Solid analysis from Citi showing commercial risk health plans posted a combined medical cost ratio of 84.2% in 2011. MCR in the small group market was better than average at 79.9%, while individual came in at 80.6%, and large group was the highest at 86.2%.
The plans in the analysis represent about 60 million members in 25 states and account for $260 billion in annual premiums. Combined underwriting margin was 2.6% in 2011 for commercial risk plans. Citi warns, however:
We don’t really buy the underwriting margins reported by the plans. For example, in the small group product, the plans reported an overall MLR of less than 80%, and an underwriting margin of only 3%, which doesn’t make sense. The issue is probably that many plans don’t report true SG&A in the stat filings, but rather, a management fee that is paid to the parent company.
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The whole idea of the MLR is government intrusion at its tyrannical worst. I don’t care how much profit my health insurer makes, as long as it honors my contract according to the clearly stated terms and conditions. What I do care about is the fiscal soundness of my health insurer, so that it has the necessary funding of its overhead and sales commissions that our political elite unilaterally has deemed expendable.
I don’t want this perversion and distortion of the free market that is Obamacare. I don’t want my health insurer to become the vehicle for distributing my premiums to freeloaders as my political elite dictates. I don’t want my health insurer to be crippled by the MLR by socialists who decide when too much profit has been made.
It is time to kill Obamacare, and restore our free market for the benefit of we the people. We don’t need our political elite shaking down everyone who has cash to give out more free stuff to freeloading voters.