percent of people with individually purchased insurance are in health plans that do not meet the new standards, known as medical loss ratios, federal officials said…

Notice how they are hiding behind ‘the people’ to do this power grab. They are promising billions in rebates that will never materialize, to get the great unwashed on their side.

Of course the ultimate outcome is that fewer and fewer insurance companies will be able to survive. Which will eventually hurt competition and drive up health insurance costs for everyone.

Until eventually we will be left with a two-tier system: Expensive private insurance – for rich people like Ms. Sebelius. And government insurance, which will be stripped down Medicare/Medicaid, for the rest of us.

Consumers Union, the American Heart Association and Democratic members of Congress praised the rules.

Representative George Miller, Democrat of California, said the rules showed the folly of efforts to repeal the health care law.

“If Republicans succeed,” Mr. Miller said, “they will be taking money right out of the pockets of millions of average Americans.”

Yep. It’s the same old subtle ploy demagogues have used throughout the ages.

This article was posted by Steve on Tuesday, November 23rd, 2010. Comments are currently closed.

9 Responses to “Obama Rules Insurers To Get Less Profit”

  1. proreason says:

    If 2012 doesn’t fix this, lock, load and join forces.

  2. Rusty Shackleford says:

    One could easily have expected this. Given the huge power-grab by the socialists, Obama, Reid, Pelosi, Frank, Dodd, etc., the trek to January of 2011 will be a brutal one. They continue their cram-down and keep punishing the American people and it will bode very poorly for them.

    Look on the not-too-distant horizon for Cram-nesty and Crap and tax as well. The republican turnout for un-spooling this had better be huge.

  3. NoNeoCommies says:

    What you will never hear from “The One”:
    I have directed the bureaucracy to do what it takes to insure that Google, Apple, Microsoft, and any other company not on the official “Evil Corporation” list of Liberals makes one dime more than the 2-4% profit made by health insurance companies.

  4. jr says:

    lets see, 15% of $1000.00, $2000.00, $3000.00……….., how much money do ins co’s want to make? hmm, quite a problem!

  5. Rick Caird says:


    Are you serious about 15%? Most of the insurers are making 3-5%. My prediction is health insurance costs will go up because lack of marketing will shrink the pool and make it difficult for consumers to do marketing. Fraud control will be cut back because it is not money being spent on care, so the costs will go up. We will all be net losers over this. I detest this administration. I detest Sebelius. I detest Napolitano and Pistole. The damage thee people have done in two years will take years to undue.

    • jr says:

      doesnt matter what the percentage is, point is the more they can charge for their product, the more they make

    • Dupree says:


      OK genius, now that insurance company profits are directly tied to a flat percentage of premiums, what is to keep the insurance companies from just spending more on care to increase the profit margin. Free market competition was the only thing urging them to have competitive prices in the first place andto get aggressive with doctor/hospital reimbursements. Now what wil they do? They will increase prices. Good job dumbass.

      Just goes to show you Liberals do not understand economics and how smart people will find a work around to government intervention.

  6. BigOil says:

    Isn’t fascism wonderful? To think we once fought wars to protect the country from ideologies that promote centralized government control.

    Its as if there wasn’t even an election 3 weeks ago where the liberals took their biggest beating in almost 80 years. In fact, they are ratcheting up the theft of our liberty. Boehner – are you paying attention?

    • Rusty Shackleford says:

      Yup, Big, the very first chore ahead of the republicans in January is to undo as much damage as they can. Since the democrat-run sessions seemed to be run in a dictatorial fashion, it would do my heart good to see them get their legislation shoved up their you-know-what since they had no problems shoving it down the nation’s throat. They need to be taken to the woodshed and no amount of whining, race-baiting or “other” should be listened or responded to. Like a fed-up parent, it’s time to take charge, take off the belt and give one hell of a whoopin’ to the petulant children who vandalized this country.

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