I’ve never been a big fan of minimum medical cost ratios for health plans, but this suggestion from The Value At Risk blog on how health plans might respond if minimum MCRs were including in the final healthcare reform legislation isn’t fair — and it isn’t very nice either.
Medical costs and operating expenses combined have come close to – or in most cases exceeded – premiums received by the major health insurance companies. Therefore, health insurance firms are not able to turn a profit from premium revenue alone. Profitability, it seems, is achieved by two other sources of revenue: fees and investment income….If I could make a recommendation to the industry, it would be to arbitrarily “invent” new fees. Maybe introduce another stage to the application process that would require payment of additional fees. To introduce a little bit of irony to the situation, the industry could pretend that it now faces burdensome ratio compliance costs, and must assess a few cents worth of compliance fee upon every claim. Remember: Focus on the Fees.
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I appreciate the link guys. Perhaps however, there has been a slight misreading as to the intent of my “industry recommendation”. I wouldn’t choose to classify that recommendation as fair, however, if one is to be completely honest (to the point of harshness) in these matters, you must admit that some variant of my suggestion will inevitably transpire. I’m simply trying to assess the world based upon how it “is”, as opposed to how it ought to be.
Sadly, you may be correct that higher fees (or premiums) will transpire.
But you’re wrong in saying that I misread your post. On the contrary, I think your writing is quite clear and concise. You are not predicting an eventuality. You are advocating a course of action – or at the very least associating yourself with those who would pursue such a course. (In fairness, I think anyone who reads your post would come to the same conclusion).
I note from your bio that you are in graduate school. Given that I was born during the Eisenhower Administration, I’m going to guess that I’m older than you. So forgive me for giving you some fatherly (or older brotherly) advice. Say what you mean, kid. I’ve made a lot of mistakes as a writer, but one thing I’ve learned is that people know whether you stand for honesty and fairness or underhandedness and deceit — whether you choose to make your point with irony or straight talk. And if you stand for the right, then there’s never a need to explain what you said.