Darrell Berkheimer: Health insurers overcharge by $743 million | TheUnion.com

Darrell Berkheimer: Health insurers overcharge by $743 million

Darrell Berkheimer

Health insurance companies overcharged their policyholders a whopping $743 million last year, and now are in the process of refunding that money to 2.75 million consumers.

Nationwide, the average refund was expected to be about $270; but some insured individuals may be receiving as much as $2,000, according to an analysis by the Kaiser Family Foundation.

That report was issued in a short five-paragraph story in The Fiscal Times on Sept. 11 by writer Yuval Rosenberg. It did not give a state-by-state listing.

(But the rebates report a year ago, on premiums paid in 2017, noted 919,608 California policyholders received an average refund of $106. And California rebates last year totaled more than $97 million.)

The overpricing must be regulated more closely.

Of course, this year’s $743 million report received little attention from our mass media — nearly all of whom are bogged down in the morass of antics, chicanery and corruption issues erupting from President Donald Trump’s administration, and the investigations initiated by House Democrats.

But I have been looking for that overcharging report each year for the past six years in an effort to learn how much money that one requirement alone has been saving policyholders since the Affordable Care Act was passed.

In 2014, in my article published by The Montana Standard in Butte, I noted $1.1 billion was refunded to 13 million policyholders in 2012, and another 8.5 million Americans received refunds totaling $504 million in 2013.

An internet check on the annual rebates since then revealed these amounts:

$332 million in 2014

$469 million in 2015

$397 million in 2016

$447 million in 2017

$707 million in 2018

Added to the $743 million in rebates this year, the refunds total $4.7 billion for the past seven years since the requirement took effect. And without that ACA requirement all of those monies would have lined the pockets of the insurance companies and their stockholders.

The refunds are a result of the Affordable Care Act’s medical loss ratio (MLR) provision — sponsored by Minnesota’s former Sen. Al Franken — which forces health insurance companies to use policyholder premium dollars to provide actual health care and quality improvements for plan participants, or refund that money.

That provision requires insurance companies with large group plans to spend at least 85% of the money they take in as premiums toward paying out claims and improving quality care. Insurance companies that cover individuals and small businesses must spend at least 80% on claims and care improvements.

I recall that in 2014, the provision was reported in somewhat of a reverse perspective. Back then, depending on the size of the insurance companies and their group plans, it was explained that they were being required to allow no more than 15 to 20 percent of premiums to be allocated toward administration, marketing and profits.

But regardless of how the restriction is explained, it is obvious that the measure is designed to keep health care insurance companies from gouging policyholders into paying higher premiums than necessary.

(As an aside in a couple of my articles, I’ve wondered how many millions of dollars, and probably billions, consumers would save if similar percentage restrictions were placed on the total drug companies allocate for administration, marketing and profits.)

The size of this year’s rebates — the largest since the first year the ACA provision took effect — resulted from various market insurers overpricing their plans last year, according to Cynthia Cox, a vice president at the Kaiser Family Foundation.

Thus, it appears to me the overpricing must be regulated more closely — because it allowed the use of $743 millions in additional policyholder monies to be invested for months to make more money for the companies.

New Homeless Actions

In my daily perusing of the internet, I often see articles that I think might be of interest to local readers because of similar issues faced by Nevada County and our twin cities here. And since the first of this month, I’ve copied two such stories into my files about homeless initiatives in other communities (See this story at TheUnion.com for direct links).

One article, by Kaiser Health News, reports why hospitals are getting into housing, and the other touts the success of tiny homes for veterans in Missouri. But I cannot adequately summarize them in two or three short paragraphs.

The story about hospitals getting into housing is one about spending money to save money while improving service. It cites similar issues experienced by our hospitals here in California.

A story from People magazine reporting on the success of the village with 280-square-foot tiny houses for veterans might relate a bit to the tiny homes project planned here by Sierra Roots, which is slated to serve chronically homeless folks.

Both stories are worth reading.

Darrell Berkheimer, who lives in Grass Valley, is a frequent contributor to The Union. He is the author of six books available through Amazon. His latest, “Essays from The Golden Throne,” also is available at Book Seller in Grass Valley. Contact him at mtmrnut@yahoo.com.

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