Thursday, June 20, 2013

HHS on Health Insurers' Costs: "Expenses Like Profits and Red Tape"

    The Department of Health and Human Services (HHS) put out a press release today promoting the savings to consumers from ObamaCare in 2012.  The department claims that the average consumer receiving a refund will get about $100 as a result of rules on how insurers must spend premium dollars. The press release contains the following curious characterization of ineligible expenses health insurers might incur:
Created through the Affordable Care Act, the rule requires insurers to spend at least 80 cents of every premium dollar on patient care and quality improvement.  If they spend a higher amount on other expenses like profits and red tape, they owe rebates back to consumers. 
    Of course, profits are not expenses, but what remains after expenses have been deducted.  "Red tape" is generally a euphemism for bureaucracy or government regulation.

    The 2011 average cost of a family policy was about $15,000, so the $100 rebates amount to a savings of about two-thirds of one percent.

Note: This article first appeared at The Weekly Standard.

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