One of President Obama’s top policy goals appears to be getting every American to drink from the government trough. But the latest handout comes not from the government, at least directly, but from health insurers via what’s known as a “medical loss ratio” (MLR).
As part of the Democrats’ highly unpopular Patient Protection and Affordable Care Act, or ObamaCare, health insurers selling to small companies and individuals must spend 80 percent of their received premiums on claims, leaving 20 percent for admin costs, which includes profit. Insurers selling to large companies must spend 85 percent on claims, leaving 15 percent for admin costs.
If an insurer spends more than its MLR-allowed cap, it must rebate any excess to policyholders. Employers that self-insure—about 165 million Americans are covered by such plans—are exempt from the MLR rules.
The Kaiser Family Foundation estimates that some 16 million Americans will receive about $1.3 billion in rebates this year. And just so the public knows who should get the credit for the windfall—estimated to average about $72 for large companies and $127 for individual policies—when insurers inform recipients about their rebate, by law the letter must say in the first paragraph, “This letter is to inform you that you will receive a rebate of a portion of your health insurance premiums. This rebate is required by the Affordable Care Act—the health reform law.”
So far, the administration hasn’t been able to buy the public’s support for ObamaCare, even with all its touting of new “free” services and expanded coverage. It’s surely hoping that negative perception will change when the checks begin to arrive. (No doubt just a coincidence they are arriving right before a presidential election.)
It is an insidious plan. It’s bad enough that politicians think they can use taxpayer dollars to buy themselves votes. How much worse will it be if those politicians come to conclude they can force private sector companies to buy votes for them?