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Tuesday, March 23, 2010

Health Insurers: May Last 2-3 More Years



Rush Limbaugh has a regular caller from the health insurance industry named Stacy from Atlanta, Georgia. She called in today and said that the private health insurance industry has about 2-3 years of life left before they go bust under Obamacare.

Here's part of the transcript of her call to Rush:

CALLER: I've gotta revise my estimate. We may last two to three years, tops, and let me tell you why. The 85-15 provision that has just been signed into law an hour ago --

RUSH: Yeah?

CALLER: -- by definition of every state and federal insurance regulator makes us financially unsound.

RUSH: All right, now, I have to take a break here and I want to ask you if you can hold on 'til the top of the next hour where we will get your details on this without any time constraints. Can you hang on?

CALLER: I'll skip a bit of a meeting, sure.

RUSH: You tell 'em it will be worth it.

CALLER: Okay.

RUSH: Tell 'em it will be worth it, and if you can't, you tell Snerdley and we'll call you back when you have time, okay?

CALLER: Okay, thank you, dear.

RUSH: You bet.


BREAK TRANSCRIPT

RUSH: Now, we welcome back from "in hiding" in Atlanta Stacy, who works for an insurance company who's been keeping us updated throughout this past year on the fate of her industry should this thing pass. Now it has passed. Give us the lowdown, Stacy.

CALLER: Um, we're going to make it two years, three tops.

RUSH: Explain why and start at the beginning.

CALLER: Okay. For time immemorial, both state and federal regulation -- and also just the industry standard -- has been a 65-45 percentage arrangement: 65 in claims payment and 45 for administration and claims expense. Withholding that you store for, you know, a major catastrophe or something.

RUSH: This is to pay your claims?

CALLER: No, 65% is to pay the claims. Forty-five percent is for everything else.

RUSH: That means 45% is salaries, administration costs, and the offices, all the paperwork, that kind of thing?

CALLER: It's that as well as, you know, we are required to keep a certain amount of cash on hand as a percentage of our claims exposure to pay claims.


The money an insurer is required to keep in reserve to pay claims is set by state and federal regulators. It was 65%. (Remember the word reserves.)

If an insurer is unable to keep adequate reserves to cover claims in any given year, it is considered insolvent. The Obamacare bill changes the percentage amount of reserves health insurers are required to have. The percentage was raised to 85%. This leaves very little (15%) for insurers to cover overhead costs and will render them insolvent, thereby possibly exposing them to government takeover.

In the short run, insurers would have to raise insurance premiums (beginning January 1, 2011) to keep afloat. This was all by design by the Democrats to cause private health insurance companies to fail or to get out of the business. Therefore, the socialist "single-payer" scheme the Democrats have been salivating over for years would be forced on us, even though there's no single-payer provision in the new law. They will be getting it through the back door.

Sneaky little bastards, aren't they?

To read the full transcript, go here.

2 comments:

Ravenwood said...

That adds up to 110%. Wonder if she meant 65/35?

Armand Vaquer said...

I noticed that, too. She could have meant 65/35%. But I did see that some of the "45%" she included "claim expense." That usually means hiring experts, attorneys, etc. to investigate and process a claim. - A.

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