Health insurers cooking books to game reforms
Insurance companies couldn't defeat reform legislation, so now they're re-working their books to avoid its impacts.
"Some of the largest U.S. health insurers are changing their accounting practices to book administration costs as medical costs in an attempt to circumvent new industry reforms, according to a U.S. Senate panel's report released on Thursday," Reuters reports.
The move appears to be an attempt to avoid the law's stricter standards for medical-loss ratio, implemented as a way of cutting waste. The law requires 80 to 85 percent of every premium dollar, depending on the plan, to be spent on medical costs.
By logging administrative expenses as medical, insurers can retain more of their income as profits.
The Senate Commerce, Science and Transportation Committee noted that WellPoint, Inc., one of the largest insurance companies, "has already 'reclassified' more than half a billion dollars of administrative expenses as medical expenses."
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WellPoint did not deny or affirm the charge when Reuters inquired, and several other insurers declined to comment.
After the law passed, some insurance companies initially considered exploiting a loophole that allowed them to continue denying coverage to children with pre-existing conditions until 2014, but eventually buckled under pressure from the White House and agreed not to block efforts to bridge the gap.
Although the stronger regulations stand to cut into insurer profits in an effort to protect consumers from dodgy practices and denial of care, the industry stands to gain in a different way.
The legislation will provide private insurance companies with over 30 million new customers after the subsidies and mandates are implemented in four years, according to the Congressional Budget Office.
New Orleans Police: No Evidence Of Political Motivation In Attack On Jindal Aide. What shame the same right-wing bloggers and pundits that lied to America about Iraq are found lying about an attack on two Republicans. Maybe we should be grateful their lies are getting smaller and killing fewer people.
Senate Minority Leader Mitch McConnell(R-KY) is fighting the good fight for his Wall St buddies. That is the least he can do. While Mitch might be a disgrace to the state of Kentucky and the U.S. Senate, Mitch does owe the nation's banking special interests some favors for all the money they've sent his way - McConnell’s Arguments on Financial Regulation 'Cynical and Deceptive'
In his weekly address, President Obama called Senate Minority Leader Mitch McConnell’s mantra that the financial regulatory reform bill would amount to a bailout bill a “cynical and deceptive” argument.
“The leader of the Senate Republicans and the chair of the Republican Senate Campaign Committee met with two dozen top Wall Street executives to talk about how to block progress on this issue,” Obama said. “Lo and behold, when he returned to Washington, the Senate Republican leader came out against the common-sense reforms we’ve proposed. In doing so, he made the cynical and deceptive assertion that reform would somehow enable future bailouts – when he knows that it would do just the opposite.”
After leaving a meeting with the president and other congressional leaders on Wednesday McConnell said he remained unconvinced that the package passed out of the Senate Banking Committee would avoid other bailouts.
"Where we are now, if we are left with the Chairman Dodd bill that came out of the Banking Committee on a straight party line vote, is that it is a bill that actually guarantees future bailouts of Wall Street banks,” McConnell said in the White House driveway following the meeting. “It will lead to endless taxpayer bailouts of Wall Street banks.”
Today, Obama countered, “We’re going to put in place new rules so that big banks and financial institutions will pay for the bad decisions they make – not taxpayers. Simply put, this means no more taxpayer bailouts.”
