Letter: The 80/20 rule
In September 2012, my elderly father passed away. So I was surprised and puzzled when a check for him arrived in July 2013 for $1.92.
It was from his Medicare supplemental health insurance company, CareFirst BlueCross BlueShield of Maryland. An accompanying letter explained that, as required by the Affordable Care Act (aka Obamacare), this rebate represented unspent premiums. More precisely, the “Medical Loss Ratio” standard in the law requires health insurance companies to spend at least 80 percent of the premiums they collect on client health care services. If they don’t, they must rebate the difference instead of spending it on “administrative costs such as salaries, sales and advertising.”
While this 80/20 rule seemed like a good idea – requiring that premiums be spent on health care rather than executive bonuses – I didn’t think it was a big deal. After all, it was only $1.92! Then I learned that at the same time, more than 6 million other people had also received rebates totaling more than $8.5 billion. As they say, pretty soon, you’re talking about real money.
The 80/20 rule is another positive feature of the ACA that the Monitor neglected to mention in its March 10 editorial (“Another Obamacare delay”). And it’s another reason why the ACA will become increasingly popular as more and more people discover its benefits, as I did.