Obama Health Care

While Obama health care certainly hasn’t been popular with a large percentage of the U.S. population over recent years, a study released by the Commonwealth Fund recently indicated that in 2012, health care reform rules essentially saved consumers almost $1.5 billion.  This is largely due to the rules targeting health insurance providers and pressuring them to become more efficient, thus more affordable.

Due to these rules under Obama health care, insurance companies delivered rebates, cut overhead, and even reduced profits in some cases in order to comply with the rules, which stated that health insurance companies would be required to refund the difference to customers if they failed to spend a minimum of 80% of the premiums collected on medical care.  Additionally, companies which sold group plans to employers with 50 or more workers were required to spend 85% of premiums on medical care.

Sara Collins, Commonwealth Fund’s vice president for affordable health insurance, said that the report regarding the study was encouraging, as it “demonstrates that these new rules are improving value for people buying health insurance.”  Collins also said that under Obama health care, the standards under medical loss ratio rule are meant to give insurance providers an incentive to use the majority of premiums collected for patient care, and to increase efficiency.

Because of the medical loss ratio rules under Obama health care, health insurance companies slashed profits and administrative costs by $350 million in 2012; they also issued rebates which amounted to $1.1 billion.  To calculate these numbers, researchers involved in the study used reports filed by health insurance providers to a group of state regulators, the NAIC (National Association of Insurance Commissioners).

The study also found that the individuals who experienced the biggest benefits of Obama health care were those who purchase coverage on their own, rather than obtain it through an employer.  Individuals received $394 million in rebates; in fact, when compared to 2010 health insurance companies’ profits for individual products disappeared.  In all, profits fell to -1.2% in 2012 from 0.15% in 2010, a total reduction of $351 million.

While this may seem like good news, it may eventually be a real cause for concern according to the report, which stated that individuals may find it harder to obtain coverage in the future if health insurance companies cannot profit from individual products, or make up the difference through selling insurance products to groups.

The news is good at the moment for individuals purchasing health insurance, however it remains to be seen how Obama health care (and the U.S. population) will fare in coming months and years.

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