In a post from just over a year ago I discussed how I had benefitted from the Affordable Care Act. The AFA contains a Medical Loss Ratio rule that stipulates that a health insurance company may spend no more than 20% of premiums on administrative costs. Any excess must be returned to customers in the form of rebates. Last year I received a 7% rebate of my 2011 premiums, for a total of $357.56.
I didn't mention that my premium was reduced at the end of 2011 from $323 a month to $318 a month, and then again in early 2012 to $312 a month. I can only assume that this happened in anticipation of complying with the Medical Loss Ratio rule, although I don't know that for sure. But it makes sense, doesn't it? After all, how often do health insurance companies spontaneously lower their premiums?
Anyway, I recently received another rebate from Blue Cross and Blue Shield of Texas. The rebate for my 2012 premiums was 2.3%, for a total of $75.95. Not much, of course, but better than nothing.
I should mention, though, that my monthly premium for 2013 increased to $345, which means that I'll pay $4140 for my health insurance this year. That is almost three times what I was paying when I started my BCBS policy in the fall of 2003.
When I moved back to Texas in 2003, I had to find new health insurance. It seemed that the company I had been using in Philadelphia didn't underwrite insurance in Texas. I contacted an agent, and he steered me towards Blue Cross Blue Shield of Texas. I applied and was accepted.
Because I'm a self-employed scholar, I wasn't eligible for a group plan. So I had to go with an individual plan with a deductible of $2500. Over the years the cost of this not-very-good policy has risen by roughly 150%. At my current premium of $312 a month, I'm now paying $3744 a year for my coverage.
Because I had health insurance, however mediocre, I never figured that the Affordable Care Act would make much of a difference to me. Turns out that I was wrong about that.
A few days ago I got a surprising letter from BCBSTX. Here are the important excerpts:
The Affordable Care Act requires Blue Cross and Blue Shield of Texas (BCBSTX) to issue a rebate to you if BCBSTX does not spend at least 80 percent of the premiums it receives on health care services, such as doctors and hospital bills, and activities to improve health care quality, such as efforts to improve patient safety. No more than 20 percent of premiums may be spent on administrative costs such as salaries, sales, and advertising. This requirement is referred to as the "Medical Loss Ratio" standard or the "80/20 rule". The 80/20 rule in the Affordable Care Act is intended to ensure that consumers get value for their health care dollars.
[. . .]
The Medical Loss Ratio rule is calculated on a State by State basis. In Texas, BCBSTX did not meet the Medical Loss Ratio standard. In 2011, BCBSTX spent only 71.0% of a total of $1,054,029,473 in premium dollars on health care and activities to improve health care quality. Since it missed the 80 percent target by 9.0% of premiums it received, BCBSTX must rebate 9.0% of your health insurance premiums.
[. . .]
We are issuing a credit to the bank account you used to pay your premium. Your credit is $357.56.
Color me surprised. I guess that some BCBSTX executive gets one less expensive dinner in a fancy Dallas restaurant.
I must have heard about this aspect of the Affordable Care Act at some point, but I can't remember anything about it. Since this would have been a major selling point for people like me who already had health insurance, I have to wonder how hard it was pressed when the bill was winding through Congress.
Did the Obama administration simply not talk this up very much? I really can't remember. But if you can, please let me know. Go to my "about me" page to get my email address.
And if you google "medical loss ratio" for yourself, you'll get lots of hits.
Thomas Schaller notes the irony of the fact that the elderly are complaining the most about government involvement in health care while simultaneously receiving the most government health care dollars.
Here's a significant excerpt from Mr. Schaller's column that addresses the widespread ignorance of how much the federal government spends on health care for the elderly:
So let's have a national debate about the government spending for health care, fine. But as we do, let's be clear about where - or rather, on whom - the government spends the bulk of its health care money: senior citizens.
Of course, elderly Americans have more expensive health care needs. And I can honestly say I've never met a single person who begrudges senior citizens the opportunity to live out their retirement years without enduring sickness or pain.
Nor, by the way, does President Barack Obama begrudge them. In fact, a significant chunk of his speech Wednesday night to a joint session of Congress was dedicated to allaying the concerns of seniors. No other group received attention.
"More than four decades ago, this nation stood up for the principle that after a lifetime of hard work, our seniors should not be left to struggle with a pile of medical bills in their later years," Mr. Obama said at a Saturday health care rally in Minnesota, as further assurance. "That is how Medicare was born. And it remains a sacred trust that must be passed down from one generation to the next. That is why not a dollar of the Medicare trust fund will be used to pay for this plan. Not one dollar."
And yet, on our televisions we see enraged senior citizens at health care town halls with signs warning about the rise of socialism in America. That is, the group most worried about government intervention into health care is the group that benefits from the greatest government investment in public health care the planet has ever witnessed. Are you kidding me?
Prior to the government's redistributive investments in Social Security and Medicare, poverty and illness made for a brutal end-of-life experience for millions of seniors. According the National Bureau of Economic Research, "a large increase in the incomes of the elderly stemming from pre-Social Security social programs and the phase-in of the Social Security system has coincided with suicide rates for that group dropping 56 percent since 1930."
Yet we have to listen to knuckleheads like Sarah Palin, the 2008 Republican vice presidential nominee, scaring seniors with bogus warnings about the government creating "death panels." But before Social Security and Medicare, the sad truth is that many seniors issued what we might call self-imposed death panel verdicts: They took their own lives.
I don't remember this many seniors complaining about socialism during the past four decades, a period during which the poverty rate among seniors was reduced to a third of what it was, Medicare and Medicaid expanded drastically, and Mr. Obama's Republican predecessor in the White House pushed through an expensive prescription drug benefit - in short, an era that witnessed a giant, "socialist" transfer of cash from younger Americans to their parents and grandparents, some of whom are now complaining about a too-big government.
As I've said before, in my darker moments I sometimes think that the elderly are the enemy.
Claire Suddath explains why Southerners are so fat.
Not that I'm fat, but I can certainly sympathize with Suddath's discussion of how Southern heat and humidity keep people from going outside and exercising. As I write this, it's 101 degrees where I live in Texas.